In the free market blogosphere, Governor Christie has been pilloried on two of the most read pro liberty websites for his support of price gouging laws—and rightfully so, while the Star-Ledger proudly cheers him on, citing his leadership during the aftermath of Hurricane Sandy.
What is price gouging as defined by statue in New Jersey? According to Governor Christie’s press release: the statute “makes it illegal to set excessive price increases during a declared state of emergency or for 30 days after the termination of the state of emergency. The law defines excessive increases as any more than 10 percent higher than the price at which the merchandise was sold in the usual course of business prior to the state of emergency. If the seller faces additional costs imposed by suppliers or logistical concerns, an excessive increase is any that is 10 percent above the normal markup from cost. Violations are punishable by civil penalties of up to $10,000 for the first offense and $20,000 for the second and subsequent offenses. Each individual sale of merchandise is considered a separate and distinct event.”
Got it? The law disregards the basic principle of economics, namely that prices balance supply and demand. So if a disaster hits and supplies of “stuff” are disrupted, merchants can raise prices only 10 percent. Why only 10 percent? Because this is the mindset of authoritarians. Supposedly, 10 percent is a “fair” increase in the case of an emergency.
By invoking this anti-market, and anti-freedom statute, Gov. Christie has demonstrated once again his betrayal of free-market principles and sound economic policies and his embrace of left wing ideology to shore up his popularity with the public as he gears up for his reelection in 2013…and possibly a presidential run in 2016.
The governor has taken a page out of the command and control polices of Presidents Nixon and Carter who made gasoline shortages incredibly worse in the 1970s by their interventionist policies. Instead of allowing gasoline prices to rise to meet the short-term shortage, Governor Christie under the guise of compassion and decisive leadership is making a temporary gasoline shortage worse in 2012. Can anyone say déjà vu again?
It is in times like this when supplies are disrupted because of the horrible consequences surrounding Hurricane Sandy that the market needs to work the way it is intended to work—to balance supply and demand at prices consumers and producers are willing to exchange to eliminate queues in the marketplace. But our “leaders” do not believe in markets allocating scarce resources; they believe in force to address economic issues.
In Fort Lee, where I live a block from a gas station which opened on Friday, a line of cars stretched at least a half a mile to fill up in front of my co-op. Cars waited for an hour or more well into the night as they blocked the driveway entrance to the front door and the driveway to the garage. The breakdown in the marketplace is completely the fault of big government imposing its will on retailers and consumers.
But if price controls on gasoline is not enough to disrupt the buying and selling of gasoline, Governor Christie is “going all in” by mandating odd-even purchases of gasoline based on license plate numbers. Welcome to New Jersey, a bastion of economic illiteracy.
If President Obama is reelected next week, many pundits believe Chris Christie will be the presumptive GOP presidential nominee in 2016. But if Chris Christie continues to govern out of the command and control page book of left-wing economics, he might as well run as a Democrat.