If the government sets a price ceiling (let's say $3/case for bottled water) what do you think would happen?
The first person showing up would buy the entire pallet, then turn around and sell it for $50/case (black market).
Thanks government.
Lets put our Economics degree to work here:
Its called INVENTORY CONTROL. If the prices remained the same the first people in the store would buy out everything leaving NOTHING for everyone else. The price increases ensure that the "supplies" go to those who need it not those who get there first and plan to horde it.
Prices are the natural mechanism to ensure rationing allowing more people to get access to the water.
Artificially restricting the price of goods in a crisis doesn't incentivize people to solve the problem. Let's say those in the affected area of Texas can't get a good, like water. All of it is sold out, because it's so cheap. And distributors have trouble getting it there, because their channels of distribution are built around large-scale delivery. Airports, trucks, etc. are all hampered right now due to the conditions.
*This is where the free market should take over. People in West Texas may have a load of water. But they aren't going to have any incentive to load up their car and drive all that water to the affected area if the prices are restricted. *
*If the prices are allowed to be $40 for a case of water, those people can make money by driving it in and they have a big incentive to do so. The market using increased prices incentivizes more to attempt the bring a scarce good into Houston. That sort of capitalism, while morally questionably maybe, can solve major shortages MUCH faster than the large distributors or the Red Cross.
What's more important? Solving the crisis of availability of critical products? Or establishing and maintaining a moral high ground?
Allow the market to control the prices and you'll solve your supply issues much faster that the government can.
Also, as an aside, anyone here care to know what $8.76 on a gas sign means?
It's the default sign number that means either a) there is no gas left or b) they just turned the signs on or c) the signs aren't communicating with the price-setting software.
But yeah, "evil capitalists" probably gets more shares and resteems...
