Libertarians believe in free markets, where “free” means free of government restrictions on voluntary transactions.
An all too common violation of the concept of free markets is “anti-gouging” regulations. Their stated purpose is to protect consumers from retailers or distributors raising prices “too much” in the face of supply disruptions or other runs on the product.
In the hysteria over the approach of Hurricane Ike, it seems that Governor Sonny Purdue has invoked an executive order left over from the days of the Katrina episode. It will punish gas stations that raise gasoline prices more than the Georgia Department of Agriculture thinks is “appropriate.”
The Libertarian Party of Georgia opposes anti-gouging laws and challenges the rationale behind them. Our platform states “The only proper role of the State of Georgia and her political subdivisions in the economic realm is to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is protected. Efforts to redistribute wealth or manage trade through the coercive power of the state are incompatible with individual freedom.”
Despite the stated intentions of anti-gouging laws, everyone — consumers and retailers — is harmed by them. Retailers who own the gasoline are deprived of their private property rights. Consumers are promised low prices but instead are likely to find empty pumps. And both retailers and consumers find their ability to come to a voluntary, mutually beneficial business agreement is interfered with by the state.
Despite populist fantasies, retailers are not stupid people who raise prices to harm customers. Instead, retailers adjust prices — up or down — to reflect the value a product has to those customers at the time. Recently gas prices have been dropping, so dealers have kept inventory low (why stock up today when it will be cheaper tomorrow?). But precautions in the face of Hurricane Ike have disrupted supplies, so there is less gasoline available to sell. And at the same time, customers are being hyped by irresponsible newscasts to want more gas NOW. The understandable result is an increase in the retail price.
Sonny Purdue’s anti-gouging “solution” is to have a low price posted on an empty pump. The Libertarian belief in free markets will lead to gas that temporarily is more expensive but actually available. Under Governor Purdue’s executive order, we run the risk of ambulances, fire trucks, and police cars being unable to refuel. Under the Libertarian plan of free markets, there will be plenty of gasoline available for those who want it bad enough to pay the temporary price.
The Libertarian Party of Georgia hopes the state legislature overturns Governor Purdue’s economic dictatorship by repealing all “anti-gouging” regulations.
