Our lawmakers are saving us from reality yet again. I guess that means that they live in a fantasy world where bad things never happen and resources are never scarce (but given that they can raise taxes at will their resources are never scarce). Assemblyman Lafayette is one of them:
Lafayette's Price Gouging Statute Must be Strictly Enforced
When hurricanes strike, when floods, fire or ice storms ravage neighborhoods, a few unscrupulous businesses take advantage of vulnerable people by skyrocketing prices of essential consumer goods to make large profits. This was why Lafayette authored Chapter 510 of the laws of 1998, which strengthened the price gouging statute.
The huge increases in gasoline prices have a high profile with sometimes twice daily increases. But, let’s not forget about heating oil, natural gas and electricity.
The law originally stipulated that only retailers could be held accountable for gouging the price of consumer goods during times of crisis. Lafayette made the law more expansive to prohibit price gouging by any party within the chain of distribution of consumer goods including manufacturers, suppliers, wholesalers, distributors and retailers.
Unfortunately, there are some businesses who will increase the cost of essential consumer goods in times of crisis for their own benefit. When gasoline prices are at their highest levels in history and oil companies are reporting record profits, it raises a red flag. These companies, along with their suppliers and distributors, must be investigated to determine if there is any wrongdoing.
Price gouging is not an uncommon practice. It has occurred in New York City during previous hurricanes and floods. This law provides broad authority for the Attorney General to investigate businesses that may take advantage of vulnerable people. Lafayette believes that people need to be punished accordingly and the way to do this is to utilize this more encompassing law that works.
Now they're raising the fine for price gouging from $10,000 to $25,000 plus restitution, when they should be eliminating the fine and restitution entirely.
In a crisis, certain resources are scarce. They shouldn't be wasted, and they should go to the people who put the most value on them. The best way to discover who these people are, in a free-market society like America, is to let the price of the resource float. The people who have the highest use will be willing to pay the highest price.
This has several pleasant effects: first, it rewards people who have the good sense to keep these resources in stock, available for other people to use when the crisis hits. Second, it encourages other people to work really really hard to increase the supply of this scarce resource, because they know they'll be rewarded by high profits. Third, the higher the profit, the more the resource will flow into the area where it's badly needed, and the sooner the price will drop down to normal levels.
Instead of allowing gouging and its pleasant effects, our
are doing their best to eliminate these pleasant effects, and ensure that the
pain of a crisis lasts as long as possible.