Tue, 06 Sep 2005

Like a Spitzer with his head cut off

Why is it, that the first thing a politician does when under any kind of political pressure, is to do something which is economically moronic, bereft of good sense, stupid, and out and out damfool? They're no more sensible than a chicken with its head cut off.

Consider two politicians, Elliot Spitzer, and Darryl Aubertine (who is so lame that he doesn't even have a website). Elliot Spitzer proposes to thwart the free market's efforts to conserve precious gasoline. He proposes to deal sharply with people gouging drivers by charging high gas prices. He must have been studying the gasoline supply chain in his copious spare time, because he has suddenly become an expert on gasoline pricing. At least, he proposes to be able to distinguish "who is price gouging and who is raising prices to survive."

Sorry, Elliot, but you're not that smart. I'm not that smart either. No one person is that smart. It takes a village to set the price of gasoline properly. Only by individuals deciding how badly they need gasoline can markets properly adjust the price of gasoline to match the supply of gasoline. If the price goes way up, then that is what the individuals have decided should happen. If gasoline retailers, distributors, refiners, see that there is lots of money to be made by coming up with more gasoline, then that is what they will do.

Now on to ream Darryl a new one for suggesting in the 8/28 Advance*News that New York State should lower the its gas tax. Hey, Darryl, remember studying economics in college (assuming that you did, which is probably a stretch, but if you didn't, how is it that you get to interfere in the economy when you don't understand anything about economics)? Remember the law of supply and demand? If the demand is higher than the supply, the price goes up. If the demand is lower than the supply, the price goes down. Pretty simple, eh? So where do taxes come into this? If the supply shrinks because of a hurricane in the Gulf of Mexico, and demand doesn't shrink, the price will go up. Why do you think that, by lowering the New York State gas tax, either the supply will go up or the demand will go down?

Darryl, you don't have a magic wand. Lowering the NYS gas tax will only result in an unfair windfall to the gasoline retailers, distributors and refiners. Don't fiddle with things you don't understand.

Political control and free market control are inevitably at odds with each other. John Trever, Albequerque Journal, makes this obvious in this cartoon:

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