The market as the great equalizer, part II

Don Boudreaux continues to lay some logic on the "gouging" meme by pointing out that rich people are rich not only because they have a lot of money, but because they have social connections and status.

In brief, the wealthier someone is, the less likely he is to care much one way or the other about prohibitions against price gouging. (Indeed, I can make a strong case that wealthier people have a special incentive selfishly to endorse restrictions against price gouging: Bill Gates might well be even wealthier than Joe Sixpack in influence and connections than he is in money terms. If so, restrictions against price gouging will increase Gates’s advantage over Mr. Sixpack at acquiring suddenly-scarcer goods and services. Mr. Sixpack might have only a few dollars to spend, but he might have absolutely no special connections to cash in on.)

Eliminating the price mechanism cannot eliminate scarcity, it just removes information. It means that resources will be allocated by non-price means, and with no additional guarantee that the distribution will have any more relation to desert than through price-based allocation.

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