Read the story here. Advertise at Before It's News here.
Profile image
By Cafe Hayek (Reporter)
Contributor profile | More stories
Story Views
Last hour:
Last 24 hours:

Teaching Me Some Economics to The Economist

% of readers think this story is Fact. Add your two cents.

(Don Boudreaux)


Here’s a letter to The Economist:


Your case for prohibiting, during times of crisis, so-called “price gouging” is confused (“Many economists defend disaster profiteers. They are wrong”, April 11th).

To begin, contrary to your implication, nothing in economists’ argument against such restrictions implies that government should not subsidize the production of goods that are in short supply. Whether or not such subsidies are justified is a separate question an affirmative answer to which is not precluded by opposition to price-control legislation.

More fundamentally, while appearing to counter economists’ argument that higher prices spur greater production of goods in high demand, you in one instance offer evidence in support of their argument and in another case dodge their argument altogether

The evidence that you inadvertently offer in support of allowing prices to rise to market-clearing levels is your acknowledgment that “the manufacture of masks … might look simple, but producers need sterile factories and sophisticated machinery to churn out melt-blown fabric.”  Indeed. But it is precisely firms’ need to incur these unusually high costs, and to do so with uncommon speed, that justifies – and explains – the very high prices that you inexplicably oppose. If ramping up production quickly were easy and inexpensive, prices would hardly rise at all.

You dodge economists’ argument against price controls when you identify regulation rather than profit as a motivation that recently incited some producers to accelerate production of masks. But so what? No economist has ever denied the obvious reality that government can compel or coax producers in the short run to increase outputs without raising prices. This reality, however – and unlike higher prices – ensures neither that industry will retain sufficient capacity to ramp up output over the long run, nor that the increased quantities produced in the short-run will find their way into the hand of buyers most in need of the goods.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!

Order by Phone at 888-809-8385 or online at M - F 9am to 5pm EST

Order by Phone at 888-809-8385 or online at M - F 9am to 5pm EST

Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)

Immusist Beverage Concentrate - Proprietary blend, formulated to reduce inflammation while hydrating and oxygenating the cells.

Report abuse


    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    Load more ...




    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.