Ron Paul: Abolish all Price Controls – Let the Free Market Function!





by Ron Paul

As the northeastern United States continues to recover from Hurricane Sandy, we hear the usual outcry against individuals and companies who dare to charge market prices for goods such as gasoline. The normal market response of rising prices in the wake of a natural disaster and resulting supply disruptions is redefined as “price gouging.” The government claims that price gouging is the charging of ruinous or exploitative prices for goods in short supply in the wake of a disaster and is a heinous crime. But does this reflect economic reality, or merely political posturing to capitalize on raw emotions?

In the wake of Hurricane Sandy, the supply of gasoline was greatly disrupted. Many gas stations were unable to pump gas due to a lack of electricity, thus greatly reducing the supply.  At the same time demand for gasoline spiked due to the widespread use of generators. Because gas stations were forbidden from raising their prices to meet the increased demand, miles-long lines developed and stations were forced to start limiting the amount of gasoline that individuals could purchase. New Jersey gas stations began to look like Soviet grocery stores.

Had gas stations been allowed to raise their prices to reflect the increased demand for gasoline, only those most in need of gasoline would have purchased gas, while everyone would have economized on their existing supply. But because prices remained lower than they should have been, no one sought to conserve gas.  Low prices signaled that gas was in abundant supply, while reality was exactly the opposite, and only those fortunate enough to be at the front of gas lines were able to purchase gas before it sold out.  Not surprisingly, a thriving black market developed, with gas offered for up to $20 per gallon.

With price controls in effect, supply shortages were exacerbated.  If prices had been allowed to increase to market levels, the profit opportunity would have brought in new supplies from outside the region.  As supplies increased, prices gradually would have decreased as supply and demand returned to equilibrium. But with price controls in effect, what company would want to deal with the hassle of shipping gas to a disaster-stricken area with downed power lines and flooded highways when the same profit could be made elsewhere?  So instead of gas shipments flooding into the disaster zones, what little gas supply is left is rapidly sold and consumed.

Governments fail to understand that prices are not just random numbers. Prices perform an important role in providing information, coordinating supply and demand, and enabling economic calculation. When government interferes with the price mechanism, economic calamity ensues. Price controls on gasoline led to the infamous gas lines of the 1970s, yet politicians today repeat those same failed mistakes. Instituting price caps at a below-market price will always lead to shortages. No act of any legislature can reverse the laws of supply and demand.

History shows us that the quickest path to economic recovery is to abolish all price controls. If governments really want to aid recovery, they would abolish their “price-gouging” legislation and allow the free market to function.



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175 Comments:

  1. as i have heard from another; LOGIC before AUTHORITY! (logic+authority=oxymoronic fucktards)

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  2. I move to texas

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  3. Are you going to run in 2016? Have Rand or Gary as your VP. You'll definitely win!

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  4. Are you going to run in 2016? Have Rand or Gary as your VP. You'll definitely win!

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  5. It doesn't matter how many guns you have.... They'll poison you first with Chemtrail tranquilizer gas from airplanes and then come in physically.

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  6. It doesn't matter how many guns you have.... They'll poison you first with Chemtrail tranquilizer gas from airplanes and then come in physically.

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  7. huh? Are you joking??

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  8. huh? Are you joking??

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  9. ***Petition for Texas to secede from US reaches threshold for White House response***

    The People are finally Waking Up!
    -----------------------------------------

    The petition on WhiteHouse.gov asks the Obama administration to "peacefully grant the State of Texas to withdraw from the United States of America and create its own new government." The petition had surpassed 34,000 signatures as of Monday evening.

    (interesting language: "to peacefully grant"...what would happen if it is not peacefully granted?)

    Similar petitions from other states have also been filed including: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Indiana, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina and Tennessee. However, unlike the petition from Texas, none of these states had reached the 25,000-signature threshold to get an official White House response as of Monday evening (with 30 days to go, how many States would also qualify?)!

    Here is the MSM link (with their usual spin):

    http://usnews.nbcnews.com/_news/2012/11/12/15117305-petition-for-texas-to-secede-from-us-reaches-threshold-for-white-house-response?lite

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  10. GARY JOHNSON IS FAKE.. like Rand Paul~

    Ron Paul 2016

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    • Gary isn't fake. Neither is Rand. Gary represents the Liberal extreme of Libertarianism. Rand represents the Conservative extreme. Both are far better than the current administrations. I would even argue that both are the only bona fide "waste your vote on me" candidates.
      One only needs to look at Gary's record as governor in budget and vetoes to see that he could never fit in as a Democrat or Republican. Supporting licensed gay marriage is definitely not Libertarian, I agree. But few people will ever be perfectly Libertarian. I am sort of glad he supports it because that is one more issue they can argue with when the Republicans come wanting his voters saying they are all really closet Republicans. Gays getting married is really not that big of an issue-not like it is made out to be and will not be the downfall of this country.

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  11. RON PAUL 2016~

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  12. Surfisher, French Canadian,
    I thought Oregon was on that list? Also, who owns the BBC and NPR? Do you know? Corporate owned????

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  13. did you hear anything else? he explains why this is his opinion.. and its supported by history.

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  14. Fuck you Paul.....prices should go up.....your an idiot....like your followers....

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  15. Fuck you Paul.....prices should go up.....your an idiot....like your followers....

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  16. Robin,

    Here are the informations:

    Alex said today that if you believe that Petreaus resigned because of a marital affair, I've got a bridge to sell you. .. lol.

    He said he believed more the version of Lt. Col Anthony Shaffer than the one by Dr, Steve Pieczenick. Pieczenick seems to think that it was a Neocon's plot to play Obama like Nixon was played with Watergate.. By the way, Pieczenick will be back on the show tomorrow. We will see what he has to say this time around. But to understand you must first listen to Shaffer's interview:.

    Here is the interview done on November 5th with Lt. Col Anthony Shaffer.

    BOMBSHELL: OBAMA MAY HAVE ORDERED AMBASSADOR STEVENS' HIT
    https://www.youtube.com/watch?v=IGPHm2bpryc

    Now, for Bev Harris, her interview starts at: 1:07:06 (with a comment first on Dr Piezcenick from Alex)

    Alex Jones Show: Monday (11-12-12) Bev Harris
    http://blogdogcicle.blogspot.ca/2012/11/alex-jones-show-monday-11-12-12-bev.html

    On Infowars Nightly News tonight' Gerald celente was the guest. We've learned that he is filing a lawsuit against Google for imposter websites impersonalizing him and making a lot of money with his name. He has courage!

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  17. BREAKING NEWS!

    ***Petition for Texas to secede from US reaches threshold for White House response***

    The People are finally Waking Up!
    ----------------------------------------------------

    The petition on WhiteHouse.gov asks the Obama administration to "peacefully grant the State of Texas to withdraw from the United States of America and create its own new government." The petition had surpassed 34,000 signatures as of Monday evening.

    Similar petitions from other states have also been filed including: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Indiana, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina and Tennessee. However, unlike the petition from Texas, none of these states had reached the 25,000-signature threshold to get an official White House response as of Monday evening.

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  18. good sense is good sense, it's universal

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  19. Surfisher,
    Thank you for the interview you posted with Ron Paul on CNN bashing Obama...I never saw that one and posted it for all to see.

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  20. French Canadian,
    Thanks..I'm waiting to hear about Prop. 37 which is another important issue for me. All those disenfranchised voters. You're right about wasting my time, but I do believe I got her to think about it, so my time was not wasted. I'm sure she feels conflicted because I used to be like her a diehard liberal. Will look for your posts. Peace...

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