Outlaw Water Main Breaks

It would seem that elected officials in Boston aren’t satisfied with altering the laws of men; they also would like to change the laws of nature.  And stuff.  So I offer them this unsolicited advice:

Stop nibbling at the edges and just legislate away water main breaks.

It would appear that when the water main broke up there in Boston, the city’s drinking water became, well, undrinkable.  And because people often desire drinkable water, the demand for bottled water sky rocketed.  And just like a market is supposed to do, the price for bottle water sky rocketed as well.  Or at least it tried too.  See, the States leading elected officials stepped in and put an end to the perfectly normal and natural response to a spike in demand.  The AG of Massachusetts as well as the Governor, issued warnings that price gouging would not be tolerated and those that were found to be in violation would be punished.

“We have begun hearing anecdotal reports of the possible price gouging of store-bought water,” Coakley said in a statement. “Businesses and individuals cannot and should not take advantage of this public emergency to unfairly charge consumers far beyond what they would typically charge for water. Our office will be sending out inspectors to review reports of price gouging and also conduct spot-checks of local businesses to assure that consumers are being protected. If we discover that businesses are engaging in price gouging, we will take appropriate legal action.”

The ignorance is staggering.

Consider this fact:  There is not enough bottled water for the whole of the Boston metro area to have as much as they would like.

What are we to do?

We could mandate that prices remain at the previous demand level.

We could allow prices to rise to the level that the market demands.

In one case we have massive over purchase in attempts to hoard water.  This method has the unintended consequence of making the situation worse; in the fear and hysteria, people will purchase more water than they otherwise need.

Or, in the other case, price would rise to the level that people would naturally self regulate their purchasing.  Further, higher prices would ADD to the supply of the water by:

  1. Forcing people to drive to other nearby water sources thereby increasing the geography of the supply.
  2. Creating a moment of arbitrage whereby clever and industrious entrepreneurs would buy cheap water of there and bring it to those folks who need it over here.

Of course, by assuming that they could change the laws of mathematics, the good Govn’a and AG simply felt that they could “legislate morality” and kept the price artificially low.  And guess what?  The water ran out and many many people who wanted water had to go without.

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3 responses to “Outlaw Water Main Breaks

  1. I wonder if the same applies to the price of gasoline… See, it was the fault of BP and nobody else that millions of gallons of oil are spilling into the Gulf of Mexico. But, rest assured, it will be the consumer who will pay for this so called “lack of supply”? Is this my responsibility to pay for their mistake? Is this how the market supposed to work?

    • I wonder if the same applies to the price of gasoline

      Why would you wonder about that? Of course it does.

      But, rest assured, it will be the consumer who will pay for this so called “lack of supply”?

      Yes. If there is a lack of supply, the consumer will pay. In fact, even without a lack of supply, the consumer could pay as the price of gasoline is driven up by the “anticipation of lack of supply”.

      Is this my responsibility to pay for their mistake?

      No, it is not your responsibility. You may choose to purchase less gasoline. But you will certainly pay the going price.

      How else would you like it? Can you imagine how many rigs would be drilling for new sources of oil if the government mandated that the price of gasoline could not match the “cost” of obtaining that gasoline.

      Is this how the market supposed to work?


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