FTC: Price Gouging is Awesome!

Today the Senate brought in representatives of all 5 of the major oil companies to explain why they're making historic record profits at a time when consumers are forced to pay historic record prices. I found it interesting that gas prices tumbled this week almost as soon as the Senate announced these hearings. It was almost like the jig was up. But some people still wish to carry water for price gouging.

In this AP story, "Oil Company Execs Defend Huge Profits" (wrong word: hoard, not defend), the chairman of the Federal Trade Commission made one of the most stunning statements I've ever seen in print. Head-snapping-off-your body kind of stunning.

The head of the Federal Trade Commission said a federal price-gouging law "likely will do more harm than good."

"While no consumers like price increases, in fact, price increases lower demand and help make the shortage shorter-lived than it otherwise would have been," FTC Chairman Deborah Platt Majoras told the hearing.

This is the exact same kind of logic John "Raging Lunatic with a Porn Moustache" Stossel made in this memorable Townhall column called, yes, In Praise of Price Gouging.

Consider this scenario: You are thirsty -- worried that your baby is going to become dehydrated. You find a store that's open, and the storeowner thinks it's immoral to take advantage of your distress, so he won't charge you a dime more than he charged last week. But you can't buy water from him. It's sold out.

You continue on your quest, and finally find that dreaded monster, the price gouger. He offers a bottle of water that cost $1 last week at an "outrageous" price -- say $20. You pay it to survive the disaster.

You resent the price gouger. But if he hadn't demanded $20, he'd have been out of water. It was the price gouger's "exploitation" that saved your child.

It saved her because people look out for their own interests. Before you got to the water seller, other people did. At $1 a bottle, they stocked up. At $20 a bottle, they bought more cautiously. By charging $20, the price gouger makes sure his water goes to those who really need it.

The people the softheaded politicians think are cruelest are doing the most to help. Assuming the demand for bottled water was going to go up, they bought a lot of it, planning to resell it at a steep profit. If they hadn't done that, that water would not have been available for the people who need it the most.

Of course, the storm-ravaged residents of New Orleans can simply go to their emergency "giant pile of $20s" they left in the Superdome for safe keeping. And by only giving their money to the price-gougers, the survivors make sure their cash only goes to the businessmen that really need it.

I love "at $20 a bottle, the bought more cautiously." It's not, "at $20 a bottle, they didn't buy and their child died of dehydration." Does this guy inhabit some distant planet where everyone has endless means in every scenario? Maybe, if he belongs to a country club.

Now, Stossel is obviously a crackpot. That's why he's had such a long and distinguished career in the mainstream media. But this isn't some nonsensical columnist playing loose with economic numbers and forgetting about the people involved. This is the CHAIRMAN OF THE FTC.

And who is she? Well, according to Sourcewatch, as a lawyer at DC firm Jones Day she was a personal counsel for Chevron Texaco. Ron Wyden of Oregon actually put a hold on her nomination for this reason, which the President sidestepped with a recess appointment in August 2004. Here was Wyden's reaction to Majoras' ridiculous statement:

"That's an astounding theory of consumer protection," replied Sen. Ron Wyden, D-Ore.

This is deep into wingnut territory, suggesting that price-gouging makes everybody happy. And it's coming right out of the halls of the FTC.