Laws Against Price Gouging Immoral
By Andrew Bernstein
Tommy Thompson, secretary of the U.S. Department of Health and Human Services was wrong to exhort the 50 state-attorneys general to zealously prosecute "immoral price gougers" of limited flu vaccines.
Mr. Thompson's exhortations violate a fundamental moral principle as well as an economic one. Morally, an individual has the right to ask any price he wants for a good or service he owns--and a buyer has an equal right to refuse that price. In a truly free society, the government is not granted the power to dictate to sellers and buyers the terms of a sale. Such power is found in dictatorships, not in nations that respect individual rights.
When prices are free to rise, producers in a capitalist economy are motivated to create a greater supply. Since they can now make more money from sales of the product, it is in their self-interest to get more of it to market. On the other hand, restricting prices of a good not only violates the rights of sellers and buyers, it inevitably leads to shortages of the particular good "protected" by the government's policy.