Lawmakers tell FTC to Define Price Gouging

What would the Congress be up to next;

“In a measure passed overwhelmingly by the House this week, lawmakers proposed penalties for price gouging -- to $150 million for wholesalers, $2 million for retailers and two years in jail for either -- and ordered the Federal Trade Commission to put a stop to it. The House measure also called for the FTC to define price gouging....

"Many economists cringe when they hear politicians talk about price gouging," said N. Gregory Mankiw, an economics professor at Harvard University and former chairman of President Bush's Council of Economic Advisers. "To economists, the price system is central to how market economies allocate resources. Sometimes prices need to rise to balance supply and demand, even if that outcome is politically unpopular."...

"Beyond this, all is the fog of bad and devious legislation," said William D. Nordhaus, a professor of economics at Yale University. He said that for the FTC to come up with a price gouging definition "will presumably involve rule-making, which will require all kinds of cost and benefit inquiries, and will not emerge until after the election, or even after gas prices have declined."

This might fit the criterion for ‘Bad Economics’, a book idea David Friedman is contemplating;

“I have an idea for a book, although I'm not sure if I will write it. The title is "Bad Economics." To write it, I make a large collection of examples of economic errors--get rich quick schemes, news stories, political speeches, et. al. Then explain why they are wrong and in the process teach the relevant principles.

Any opinions on whether it would work? If you like the idea, feel free to contribute examples of bad economics, either as comments to this post or as emails to me. And if you happen to find bits of good economics by non-economists with good economic intuition, send them in too--I'm thinking of a short bit at the end of each chapter labelled "Diamonds from the Dungheap."


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This page contains a single entry by Paul published on May 7, 2006 2:49 AM.

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