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Inspired by Hurricane Dorian, I propose the Maximum Temperature Act to stop unconscionable temperature gouging – Publications – AEI

Summary:
AEI Inspired by Hurricane Dorian, I propose the Maximum Temperature Act to stop unconscionable temperature gouging Inspired by recent news reports about the imposition of anti-price gouging laws in Florida, Georgia, South Carolina and North Carolina as Hurricane Dorian approaches and threatens those states, I’d like to propose a “Maximum Temperature Act.” Specifically, couldn’t the government intervene in the market for temperature-reading equipment to counteract unconscionable “excessively high” summer temperatures (“temperature gouging”) just like state governments are now intervening to counteract unconscionable “excessively high” prices (“price gouging”) following natural disasters like Hurricane Dorian? Let me explain, and start with a typical non-economic “Defense of Price Gouging

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Inspired by Hurricane Dorian, I propose the Maximum Temperature Act to stop unconscionable temperature gouging

Inspired by Hurricane Dorian, I propose the Maximum Temperature Act to stop unconscionable temperature gouging - Publications – AEI

Inspired by recent news reports about the imposition of anti-price gouging laws in Florida, Georgia, South Carolina and North Carolina as Hurricane Dorian approaches and threatens those states, I’d like to propose a “Maximum Temperature Act.” Specifically, couldn’t the government intervene in the market for temperature-reading equipment to counteract unconscionable “excessively high” summer temperatures (“temperature gouging”) just like state governments are now intervening to counteract unconscionable “excessively high” prices (“price gouging”) following natural disasters like Hurricane Dorian?

Let me explain, and start with a typical non-economic “Defense of Price Gouging Laws”:

Many residents from Florida to North Carolina have already been impacted by the threat of Hurricane Dorian in recent days, and some of those residents are now being unfairly subjected to further suffering from the unconscionable actions of businesses and individuals who are engaged in illegal price gouging for essential goods like gasoline, bottled water, building supplies and food. To prevent residents from being victimized by ruthless and greedy price gougers, “Florida law bars retailers from boosting prices on ‘essential commodities’ as well as dwelling units and self-storage facilities during a state of emergency, unless the retailer can justify the higher price because of market trends — for instance, if gas prices spiked nationally. Essential commodities include food, water and gas.” Despite those price gouging laws, one Florida gas station was selling 24-packs of water for $9, more than twice the normal retail price, and other stations hiked prices at the pump by $1 per gallon more than the advertised price. Those retailers are now subject to legal prosecution and fines for charging “excessively high” prices in violation of price gouging laws in Florida, and the state’s attorney general Ashley Moody’s office is looking into more than 2,400 reports of price gouging.

Based on the flawed “logic” of anti-price gouging laws presented above, I will now present a “Defense of Maximum Temperature Laws”:

During the summer, many areas of the country are affected by “excessively high, exorbitant temperatures.” For example, Austin, Texas just survived the second-hottest August ever, with 27 of 31 days during the month registering high temperatures of 100 degrees or above. And with many climate alarmists expecting global warming in the coming decades (at least until the world ends in 12 years), something has to be done about this unacceptable situation of excessive heat. Without some kind of government intervention to address high-temperature readings being registered on existing thermometers and thermostats during the summer months, Mother Nature will continually and ruthlessly expose us to unbearable summer conditions of unconscionably high temperatures.

Who among us wouldn’t agree that these excessively high summer temperatures are unfair, unreasonable, unjust, and maybe even “immoral”? To counteract this ongoing weather injustice and Mother Nature’s ongoing lack of concern for overheated Americans, our collective sense of fairness and justice should motivate us to support legislation that will force all thermostats and thermometers sold in the United States to have a maximum, reasonable and fair temperature reading, of let’s say 90 degrees Fahrenheit. As part of my newly proposed Fair Maximum Temperature Act of 2019 therefore, all existing thermometers and thermostats in homes, offices, and businesses will be immediately replaced with new government-approved temperature-reading equipment with a maximum reading of 90 degrees Fahrenheit (see graphic above).

Any temperatures above that maximum (e.g., 100 degrees in Austin) will now be considered unfair, immoral and unconscionable acts of “temperature gouging” and will be outlawed by the Fair Maximum Temperature Act of 2019. Violators will subject to penalties, fines and possible jail time for thermostat manufacturers who continue to sell thermostats with temperature readings above the government-mandated maximum temperature. Further, all news and weather reports, all TV and radio stations, and all newspapers and websites will be prohibited from quoting any temperatures above the federally mandated maximum of 90 degrees F.

If successful, subsequent legislation for a Fair Minimum Temperature Act should be considered for winter months, e.g., a minimum allowable temperature reading of 0 degrees Fahrenheit on all thermostats to control Mother Nature’s unfair and unconscionably low temperatures during the cold summer months, frequently leading to weather-related deaths.

Bottom Line: If the proposed Maximum/Minimum Temperature Laws seem ridiculous, that’s because they are totally ridiculous. And so are price gouging laws equally ridiculous. Setting maximum prices to prevent “excessively high” and “unconscionable” prices in response to Hurricane Dorian with price gouging laws won’t change the underlying supply and demand conditions one iota, and will in fact significantly distort information about those conditions and shortages that are guaranteed to significantly retard the recovery process. The artificially low, government-mandated prices will cause distortions and inefficiencies from Florida to North Carolina because the artificial prices won’t accurately and truthfully reflect the economic reality that supplies of critical goods are extremely low at the same time demand for those goods is extremely high. Price gouging laws create a government-mandated fantasy world with prices that create a complete disconnect between the true measure of a scare good’s value and a fantasy measure of that good’s value.

Likewise, imposing a maximum (or minimum) temperature law would create a government-mandated fantasy world about weather conditions, creating a disconnect between the true temperature (e.g., -20 degrees or 100 degrees F) and an artificial government-mandated minimum or maximum temperature (0 degrees or 90 degrees F). And just like price gouging laws create distortions in areas affected by a natural disaster, so would a maximum (or minimum) temperature law create havoc for Americans, because thermostats would be conveying inaccurate measures of the true temperature when it is extremely hot or cold. Artificially low prices that result from price gouging laws won’t change the true conditions of scarcity in Florida, Georgia, South Carolina or North Carolina any more than artificially restricted thermostats change the true temperature.

When it comes to the weather, what we want is the most precise measure possible of the temperature, and we get those readings from accurate thermostats and thermometers, not from artificial, fantasy readings from instruments regulated by government-mandated minimum or maximum temperature laws. When it comes to maximizing the efficient allocation of resources following a natural disaster like Hurricane Dorian, what we want are accurate, truthful and precise measures of market conditions (supply and demand), and we can only get those measures from market prices, not from artificial, government-mandated price gouging laws.

To address the serious economic disruptions and disaster-related shortages from Hurricane Dorian, we only have two basic choices: a) market prices that accurately reflect true scarcity and market fundamentals (like an accurate thermostat provides the true temperature) or b) price controls that ignore scarcity and market forces, and therefore transmit false information about scarcity (like a thermostat subject to minimum/maximum temperature laws). As cruel as it may sound to those who are long on indignation and short on economics, market forces and market prices will address the disaster-related shortages from Florida to North Carolina more quickly and more effectively than government-determined, non-market based prices that result from price gouging laws.

Related: See my recent CD post “Accurate weather information vs. inaccurate economic information before, during and after natural disasters.”

Inspired by Hurricane Dorian, I propose the Maximum Temperature Act to stop unconscionable temperature gouging
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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