This one is to file in the two wrongs don’t make a right file: Amazon is asking Congress to pass a federal price-gouging legislation. According to Politico Pro:
Amazon today called on Congress for the first time to pass federal price gouging legislation that would give regulators expanded powers to crack down on profiteering related to the coronavirus pandemic.
It seems that the giant company sees this as a solution to having to comply with 30 different state price-gouging rules.
Amazon, which has at times taken heat from state enforcers and some lawmakers for not policing price gouging sufficiently in its massive online marketplace, said a federal framework would fill holes left by laws at the state level.
State legislators are notoriously bad at economics, and they repeatedly fail to understand the importance of price increase in times of crises. Unfortunately, in their eagerness to combat price hikes, which they often describe as immoral, these legislators are keeping resources from being reallocated and supplies from rising. In other words, they are making things worse.
Of course, I am sure that Amazon’s cost of complying with the 30 states that have price-gouging rules on the books is annoying and expansive. But that’s no reason for lobbying for a bad policy to be implemented at the federal level. As I said, two wrongs don’t make a right. A bad state policy is still a bad federal policy.
Considering the level of economic ignorance all around, I would be tempted to make everything on this anti-price-gouging page created by Russ Roberts mandatory reading and listening. But if you are lacking time, read this piece. A tidbit:
When there’s a fixed supply of something — say seats for opening night for Hamilton at the Richard Rodgers Theatre on Broadway — higher prices just mean more money for the theater and less money for the customer. The theatre can’t add more seats to accommodate a bigger audience, so StubHub allocates the seats to the people willing to pay the most.
But for goods that you can produce more of, allowing prices to rise gives producers the incentive to make more, which eventually bring prices down toward where they were before the increase in demand.