Well, not quite: Study: Oil, gas price gouging bill would damage economy. So it might as well read: “Study Confirms Laws of Economics.” Consider this an obligatory blog post on price-gouging legislation, there will probably be more, but this one is a little different. There are plenty of arguments against this sort of legislation that I could have raised, or that I have previously raised. I thought it might be nice for a change, to demonstrate the the chosen leaders are in fact idiots, and not qualified to lead or govern.
I will spare you discussion of elasticity, instead, I’ll demonstrate that the bill’s proponents are idiots. Says one of the bill’s sponsors, Rep. Bart Stupak, D-Mich, “There is nothing in the legislation that would restrict the supply of oil to this country. All we’re saying is: Just justify your costs…if you can justify your costs, you have no fear of this legislation.”
Now, the first clause in the quote – that the supply of oil to this country will plug along uninterrupted – is either pure idiocy, or a calculated lie. Of course, from a politician’s paradigm, nothing would restrict the supply of oil to this country. For starters, a politician doesn’t believe that any measure of law is capable of disrupting the market’s interplay of supply and demand. So to postulate that the law cannot do this is idle wind. To a politician, the demand for and the supply of everything is infinitely and perfectly elastic. This is clearly a fantasy world in which they live, and it is a prime reason why all politicians are moral defectives Of course, the law does not create a supply disruption – but even if it did, Stupak wouldn’t believe it, and would make statements to the contrary. The problem is that the supply disruption, the restriction is entirely exogenous – the law does not create a restriction per se, but it is similarly powerless to prevent one.
As for the latter part of Stupak’s statement, what I presume he means, is “Just justify your prices…If you can justify your prices, you have no fear of this legislation.” But there can be no justification for an exogenous sourcing cost – it is justified axiomatically. If it were not justified, it wouldn’t have been incurred. If it is “too high,” the company will lose money selling at a loss. The oil companies have no control over the cost of inputs they buy; they can only decide whether to purchase inputs or abstain from purchasing. Stupak would have them abstain, (but the law does not require this) which translates to domestic shortages. BigOil cannot manipulate the market price of crude. They probably cannot exert appreciable pressure on the market price for ball-bearings. So I’ll conclude that Stupak is a fucking idiot (see also, above), because he doesn’t know the difference between a “cost” and a “price,” and has therefore revealed that he is not even remotely qualified to weigh in on this issue.
The article notes that a similar bill died in the Senate last year. Given that discussion about high gas prices was at a fever pitch last year, and this year seems to be barely a blip on the radar, my hopes are that if it gets that far, it suffers similar fate.
* “Politicians…see the tax code as serving the dual purposes of raising revenues and controlling behavior… They are impervious to both economics and history. This is a major reason why all politicians are, by definition, moral defectives. back to top