How would I draw that conclusion? Following the disaster in New Orleans from Hurricane Katrina (which was a Category 3 storm), Krugman said that the federal government's response was bad because the Bush administration was filled with people who don't believe in government:
... the federal government's lethal ineptitude wasn't just a consequence of Mr. Bush's personal inadequacy; it was a consequence of ideological hostility to the very idea of using government to serve the public good. For 25 years the right has been denigrating the public sector, telling us that government is always the problem, not the solution. Why should we be surprised that when we needed a government solution, it wasn't forthcoming?So, Krugman had an explanation as to why FEMA was incompetent in New Orleans. However, now that the Obama administration's response to the aftermath of Hurricane Sandy (a Category 1 that quickly weakened into a tropical storm) has been exposed as utterly inept, so far there is silence from the Great Man at Princeton. After all, there is no ideological barrier keeping FEMA from being the Super Agency Krugman has claimed it should be (and allegedly was under Bill Clinton), so why the failure?
While it should be logical to an economist (except Krugman, who is not an economist, but rather a political operative who can do math), centralized government planning in which agents from Washington dictate policy to people who actually have more information is a loser from the beginning. Furthermore, the so-called price-gouging laws are responsible not only for horrific shortages but also discourage entrepreneurs from bringing supplies into the stricken areas, which means the recovery takes longer.
(Krugman is a Keynesian, and Keynesians really don't worry about price controls since everyone knows that prices really don't matter, except when they can be put into indices so that Keynesians can put them on the vertical axis of the Aggregate Demand--Aggregate Supply graphs.)
So, we can say that governments at all levels are involved in the aftermath of the storm, with FEMA taking the lead. And we can see how this is working. Not very well. I guess Obama just doesn't believe enough in the power of the State to work miracles. He needs to make a call to Princeton -- if the lines are not still down.
I note the gasoline rationing going on in New Jersey. Would people not be more able to get the gas they need if the price was allowed to go up to the local market level?
ReplyDeleteHey, on the issue of gasoline, even if the market prices were allowed to operate, there is a good chance that a shortage would still exist in NY and NJ. You see, the EPA mandates different "blends" of gasoline in different parts of the country. And you can't just sell Denver blend gasoline or Arizona blend gasoline in New York City.
ReplyDeleteWe ran into this problem here in Phoenix several years ago when a pipeline from a refinery in Tucson broke, causing a massive gasoline shortage here in Phoenix. The price rose to the astronomically high price of $3.50 a gallon; almost double what it had been before the crisis. And even though we had people in California and Utah dying to sell us gasoline here, the damnable EPA wouldn't let them. Instead they made everyone's lives incredibly frustrating in the name of "protecting the environment."
I really wish these government people would simply go the hell away.
Price Gouging.
ReplyDeleteReal world experience
Three years ago I was on a trip back from Sacramento. I was leaving I-84 at Wells, Nevada, headed to Twin Falls, Id. Towns and gas stations are few and far between in this area. Arriving in Wells with less than ¼ tank of gas, I found the town dark and the gas stations full of cars just sitting there. There was a power outage, and the whole town was without electricity for the foreseeable future. Without electricity, of course, the gas pumps would not work. Jackpot, the nearest town with gas was 90 miles away, well beyond the range of my remaining fuel. What to do. After assessing the situation I noticed a man in a small car sitting at the corner with quite a few 5 gallon gas cans in his car. He was selling the gas at almost 10x the price at the (non-functioning) pumps. Very few people seemed interested. Took me about 20 seconds to say, ok give me 10 gallons (my full sized van conversion doesn’t get very good mpg.) Poured the gas into my tank and was on my way in less than 10 minutes.
This man was a price gouger. In New Jersey, he would be arrested. But this was a voluntary exchange between two consenting adults. In addition, he had brought this gas from Wendover, 90 miles away in the hopes of making some profit for the day. This is how prices should work in an emergency situation. By allowing the price to rise, it became worthwhile for someone to drive 90 miles with extra gas to sell at a profit.
For someone else, without a whole family in the car, and hundreds of miles left to travel, perhaps the expense would not have been worth it, but for me it was. This is how the free market works. Someone should tell that paragon (!) of Republican values, Chris Christie these economic facts of life.
Also brings up the point that cash on hand is important. This guy wasn’t taking plastic!
Paul Smith 11/04/12
Exactly. In times of emergencies, people's priorities change with the circumstances, and at higher prices, people are going to be discerning and not wasteful.
ReplyDeleteIn the coming days, I have to evaluate how it went with us being without power for six days. We prepared, but not enough. (It really was depressing coming into what seemed to be a "dead" house. My wife and kids did better than I did, so I need to re-evaluate my attitudes, too!)
I'm trying to approach this whole thing like an economist and not overreact. In the end, I think I can do without the electricity for a short period of time, but what was tough was losing our running water. (We have a well and electric pump. Time to talk to my Amish neighbors about alternatives!)
Speaking of Keynesians, remember the MMTers and "AP Lerner". I've finally figured them out. They are about the dumbest and most dishonest people in the galaxy. This is an actual post from MMT Princeling, Mike Norman who believes that a price control anti-gouging regime is "the free market". This really explains a lot.
ReplyDeleteFederal Gov't delivering millions of gallons of gasoline to NY. WTF...das Frei MarKet didn't do it????
The Department of Defense is trucking 12 million gallons of gasoline (that's a lot of gas) to New York. Until now there has been no gas. In other words, the Federal Gov't is supplying gas.
Where was the "invisible hand" of the free market? Where were the suppliers anticipating conditions as a result of listening to the perfect information supplied by the perfect, all-knowing market?
I just had to post this hysterical comment that Rob Parenteau put on my Facebook page. It's hilarious.
Wait, Mike, you mean das Frei MarKet, with its illustrious and ever innovating Invisible Hand, didn't deliver the goods already? WTF? Must be price controls or sumpin inhibiting all those entrepreneurs from buying and selling and bartering and trucking all that fuel from transnational oligopolistic oil companies into place in near perfect anticipation or at least nearly complete knowledge of future demand schedules. And now, back to Atlas Slouched.
I'm sure Libertards and conservatives will be all over this with lame excuses like it was gov't regulation or some other crap that blocked the ability of businesses and entrepreneurs to supply gas.
Mike Norman's response to me in the comments is quite scholarly and intellectual rigorous.
http://tinyurl.com/a28yvh8
And CNBC puts that guy on TV.
Even Obama gives to charity instead of the government he manages. $174 billion would lift everyone above poverty level. Government spends over $1030 billion on anti-poverty programs, 6 times as much. Get government out of the charity biz. http://www.youtube.com/watch?v=Rlt5_q7wwTo
ReplyDeletealso see http://www.politicsdebunked.com/government-fails-the-poor