Rationing: Assume Government Is Benevolent
By Pierre Lemieux
Let’s make two assumptions: (1) the state (any level of government) really cares for the poor; (2) it is minimally efficient to reach this objective. What then would it do in case of large and sudden price increases caused by a natural or man-made catastrophe?
Create a shortage by capping price increases? Certainly not, for the poor are the ones least able to get ahead of waiting lines. They often don’t have the necessary contacts and are less able to physically move to places where shortages are less stringent. They can’t wait out the emergency at a far away Hilton and or use their private planes to take refuge under better skies.
What the state would do given our assumptions may be to ban the sale of “essential” supplies without ration coupons (on top of previous prices) and distribute the coupons at least proportionately to the poor. Moreover—and this is essential if the state believes that the poor who elected its politicians are not stupid idiots—it would allow the coupons to be openly traded on the free market, so if a poor family prefers more medical masks to more soap, they can sell some of their soap coupons to buy more masks. (Note that voters, as opposed to consumers, remain rationally ignorant.)
It is true that setting such a system is complicated (costly), and the more so if it needs to be rapidly in place during a sudden and temporary emergency–as opposed to, say, a long war. But given our assumptions above, the government would already have spent resources preparing such stand-by systems, instead of, say, waging wars on smoking, vaping, and sugary drinks, or instead of preparing laws and hiring cops to stop “price gouging” during an emergency. By assumption, efficient rationing systems would be ready to go when a serious emergency points its ugly head.
So why doesn’t the state do that? Could it be that the state is not as benevolent and efficient as in our (heroic) assumptions? Could it be that, for example, the state cares less about the poor than about hiding the rationing system preferred by politicians and bureaucrats (or by the mob), which is rationing by queues and stealth requisitions (keeping supplies for its public health clients)? Could it be that the state is less concerned about the poor than interested in increasing its power? Could it be that Bertrand de Jouvenel was right when he wrote (in The Ethics of Redistribution , LibertyPress, 1990, p. 72):
The more one considers the matter, the clearer it becomes that redistribution is in effect far less a redistribution of free income from the richer to the poorer, as we imagined, than a redistribution of power from the individual to the State.
To follow up on my Econlog post of yesterday morning, we learned, thanks to Reason Magazine, that eBay stopped allowing sales of coronavirus supplies out of fear of “anti-price-gouging” laws. It seems that Amazon, for the same reason, stopped its third-parties from letting customers bid up prices of such supplies, otherwise generally unavailable. There is too much top-down benevolence and not enough free self-interest in America and the world. Why not try free enterprise?