Public Service Announcement for Californians -- State of emergency declared.

in price •  5 years ago 

Gov. Gavin Newsom declared a state of emergency on March 4th. Under CA law, prices of certain goods and services (including food, toiletries and emergency supplies) cannot increase by more than 10%.

Price controls like these are known to cause shortages. When demand for a good increases, the price must also increase to ensure that suppliers will sell as much as consumers want to buy. By holding the price (close to) the old price, the law encourages buyers to buy more of the product and discourages suppliers from producing more of it. Hence, a shortage. This is ECON 101 material.

This is especially pernicious when the underlying cause of the emergency is a pandemic. With COVID-19 spreading, people should be keeping a healthy distance from each other. But when there is a shortage of goods, everyone rushes to the supply sources at the same time to try to buy what they can while there's still something to buy. And shortages often force people to wait in long lines. This will encourage the spread of the virus. The pandemic in CA will be worse because of our anti-gouging law.

(TL;DR: we're out of toilet paper because of our stupid anti-price gouging law. Also, more people will die because of the law.)

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!