Like most Americans these days, Representative Waters is upset about the price at the pump. The difference, of course, is that unlike most Americans, Maxine is not afraid to send armed men to take ExxonMobil’s property from them by force if need be, whereas you or I would probably just decide to ride the bus or maybe work from home once in a while. But then again, you and I understand a thing or two about supply and demand. “Marxine” Waters, on the other hand, relies on a number of simplistic economic fallacies to get her through the day.
Clearly, Ms. Waters believes that “the people” have “a right” to gasoline at what she considers to be a “fair price.” I’ve covered the positive rights nonsense in this column before, so I’ll just skip ahead to today’s lesson. Although I’m not sure she would be able to use the term in a sentence, what I think “Marxine” is really saying about the high price of gas is that it reflects what is known in anti-capitalist circles as “market failure.” (Somebody check with Guinness – I think I just set the record for most sarcastic quotation marks ever used in a single paragraph…but I digress).
According to Wikipedia, the term “market failure” refers to the condition in which the allocation of goods and services by a free market is not efficient. The Economist offers an even better definition:
“When a market left to itself does not allocate resources efficiently.
Interventionist politicians usually allege market failure to justify their
interventions.”
That’s really what we have here – just a mindless, thuggish politician alleging market failure in order to justify a destructive power grab. And it’s not exactly the first time this has happened, either.
Take the subprime mortgage crisis, for example. Just a few years ago, government bureaucrats like now former HUD Secretary Alphonso Jackson were claiming market failure because mortgage companies weren’t lending to people with bad credit, little savings, or very low income. Clearly, this was a problem that demanded a government solution! And what was the solution? To force mortgage companies to lower their lending standards and to encourage the Fed to pursue a policy of loose money. Now that the whole house of cards has come crashing down hard on those people who were “helped” by the government “solution,” though, all talk of the previous government intervention that sparked the crisis in the first place has been quietly swept under the rug, and is not mentioned in polite society. Had the market been allowed to operate freely, of course, the people least able to afford adjustable rate mortgages would not have received them in the first place. They would have remained renters until they were able to shore up their finances, and would not now be in danger of losing their homes and whatever little equity they might have.
