When Hurricane Charley pounded Florida, thousands had to evacuate their homes, while those who stayed had difficulty getting basic supplies such as food and gasoline. As a result, The New York Times reported, “officials say a wave of price gouging has swept across central and southwest Florida, putting law enforcement officials into high gear and infuriating storm victims already faced with damaged homes, shuttered workplaces and long lines for basic commodities.”
According to state statute, “price gouging” occurs when, during a state of emergency, the price charged for a “necessary” good or service exhibits a “gross disparity” with the average price of that good or service before the state of emergency was declared. The state has posted a Web site to draw attention to the crime and its $1,000 fine, and Attorney General Charlie Crist has filed lawsuits against two hotels.
Such a law seems rather sensible, and it is difficult to imagine anyone opposing it. As Americans, however, one would think that our general approbation for the free market might ensure widespread opposition to such a law. Adam Smith would tell us that, if Floridians do not want to pay $10 for a bag of ice, then they would not do so. At that point, if others can produce ice for less, they will. People will buy the cheaper ice, and eventually more people will have ice at a lower cost. Instead of passing a law, Smith might have said, Florida’s citizens should have made their will known through the market — by refusing to buy the overpriced ice.
But in enacting their price gouging law, Floridians not only rejected this reasoning, but affirmed a long-standing American trend: When suspicious of the market, they turned to their government.
In 1890, people were concerned that Standard Oil’s control over the market had become too great, and Congress enacted the Sherman Anti-Trust Act.
By 1935, it was apparent that market forces could not ensure all Americans a job, much less a safe retirement, and we passed the Social Security Act. United States citizens have proven themselves willing to restrain market forces in order to create the minimum wage and public schools, and to forbid racial discrimination in employment and housing. In short, the American system of democratic capitalism relies as much on a willingness to use government to alter market outcomes as a respect for market principles.
Today’s era is one in which Americans are particularly enamored with free-market rhetoric. In his 2000 “One Market Under God,” Thomas Frank diagnosed this outlook as “market populism.”
According to this idea, which had its heyday in the 1990s, markets, “in addition to being mediums of exchange … were mediums of consent … markets conferred democratic legitimacy; markets were a friend of the little guy; markets brought down the pompous and the snooty; markets gave us what we wanted; markets looked out for our interests.”
Though the bursting of the dot-com bubble has reined in the most exuberant expressions of market populism, one need look no further than President George W. Bush’s attempt to fix the public schools with vouchers, or Social Security through private investment accounts, for evidence that it still has powerful adherents in the political sector.
Today, the market is doing little for middle- and working-class Americans. It encourages growing income inequality, sending of jobs overseas, media consolidation, dependence on Middle Eastern oil and escalating environmental damage. Many Americans today need a number of things the market will never provide: A living wage, quality public schools and day care, a stable and affordable health-care system and the hope for a comfortable retirement. Perhaps now is a time to think seriously about a movement to empower government to protect its citizens from some of the excesses of the market, as did those citizens in Florida.
n Mike O’Connor, Daily Texan, University of Texas.