It’s amusing to hear a Republican advocating government intervention in the free market.
Republicans believe in the free market, that the laws of supply and demand cover all. So, when Gov. Sonny Perdue’s director of the Georgia Environmental Finance Authority mentioned “price gouging” at last Wednesday’s chamber of commerce breakfast, I had to smile.
In a free market, the people who own a commodity or perform a service are free to demand whatever price or rate they want. Customers can take it or leave it, and the balance of the two will set the price.
If I own a gas station and want to charge $6.96 a gallon during times of shortage, the free market philosophy says I’ve that right. And you have the option of buying or not.
But elected officials understand a greater law of supply and demand. When enough voters (or contributors) demand something, government supplies it.
You can’t have free markets and price controls; they’re mutually exclusive. Yet, time and time again, particularly from the right, we’re told that the free market is more efficient than government — whether the subject is health care, education or energy.
The free market philosophy dictates that when gas supplies are low, gasoline prices go up and settle at a point where consumers are willing — grudgingly or not — to pay. The supplier of a good or service is rewarded for having that product in a time of scarcity. When other suppliers arrive, scarcity is abated and prices fall.
The goal in the free market is to make a maximum profit. Since there is no money to be made in indigent health care, in providing education to poor people or cutting electric rates for people on a fixed income, in a free market, the have-nots are left to count on benevolence that may not be forthcoming.
It is not in the interest of the oil companies to see gasoline prices fall, which is why they have not exploited the drilling leases they now have and why opening up new areas to drilling will have little effect on prices. In the free market, our best approach is to use less energy, reducing the demand for oil and causing prices — or at least our own consumption of costly fuels — to fall. That happened before the hurricanes hit the Gulf of Mexico.
That policy begins with us. We drive less, we drive more efficient vehicles, we become consciously aware of our other energy uses — we adapt to the market. But we don’t have to do that. We can continue on the same path of careless use, scarcity and outrageous prices and complain to elected officials about price gouging.
That’s our current game plan.
Mark Beardsley is editor of The Commerce News. He lives in Commerce.
For all of the editorials and columns, see the Oct. 8 issue of The Commerce News.