May 03, 2006
$100 is insulting?

I am a big fan of mailbox money, especially if the money is removed from the clutches of the Federal government, therefore when the Republican Majority Leader of the House suggests that a $100 check in my mailbox would be insulting, I beg his pardon:

Boehner told reporters Tuesday he considered the rebate "insulting" and said it would not solve motorists' problems. He said he received nothing but negative responses from constituents. "They thought it was stupid," said Boehner.
$100 is less than 2 tanks of high-test for my 1988 MB roadster, but would contribute to my next digital camera. I wonder how much more of this we need until we are all voting "L" instead of "R" and "D".

The insanity that is known as the Congressional Session gets even more bizarre as the House is evidently seriously considering an arguably hastily written federal law making price gouging illegal (more here, the 2005 bill, the 2006 bill). The story offers the following "justifications":

About half of the states have some price gouging statutes, but enforcement and penalties vary widely. There is no federal law prohibiting price gouging nor agreement among the states on what constitutes price gouging [emphasis added].

State attorneys general have lobbied for a federal price gouging law.

"Nationally there is no common definition of price gouging," Arizona Attorney General Terry Goddard told a Senate hearing in November. He said some states have laws that apply only to emergencies, while others allow up to 20 percent price increases.

The House bill requires the Federal Trade Commission to establish a definition of price gouging and imposes stiff civil and criminal penalties for violators who market gasoline, diesel fuel, crude oil and heating fuel.

It seems that the worst federal laws come about when it is believed that the various states haven't homogenized their definitions/penalties sufficiently. The fact that the FTC hasn't come up with a working definition of price gouging in almost 100 years of existence doesn't seem to register with those on the Hill.

I bet my students a full letter grade that they can't find a published definition of price gouging in an economics textbook. There might be one out there, but to date I have never had to pay up.

Congress consistently passes bad legislation because (in the least) a) they think they are smarter (or more powerful) than the market, b) they subscribe to a political pragmatism that can be summed up as "any policy is better than no policy", and c) they incorrectly subscribe to a philosophy that a free society is consistent with an overarching government apparatus that will monitor the thousands of decisions of thousands of gasoline (and other) producers, retailers, and customers.

I wouldn't mind a little mailbox money - and a corresponding reduction in federal expenditures - but I have a feeling Congress is too busy being insulted for me.

Posted by Craig Depken at 11:06 AM in Economics  ·  TrackBack (0)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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