American Socialism (8)

A common characteristic of all market economies is that scarce products and services can best be rationed by means of price. Students who attend Economics 101 will learn that concept in an early discussion of supply and demand. In socialist economies, by contrast, rationing is achieved by coupon books and by waiting in long lines.

What, then, to make of the long lines to buy currently scarce gasoline in New York and New Jersey?

The United States prides itself on being a market economy but as soon as there is a shortage, then the shouts of 'profiteering' and 'price gouging', sometimes supported by state and local laws, become overwhelming. The result is the same as in a socialist economy: long lines and miserably poor allocation of scarce resources.

Should not the market not be permitted to work? Those who really need - not just want - gasoline might consider $10.00 (or more) to be a reasonable price for a gallon and would find it easily available while those who merely want gasoline, or consider such a price to be too high, can wait until the buying panic is over.

But what about the poor people? Since, at least in this situation, they could have planned ahead and bought gasoline (at its more or less normal price) before the storm, your correspondent has little sympathy for them.

There is such a thing as individual responsibility. Socialism, however, with all of its ugly consequences, seems to be the regrettable solution for those to whom such a virtue is little known.