Governor short circuits market in wake of storm

Governor Kulongoski today invoked the state’s new so-called anti-price gouging law in the wake of last week’s monster storms. He stated that “by issuing this declaration, these victims will be protected from unscrupulous retailers and those attempting to take advantage of the needy and vulnerable.”

Of course, nothing was mentioned about what a Sunday Oregonian article labeled Retailers to the rescue. It was all about how firms like Wal-Mart and Home Depot often respond better to disasters than do governments.

A full four days before the storms hit, Wal-Mart’s own private meteorologist “tracked the weather and notified colleagues that Oregon and Washington stores could lose power and the retailer should consider alternative truck routes.”

Home Depot’s director of crisis management “coordinated more than a dozen recovery workers, from hazardous-material cleanup crews to structural safety assessors, to Portland. From his Atlanta office, he also summoned trucks as far as Nebraska and Texas to hightail it west with extra batteries, flashlights, heaters and generators.”

Have you heard any government officials in Oregon or Washington praise such forward thinking retailers for what they did to help keep critical supplies flowing to disaster victims? No, all we hear today is Oregon’s Governor slapping down “unscrupulous retailers” who might dare raise prices more than an arbitrary 15 percent limit.

I testified against this new law, SB118, during the last legislative session. Here’s what I told the House Consumer Protection Committee:

Imposing price controls to protect consumers is one of the worst things government can do in an emergency. Rapidly rising prices signal those outside the affected area to conserve scarce products, and they signal producers to ship more of those products into the affected area quickly. Price controls short-circuit these signals, turning a natural disaster into a political one.

Let me give you just one example of how this bill might backfire and hurt the very people you’re trying to help:

Imagine a catastrophic storm hitting Oregon, like the Columbus Day Storm of 1962. The windows in your house are broken and the rain is pouring in. Everyone is scrambling to board up damaged buildings.

Overnight, the price of plywood in Oregon skyrockets. The sudden high prices send a message to casual consumers who aren’t affected by the storm: “Conserve plywood.” At the same time the spike in prices sends a message to producers, brokers and retailers that we need plywood in Oregon and we need it now. The faster they get it here, the more profit they can make before the prices come back down after the crisis.

Casual users of plywood will reduce their purchases because of the high prices, allowing those who have a critical need to find the product, even at what this bill calls “unconscionably excessive prices.” But in these circumstances they’re happy to find it at all.

Now imagine that this bill becomes law and the Governor applies it to keep plywood prices down. Stores in the affected area sell out quickly because demand greatly exceeds supply if prices can’t rise. Imagine homes being severely damaged and homeowners not being able to buy a sheet of plywood at any price. While some Oregonians’ property is being destroyed, consumers in other parts of the state, or in California or Washington, might unknowingly be building playhouses for their kids with cheap plywood. Under this scenario, would this law protect you or hurt you?

The law of supply and demand is actually a better friend to disaster victims than any price control law coming out of this building.


Steve Buckstein is Senior Policy Analyst and founder of Cascade Policy Institute, a Portland-based think tank.

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Posted by at 05:43 | Posted in Measure 37 | 32 Comments |Email This Post Email This Post |Print This Post Print This Post
  • CRAWDUDE

    Does the state have any anti-tax gouging laws that can be invoked on last sessions wastefullness?

  • Jerry

    I also note that many state officials sat around and did absolutely nothing on their own to help the matters in Oregon.
    NOTHING!
    Where were they? At home, because it was a weekend.
    I stand by my contention that this governor is the worst in the history of Oregon.
    Bar none.
    Anytime government attemtps to control the free market it never works. Anyone remember Carter?????
    This guy is out to lunch.
    He is a complete incompetent.

  • Chris McMullen

    “I stand by my contention that this governor is the worst in the history of Oregon.”

    I beg to differ. Worst in the history of the United States is more like it.

  • DMF

    Worst Governor any where ever. I add my vote

  • Kathryn Hickok

    I think if FEMA had rerouted supplies and sent recovery workers four days in advance of a disaster, we might be praising their competence and foresight and offering it as an example of good government. When the private sector does it, why do we call it greed?

  • dean

    Steve…”imagine” that Roosevelt had decided to fight WW2 on your free market principles. No price controls, no rationing, no draft. Contracted out the fighting to the private sector. Would we still be a free country today?

    • Steve Buckstein

      Dean,

      I’m no war historian, but I’ve read enough to question whether price controls and rationing worked any better in WWII than they have ever worked anywhere else. A long, sourced article on this topic can be found at:

      Coupons and Counterfeits:
      World War II and the U.S. Black Market
      By Garrett Moritz
      https://www.gtexts.com/college/papers/j2.html

      The first paragraph reads:

      “During the second world war, many different kinds of battles raged. Less well known than Stalingrad or Midway, but in its way just as fierce, was the battle over economic control in the United States. Well-meaning technocrats seeking efficient allocation of scarce resources during the wartime crisis worked hard to impose a rational system of controls on the domestic economy. Intentions proved a poor predictor of results. Instead of simply an efficient war machine, rationing and price controls resulted in a widespread black market, and the well-meaning technocrats found themselves up against widespread public discontent. This black market was not caused by bureaucratic mistakes alone—though there were mistakes aplenty—but by widespread public distrust of economic control.”

      Our earlier discussion about the draft also applies here. I believe that when a war is worth fighting, as most Americans believed WWII was, there was no shortage of volunteers, so much so that labor was in short supply elsewhere in the economy. If volunteers are not enough, that seems to be a signal that the American people may have serious doubts about the war itself.

      And, I wouldn’t characterize a volunteer army as contracting out the fighting to the private sector. I’d characterize it as the way a free people remain free in the face of aggression. We shouldn’t have to give up our freedoms at home in order to fight wars against foreign aggressors. Isn’t that part of your liberal creed?

  • dean

    Steve…I don’t have a “creed,” or at least not that I am aware of. Identifying as a “liberal” to me means being open minded, avoiding dogma, accepting facts and supporting what works, even if it contradicts my bias.

    I’m not enough of an economist to know to what extent WW2 price controls were helpful or hurtful. Of course a black market developed. They always do when commodoties are restricted. But the point of rationing and price controls was to insure that material needed for the war effort was available and affordable, and to head off war profiteering.

    I do know that a liberal Democratic President mobilized a nation to fight a 2 front war against very serious and tough enemies. Many errors were made in fighting that war, but we won it, and fairly quickly in retrospect. He certainly showed that “government works” and is necesary at least for some projects.

    I don’t know the ratio of volunteers to draftees during WW2. My question was whether we sould have an army of government bureaucrats, volunteer or otherwise, or whether we sould have an entirely private sector army. Since the private sector is ALWAYS better, why not? And if we had 2 or 3 companies in the army business, we could have them bid on who does the fighting at the lowest cost. Your thoughts?

    • Steve Buckstein

      Dean,

      Sorry about the “creed” remark. I just meant that as a self-described liberal you probably value personal liberty a lot (as you should). I extend that liberty farther into the economic sphere than do many liberals I know.

      I’m not advocating a private army, just an army made up of volunteers. Speculating about two private armies bidding against each other may be fun, but that wasn’t how things worked in WWII and they don’t work that way now.

      Individuals who volunteer for military service in the US are subject to the rules of their service and are government employees. That’s quite different from private security companies where, I assume, individual employees are free to leave their employment at will.

      I have no problem with military volunteers signing up for extended periods of time and being subject to the rules and being required to follow legal orders.

      • dean

        Steve…I think our core differences are that I’m more of a “social liberal” and you are an “economic liberal.” We are both equally concerned with individual political freedoms, but have different views of the role of the state (government) with respect to how much and what sorts of intervention is appropriate to help insure people from potentially severe problems (poverty, loss of income, access to medical help, damage to the environment, and so forth). More intervention means a bigger state with higher taxes, and some restrictions on our economic freedom. That is a tradeoff I’m okay with.

        As to which intervention and when, I’m open to whatever works.

        So maybe you were right. Maybe I have a creed after all but wasn’t aware of it.

        • Steve Buckstein

          Dean, I prefer to think of myself as a classical liberal, in the sense that I believe in maintaining a high degree of both economic and personal liberty outside control of the state. I worry that “social liberals” don’t understand that they can’t maintain their personal liberties for long once they cede government the power to control their pocketbooks.

          I don’t ascribe bad motives to most liberals, I just think they have a faulty understanding of how, in Lord Acton’s words, power corrupts and… you know the rest.

          • dean

            I’ve worked enough in and for governments at all levels to draw some conclusions. First, as long as we stay vigilant on preserving our democratic and free speech rights, and we prevent a Nixon or Bush or whomever from abrogating too much power, we don’t have to live in fear of the jackboots.

            Second, we can control how much government is in our pocketbooks through our votes and our own good sense in determining what we really want done for us as opposed to what we can do without.

            Third, as I’ve said before, government is generally too disorganized and befuddled to have or exercise much true power.

            Fourth, if we bung up the ecosystem that our economy exists within badly enough, the free market won’t be worth much to anyone.

            The body public ceded a whole lot of pocketbook power to the government in the 1930s. We were warned then we would lose our liberties, and are still being warned. To tell the truth, I think you libertarians have far more to fear from your friends on the right than you do from we social liberals. Think Terry Schiavo.

    • Anonymous

      “Identifying as a “liberal” to me means being open minded, avoiding dogma”

      Are you serious? Do you read what you write?

      • dean

        Yes and yes.

  • Steve Buckstein

    Dean, I hope you’re right that “government is generally too disorganized and befuddled to have or exercise much true power” but I’m skeptical. If it were true, then how could you advocate that government should do more and more, and that we should pay more for services from such a disorganized and befuddled entity?

    Our liberties are endangered by those on the right and the left to the extent they seek to use government to impose either personal or economic controls beyond the minimum necessary to protect lives and property.

    • dean

      Steve…I reject your interpretation that I want government to do “more and more.” I would be willing to stop at the first “more” and leave out the second. Or better, I would say the government should be doing both “more” and “less,” that is more in some arenas (environment, education, social welfare) and less in others (waging unecessary wars, imprisoning non-violent offenders, subsidizing busnisses).

      Case in point. Our state forest practices code should ban clearcutting (but still allow selective cuttting) of steep headwall streams on private lands. We have enough evidence that clearcutting steep headwalls increases the risk of landslides, like those just experienced that have wiped out homes and may have cut off a public highway for weeks, at a high cost to we taxpayers. These slides also foul our public water and harm our public wildlife.

      As for the disorganization and beffudlement, we badly need civil service reform and better managers, I admit. And managers need the authority to be able to get rid of the non-preformers and reward the best. Some agencies have been very succesful at this, like Clean Water Services in Washington County.

      Lives and property only? What about “health?” And if global warming turns out to be a reality, doesn’t that put many lives and much private property at risk? What if I own beachfront property in Florida? I mention this not to open a global warming debate, but just to illustrate a defense of environmental regulations as a defense of lives and property.

      • Steve Buckstein

        OK Dean, I’ll accept your statement that you just want government to do “more,” not “more and more.”

        When I said I just want government to protect life and property, I should have added liberty. But health? Sorry, I don’t think that’s a function of government, although I realize that government is deeply involved in health care today and I am working to find ways to improve health care giving that government involvement.

        I’ll leave global warming for some other time, and for someone more knowledgable on the subject than me.

        • dean

          Steve…I didn’t mean health care. I just meant that, given your statement that government has a legitimate role in protecting people’s LIFE…well if one’s HEALTH is at risk then one’s LIFE could be at risk. Air pollution is certainly implicated in not only health effects, but in lowering one’s life expectancy. Broadly speaking, poverty is bad for one’s health. And back to the GW example, PROPERTY can also be at risk here.So I’m just curious about how and where libertarians draw the line. Why are the military and police more philosophically acceptable than the EPA? All 3 protect life and property, they just use different methods.

          Bad Boy…Ted was re-elected just last year by a pretty strong majority. He’s not my favorite gov, but I think you overstate your case.

          • Steve Buckstein

            Dean,

            I see the government’s role as protecting our rights to life, liberty and property. In natural rights theory these are “negative”, not “positive”rights. Briefly, our natural rights are inherent, granted by our creator, or God depending on your own personal philosophy. But, we have no “right” to something if it must be taken from someone else. For example, if I’m sick through no fault of another, I have no “right” to command a doctor to treat me if he chooses not to. I also can’t call on government to force the doctor to treat me either, or to tax you to pay the doctor to treat me.

            This is the theory, so let’s not get into how things really work today where government taxes all of us to pay for lots of things that violate the natural law theory.

            The EPA example is complicated because if someone violates my property rights by dumping pollution on my land, in my water or air then, yes, the government may have a role stopping or punishing that violator of my legitimate property rights. Defining property rights in the air and water are difficult, so I don’t want to get into all the nuances here. But, you asked…

          • dean

            Steve, in a recent interview Ron Paul was asked a similar question on pollution and said the damaged party could just sue the polluter, thus we don’t need the EPA. Of course, this means we would still need a law that made pollution an offense, and we would need a lot of experts to argue it out in court. It also gets dicey if I try to sue my neighbor for driving a Hummer that is warming the planet.

            Also, suing after the damage is done is a poor solution. See Erin Brokovich or Civil Action for great examples.

            As for “natural rights,” I don’t believe there is any such thing. I think what we have is a constantly evolving set of relationships among people within and between societies. Our rights are whatever they happen to be at the moment, as provided in our constitution and subsequent laws and court decisions. All subject to change.

            Back to the EPA example for a moment. What if the pollution is affecting your HEALTH to the point where it may shorten your LIFE?

            And it is fine to say just sue the SOBs, but deep poclets can and do declare bankruptcy or can find many ways to to protect their assetts.

          • Steve Buckstein

            Dean, I agree that trying to prevent rights violations before they occur is preferable to suing after the harm has been done, but I don’t want to get into the debate here over what that means in terms of experts, agencies, etc.

            We will again have to agree to disagree on whether our rights are relatively limited and fixed, or ever changing depending on evolving relationships. I would agree that our “entitlements” change as you suggest, but those are not rights as I define them. Just because you may be “entitled” to some benefit provided by government does not mean you have a “right” to it, at least not if that benefit comes at the expense of someone else. You may think this is a distinction without a difference, but it really gets to the heart of the debate over the proper role of government as defined by our founding fathers, the Declaration of Independence and the Constitution. None of which are perfect by any means, but they do a very good job of defining the relationship of government to a free people.

          • dean

            Steve… the founding old white guys (just kidding) created a system that laid out certain principles and rules in order to prevent our nation from lapsing back into the historic norm, which was rule by royalty with varying degrees of parlimentary power. They were people like us, and did a great job for their time. But the system they created included the flexibility for future generations to make changes as needed, like the amendment that created the income tax, the one that gave women the right to vote, and so forth. There is nothing stopping us but our own good sense from repealing the bill of rights for example. The Constitution is a living document, not a stone tablet with chisled commandments.

            I didn’t mention entitlements. But under current law, if one is 65 they indeed have a “right” to social security and medicare, and those benefits do clearly come at the expense of others. Perhaps you mean the SHOULD NOT have that right?

          • Steve Buckstein

            Dean,

            Sorry, but the US Supreme Court ruled in Fleming v. Nestor that there is no “right” to Social Security benefits (see https://www.cato.org/pub_display.php?pub_id=5776). Social Security and Medicare are “entitlements” and Congress can take them away at any time, even after we’ve paid into them for a lifetime.

            I agree that our laws and Constitution change, but I still maintain that terminology is important, and rights should reflect those protections we have from intrusion by others, not those benefits we can only receive by forcing others to provide them.

          • dean

            Steve…that case is not inconsistant with my point. The right to SSI benefits exist only as long as that particular law exists. Since SSI and Medicare are insurance, not personal investment programs, they are only as secure as the next movement conservative administration. So vote Democratic. Property rights” under M37 were lost or curtailed when M49 passed. If Roe V Wade is overturned, the present “right” to an abortion may be lost. It is a dance that never ends my friend.

            I think if I read you right that you have now shifted into a SHOULD argument. You believe certain rights SHOULD not ever be restricted, while others (I presume those not specifically enumerated in the original constitution) can and perhaps SHOULD be done away with. Am I interpreting you correctly?

          • Steve Buckstein

            Dean, I think we’ve devolved into a semantic discussion that is probably not very productive for most readers. I’m making the case that rights are not granted by government, while entitlements are. Rights cannot be done away with by government, but they can be violated by governments, and too often are. At its best, our government should protect our rights, but we are far from that now.

          • dean

            Steve…maybe it is semantics, but I’m trying to better understand the libertarian position. My position is that there is no inherent difference between a “right” and an “entitlement”, because both are granted by law and can be taken away by law. I assume your argument is that certain rights are “inalienable” to use Jefferson’s word. That was stirring poetry, but clearly not true or people would have had those rights and been exercising them for thousands of years before the Declaration.

            Having said that, some of our rights are worth fighting and dying for. Others probably not.

          • Steve Buckstein

            Dean, I see only negative rights as legitimate. Positive rights, or entitlements, are what natural law philosophers label “false” rights. If this were not so, then any government could legitimately take anything from anyone, and give it to anyone else simply by creating a new “right.” Of course, you may respond that government does this all the time, but I’m saying that it shouldn’t.

            And, yes, I do believe that negative rights are “inalienable. Just because people may not have been able to exercise their rights to life, liberty and property for thousands of years before Jefferson wrote the Declaration doesn’t mean that they did not exist.

            Let me quote three paragraphs from one of libertarian philosopher Tibor Machan’s articles, since he is more articulate on these subjects than I am.”

            “Natural rights—or, as they have been un-euphoniously dubbed, “negative rights”—pertain to freedom from the uninvited interventions of others. Respect for negative rights requires merely that we abstain from pushing one another around. Positive rights, by contrast, require that we be provided with goods or services at the expense of other persons, which can only be accomplished by systematic coercion. This idea is also known as the doctrine of entitlements; that is, some people are said to be entitled to that which is earned by other people.

            “Positive rights” trump freedom. According to this doctrine, human beings by nature owe, as a matter of enforceable obligation, part or even all of their lives to other persons. Generosity and charity thus cannot be left to individual conscience. If people have such positive rights, no one can be justified in refusing service to others; one may be conscripted to serve regardless of one’s own choices and goals.

            ”If positive rights are valid, then negative rights cannot be, for the two are mutually contradictory. So the question is: which concept is the more plausible in the context of human nature, of how the issue of rights arose, and of the requirements of surviving and flourishing in a human community?”

            Source: The Perils of Positive Rights
            By Tibor R. Machan
            https://www.fee.org/publications/the-freeman/article.asp?aid=2993

          • dean

            Steve…thanks for the clarification.

            So any exercise of a “negative” right makes “positive” rights moot?

            I find that a striking presumption. Here we live in a world that has a growing number of democratic nations, not a single one of which has only “positive rights” as defined by Machan, and ALL of which have varying degrees of both “negative” and “positive” rights. So clearly in the real world these mutually contradictory rights do seem to co-exist. Doesn’t this give you some cause to reflect on your ideology?

            And here in the US, arguably the stingiest advanced democracy with respect to granting “negative” rights, and not much political prospects for further erosion of those rights that do exist. Doesn’t it make you wonder just a bit? I would think a sharp analytical mind like yours could not tolerate the obvious contradictions.

          • Steve Buckstein

            Dean,

            No, the fact that “negative” and “positive” rights do co-exist in the real world does not make me reflect on my ideology. Again, I think it’s a semantic issue. I don’t think Machan is saying that any exercise of negative rights makes positive rights moot; he’s saying that positive rights are not rights at all. They may be entitlements, enforced by government, but they are not rights as he and I believe they should be defined.

            Obviously, many people, probably including you Dean, do want to believe that positive rights are legitimate rights; I simply disagree. If it were true, then the very term “rights” would be deluded to the point that anything a government wants to take from one person and give to another becomes a legitimate right. I’m simply not willing to grant that assumption.

          • dean

            Steve…thanks for clearing up your position. Even we old diehard social liberals can stand more education now and then.

            Its not that I “want to believe” that positive AND negative rights are both equally legitimate. Its that this is in fact the case. Laws are passed, signed, and tested in court continuously. That is where the game is played, not in anyone’s ideal world. In this country, it is “legal,” hence ‘legitimate,” for the government to take more from the rich, less from the middle class and poor, and to help even out opportunities and outcomes for both ethical and practical reasons.

            I accept that you would prefer this would not be so. Again Steve, thanks for the high minded dialogue.

          • Steve Buckstein

            You’re welcome Dean. Of course you’re correct; the game is played in the arena of laws and courts, not in anyone’s ideal world. But not all laws are moral, or good for society, even if your definitions and mine may differ.

            I’m sure we’ll have the opportunity to test these positions again in the future.

  • Bad Boy Brown

    Lte’s get back to the subject at hand – mainly our PATHETIC EXCUSE FOR A GOVERNOR. Talk about a complete lack of leadership. Not only is Ted little more than an empty suit; but he is morally corrupt and unqualified to hold such a high public office given his long time cover-up for Oregon’s best known child rapist.
    His constant bending over for his union masters is truly an insult to the citizens of Oregon.

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