Censoring Pleas For Help

In the article "Censoring Pleas for Help", Dwight R. Lee talks about government price controls. The author likens government price controls to government censorship, arguing prices are how markets communicate with one another. The example used to demonstrate this point is the price regulations the government enforces after a natural disaster, freezing prices on such items as labor, construction materials and basic necesities. However, the article demonstrates later how these regulations, while seemingly in place to help protect consumers (in this case disaster victims), actually hurts them. While the intent of the "price gouging laws" is good, they actually do more harm than good. By controlling the prices of these materials, these laws limit the supply of these materials and effectively stop the free market from communicating its increasing demand. Further more, these laws seem to go against the very idea of a free market.

The free market communicates by the fluctuation of prices as the market deals with shortages and surplus until an equilibrium point is found where the price of an item generates an equal amount of quantity supplied and quantity demanded. If the price falls below this point, quantity demanded is greater than the quantity supplied and there is a shortage in the market. This causes the price to rise, and with it the quantity supplied. As the price rises, the quantity demanded falls. Eventually it reaches the equilibrium point. If the price rises above the equilibrium point, there is more of a quantity supplied than a quantity demanded and that will create a surplus. This causes the price to lower, increasing the quantity demanded and decreasing quantity supplied until it reaches equilibrium again. The market depends on these fluctuations in price for communication between suppliers and consumers. With out this communication the market would be in chaos. Suppliers would not know how many products to supply and consumers would have no way to inform suppliers of their wants.

These laws misdirect the flow of supply by not allowing the increasing demand for these items to be reflected in the market as an increase in price. This can be demonstrated by looking at a graph representation of the supply and demand curves relative to construction materials. Before the natural disaster struck, the market for construction materials was at its equilibrium price point of Fifty dollars. There is no surplus or shortage of goods at this point.