The recent water main break caused a so-called shortage of H2O in the Hub. Of course, there was no shortage. All people needed to do was boil their tap water for one minute making it then safe to drink. However, the scare mongers in the media combined with the drama queens in the city who immediately ran out and bought up all of the bottled water.
The Pols quickly pointed to businesses that raised prices as “price gougers.” Governor Patrick said,
There is never an excuse for taking advantage of consumers, especially not during times like this. I have asked our Division of Standards to closely monitor the situation so that we are protecting consumers.
He must have missed his Economics 101 course that described the role prices play in regulating supply and demand. Although some stores did raise prices, most did not and the result was empty shelves.
Water which was sold at the normal price was quickly sold out. Think of what an increased price might do. Since water is now scarce, or at least more valuable to many consumers, buyers are looking to stock up. At the regular price this is no hardship to consumers but since demand is up businesses have not had time to react by increasing inventory. This is where prices come in. By raising the price of a six pack of gallons from the normal $8 to $20 buyers are not so quick to overstock leaving more for other buyers.
This is basic supply and demand but the demagogues in the government and the media are happy to highlight the “greedy” opportunists. They don’t realize that by raising prices to a level that regulates demand the business is providing a service. If they raise the price too high people will adjust their habits. Maybe they will buy soda or milk, or just boil tap water.
As Thomas Sowell notes, “But facts are not nearly as exciting as rhetoric — and the role of most political rhetoric is to be a substitute for facts.”