Prices and Prohibitions

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The
summer is now in full swing, and with it comes the establishment's
annual concern with overburdened utilities. The public is instructed,
in the name of civic duty, to refrain from "unnecessary"
water and electrical usage: Resist the temptation of a weekly car
wash, and do not complain when the office thermostat corresponds
to Dante's third level of Hell. In many communities, these moral
exhortations are backed by government decree, and citizens are urged
to report to the authorities any selfish neighbors who dare violate
the farsighted regulations.

Yet
one question remains unanswered: Why is it that only government
services become scarce during the summer months? After all,
Oscar Meyer does not implore its customers to moderate their consumption,
lest we run out of hot dogs. Budweiser does not restrict the purchase
of beer to odd-numbered days. Swimming pool suppliers with toll-free
numbers do not scold callers with "non-essential" concerns,
and blame them for "clogging" the phone system. Rather
than lament the seasonal jump in demand for their products, private
businesspeople lick their chops in anticipation. As one snack advertisement
put it: "Eat all you want; we'll make more."

One
of the few relevant lessons of Econ 101 is this: When the government
sets an artificially low price for a product or service, the result
must be a shortage. Then the automatic, voluntary rationing performed
by market prices must be replaced by government prohibitions based
ultimately on threats of violence. Goods are not channeled to those
most willing to pay for them, but instead are allotted via a one-size-fits-all
bureaucratic fiat.

The
government monopoly of utilities will be defended on the grounds
that these services are simply indispensable, and as a society we
will not tolerate the reservation of such amenities to merely the
rich. But this is romantic nonsense. Two years ago, as a struggling
college grad in a decidedly ethnic Chicago neighborhood – my former
roommate swears that teens referred to him as "el blanco"
as they drove by – I was in no way aided by Con Edison's contingency
plan to deal with a potential generator failure. The plan called
for "rolling blackouts," which meant that selected neighborhoods
would experience temporary power outages in order to prevent the
collapse of the entire electrical grid. Although the exact details
of the plan were kept secret – in order to prevent premeditated looting – there
was no doubt that the affected neighborhoods would be neither affluent
nor white. My neighbors and I would have been far better off paying
more to a "gouging" private firm than being forced to
"take one for the team" by the ostensibly benevolent Mayor
Daley.

The
supply of usable water or electricity is not a God-given quantity;
it is determined by human beings. We trust private individuals to
provide consumers with hot dogs, beer, and swimming pools, and they
have never once let us down. Can we say the same for the government's
provision of life's necessities?

July
7, 2000

Bob
Murphy is a graduate student in New York City.

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