Christianomics: A blog on economics, politics, and law

The law of supply and demand simply says that as demand increases, the price will increase until the supply catches up. What we saw with toilet paper in 2020 and what we are now seeing on the East Coast with gas prices is what happens when government (and private companies) stop the price from rising. We all get shortages. (1). Source: https://fee.org/articles/why-politicians-not-hackers-are-to-blame-for-the-gasoline-shortage/?utm_source=zapier

"Prices are communication. Price controls are government censorship." -Russ Nelson One of the most important factors (and one of the most overlooked) aspects of free market capitalism is the utility of prices. Without know anything about the product, a high price can tell you something is rare or hard to make. It might also hint at the quality of two similar products. Price controls (most often associated with top-down socialism and communism) removes these features. And that’s when you excesses (when prices are fixed too high) and shortages (when prices are fixed too low).

  My governor is threatening tighter restrictions on mask wearing and event attendance limits. To back up these restrictions he is promising to charge violators with fines and misdemeanors. This has of course spooked the locals and that’s why I just spent $200 On-groceries-I-don’t-need-but-might-need-in-the-next-four-months. That’s $200 I can’t invest in a 401K. That’s $200 I can’t use for Christmas shopping. That’s $200 I won’t have on hand for emergencies. Now granted, if none of these emergencies happen, my investment will balance out and the money I spent today will turn into money that I save in the future. But I only have that option because I was able to get ahead of the panic and I had an extra $200 in the bank. But what about the people who don’t get ahead of the panic or don’t have the cash on hand? This is the true devastation of the lockdowns. They disproportionately impact those who also are least able to prepare or react. So what’s the solution? Well on an individual ...