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Atlas Ready to Shrug

My company operates several retail gasoline outlets. We at best break even and probably lose money on the gas, but we continue to sell it to bring people into our stores and because there are so few other local retailers (we are in very rural areas). If this law passes, I am just not going to risk going to jail because some economically ignorant jury in the future can't figure out that gas is more expensive in rural areas or because some tragic and sympathetic figure decides to sue me. I'm out. And if someone observes that in the rural areas in which we operate, consumers will probably be worse off if we exit, then Congress should have thought of that before they passed this Marxist-populist legislation. [source]

I struggle to find the words to express how horrible non-objective law is. It must be possible to determine, before acting, whether or not that action is legal.

The classic example of non-objective law is antitrust. Now, in another public spectacle of gross economic ignorance, Congress is working to make "price gouging" a federal felony. (For the sake of argument, let's ignore the beneficial effects of high prices and pretend this law might be reasonable.)

The actual definition of "price gouging" is "charging a price that I feel is too high." That's it. There is no objective standard whatsoever, despite the delusions of Congress. Any definition that is clear and unambiguous is tantamount to price controls or central economic planning and will necessarily be a disaster; any definition that is vague leaves the matter entirely in the hands of unpredictable juries and will induce businessmen to abandon the market, as exemplified in my opening quotation.

The root of the trouble is the widespread belief that economic law can be overturned by political law.

It can't be.

The retail price of gasoline is "high" because that's the price at which the market clears. A lower price is only possible if the physical supply can be increased. If it can't be, trying to hold down the price will cause a shortage. If the additional physical supply is available, the profit motive will cause it to be brought to market and the price to fall. Cartels in profitable businesses do not work except when they have government support to keep competitors at bay. The oil companies emphatically are not conspiring to keep prices high.

Yes, Congress should act — but it should act to reduce the barriers put in the way of the oil industry in the name of environmentalism. Popular culture has it backwards; the oil companies are the good guys and the environmentalists are the ones to fear.

Tiny Island