Price Gouging Form

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Fearing increases in the prices of WATER (name of item in short supply) as a result of a MASSIVE PIPE BREAK (type or name of disaster), officials in MASSACHUSETTS (affected state or municipality) have declared a state of emergency whereby restrictions on "price gouging" are now in effect. According to ATTORNEY GENERAL MARTHA COAKLEY and GOVERNOR DEVAL PATRICK (politicians or law enforcement officials), the law is designed to protect innocent consumers from "unconscionable" increases in the prices of WATER (or food, gasoline, ice, electric generators, and home-repair services). The unintended, unseen consequences, however, are predictable, unfortunate, and avoidable.

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Boston's Water Shortage

THERE WASN’T much Martha Coakley could do about the massive pipe break that left dozens of Greater Boston towns without clean drinking water over the weekend. So she kept herself busy instead lecturing vendors not to increase the price of the bottled water that tens of thousands of consumers were suddenly in a frenzy to buy...

It never fails. No sooner does some calamity trigger an urgent need for basic resources than self-righteous voices are raised to denounce the amazingly efficient system that stimulates suppliers to speed those resources to the people who need them. That system is the free market’s price mechanism — the fluctuation of prices because of changes in supply and demand...

Letting prices rise freely isn’t the only possible response to a sudden shortage. Government rationing is an option, and so are price controls — assuming you don’t object to the inevitable corruption, long lines, and black market. Better by far to let prices rise and fall freely. That isn’t “gouging,’’ but plain good sense — and the best method yet devised for allocating goods and services among free men and women.

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The Result of Socialism and Central Planning

Robert Mugabe "who famously despises “bookish economics”, has decided to outlaw inflation. Price freezes have only been enforced through the arrest of scores of businessmen who are accused of profiteering. The result: shops are bare of basic goods, as businesses refuse to sell more than a minimum of flour, sugar, maize and other items at a crippling loss. There has been panic buying all over the country. In Harare, the capital, crowds wait outside supermarkets ready to rush in and grab whatever they can. Where basics such as cooking oil are available they are rationed by shopkeepers. Fuel is in short supply, with long queues of cars reappearing outside Harare’s petrol stations. As factories prepare to close operations their owners, in turn, are being arrested and forced to keep operating."

Desperate Times in Zimbabwe