Drewish Econ 101

(Originally posted September 28, 2008)
Ordinarily, I would not bore my readers my readers with an economics lesson. But unfortunately, some very popular, highly foolish ideas about the economy have proven the need for more Drewish wisdom!
 

The Morality of “Price-Gouging”

Recently, a hurricane tore through Texas and significantly cut off oil flow to parts of Tennessee. Naturally, a cutback in supply should signal that prices increase. Nonetheless, our brilliant, hardworking government lawyers apparently had already eliminated violent crime, so they had enough time on their hands to threaten gas station owners during this crisis. If the owners raised gas prices due to the limited supply, the government would charge them with the crime of “price-gouging.”

Our esteemed Governor Bredesen made the following comments:

“We will be very tough
and very aggressive on people
who take advantage of this situation.
I hope people do
not try to capitalize
on the effects of these storms
at the
expense of Tennesseans,
who are already struggling
with high gas prices.”

Well thank you for that piece of wisdom, Karl Marx. Suddenly I remember why I campaigned against this idiot in 2002.

“Gouging” does not exist. Raising prices is natural and moral. Whenever a quantity becomes scarce, it becomes valuable! Raising the price means acknowledging reality. Acknowledging reality is right, not wrong!

If gas prices rose, people would use less gas. They would stop taking pleasure trips. They would carpool. They would stop wasting a precious resource. Furthermore, increased gas profits would encourage more suppliers to move into the area, ultimately fixing the situation faster.

Instead, the government legally froze prices during the crisis. As a result, hordes swarmed every gas station in Nashville, filling up as many gas containers as they could. Drivers had to wait in line for hours, and some people simply could not find gas at all.

Whereas a price hike would motivate more suppliers to enter the market in search of profits, local gas stations actually suffered during this price freeze. Think about it:  If you owned a gas station and suddenly saw your supply drop by 75%, how would you earn any money?! Simple, you would raise prices…Oh, wait a minute.

gouging

 

Housing Bubble and the Financial Crisis

Consider the current financial woes, which Barack Obama compares to the Great Depression. Many fools have stated that capitalism caused these problems, but the exact opposite is true. In 1995, the Clinton Administration began threatening lenders, forcing them to make bad loans to poor people. Once any idiot could get a house (even if he couldn’t afford it), housing prices rose. Everyone assumed house values would continue increasing, so they kept on buying houses they could not afford. (Even if the house seemed unaffordable now, it would be valuable later!)

Unfortunately, the bad loans to poor people could not go on forever. Once the poor people stopped paying — and lost the ability to buy unaffordable homes — everyone realized their houses were not worth as much as they thought. Humongous housing lenders like Fannie Mae and Freddie Mac have run into problems and essentially gone bankrupt.

“But Drew, I think everyone should be able to have a house!” Yeah, so did Bill Clinton and his attorney-general, Janet Reno.At this point, you may ask yourself, “On principle, if the government caused this economic problem, shouldn’t the government therefore fix it?” Just listen to the following message from the Great One, Mark Levin, and become enlightened on this issue:

The government creates problems with the economy. It rarely solves them. Do not look to the government for help!

Much like the Commie FDR during the Great Depression, politicians now want to use economic trouble to strengthen their own power. Resist, or serve!

Note: If you don’t buy my explanation for the financial crisis, you may wish to examine the first five minutes of this video:

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