Wednesday, September 07, 2005

Sued Again

Eliot Spitzer has been sued again. I'll let Will Wilson of AEI's AG Watch fill you in:
The Attorney General of the State of New York, whose New York Post name is “The Spitz,” has had another suit brought against him. General Spitzer, like worsening dyspepsia, has been festering against J & W Seligman since 2002. Seligman cooperated until Spitzer’s compliance demands became despotic; Spitzer’s requirements of Seligman amounted to, as the Wall Street Journal paraphrases the suit, “effectively turning over control of the negotiation of advisory fees to an outsider and subjecting the negotiation process to the oversight and control of Mr. Spitzer’s office in perpetuity.”

The sole issue of the complaint is Seligman’s advisory fee. But the suit’s descriptions of General Spitzer are redolent of vain timocrats and heavy-handed intimidators resurrected from Mausoleum Immemorial. By the text of the complaint, Mr. Spitzer breaches the Investment Company Act of 1940 and encroaches on the jurisdiction of the SEC; between the lines of the complaint, Mr. Spitzer breaks the propriety of decent governance and trespasses the ethical boundaries of power.

Lest hopes be raised that Spitzer’s inofficiousness is rare, today’s Journal also brings Hans Bader’s response [fourth letter from the top] to NAAG’s August 31 letter to the editor. For their part, NAAG co-chairs Tom Miller and Lawrence Wasden defend the evidence that cigarette consumption has decreased since the Master Settlement Agreement took effect—which would have resulted from any tax-driven price hike. As Bader rejoins, they miss the point: whatever has taken place since the MSA, the Agreement allies government to a segregated selection of businesses, specifically, Big Tobacco. Manufacturers not party to the MSA suffer the yoke of NAAG’s codified favoritism. If such rich-over-poor discrimination were enacted in the personal sphere—a civic-fisted “seat’s taken” to those without a gold-plated bus pass—one could imagine the outrage.

Nascent outrage dissipates because Spitzer and Co. attack citizens covertly and their ill-spent bravado spreads infectiously: brutish and unjust assaults on particular companies receive applause, while we the consumer pay dearly.
[WSJ links requiring subscription omitted.]

Is Eliot Spitzer good for America?

That is the question that will be answered tomorrow:
On Thursday evening, Sept. 8, at the Cornell Club in NYC (6 E. 44th), Prof. Richard Epstein will be debating former Maine attorney general James Tierney on the subject: "Is Eliot Spitzer Good for America?" The sponsor is the Federalist Society New York Lawyers' Chapter, and the moderator is Mark Smith, author of "The Official Handbook of the Vast Right-Wing Conspiracy". Reception at 6, debate at 7; contact Mark Schuman at (212) 578-9043.
If I was still in New York city I would certainly attend...

Of course I already know the answer!

Tuesday, September 06, 2005

Spitzer against Price Gouging/Spitzer for Gas Rationing

Last week Spitzer issued a press release stating that he would be prosecuting any gas stations found to be engaged in "price gouging."
Under the New York State General Business Law, price gouging has occurred if "the amount charged represents a gross disparity between the price of the goods or services...and their value measured by the price at which such consumer goods or services were sold or offered by sale..." Violations of this law are punishable by civil penalties of up to $10,000, and where appropriate, restitution to the aggrieved consumers.
But how then, with raised prices being outlawed, should gas stations respond to the increased demand caused by the decreased production and increased consumer demand caused by Katrina. (I should note the Spitzer is far from the only politician guilty of this. He should be held accountable, however, because he claims to be such a pro-capitalism Attorney General.)

But as pointed out in this article, all "price gouging" really represents is the market rationing gas by demand. The only alternative to price gouging, and one that Spitzer isn't talking about, is rationing like they had during the oil crisis of the late 70's.
About 12 percent of the nation’s refining capacity has been damaged and the pipelines that deliver fuel from the Gulf Coast are still mostly offline. Oil companies are carefully rationing what they have and are uncertain when the flow of gasoline from refineries might return to normal. Meanwhile, panic is driving up demand as motorists line up for gasoline out of fear that it might be a lot more expensive -- or perhaps not even available -- tomorrow. Some communities are literally seeing the pumps run dry.

So, how should we ration our limited pool of gasoline? In a free market, scarce goods are typically rationed by price. People who value gasoline most are willing to pay higher prices than those who value it less. The former get the gasoline -- the latter to some extent go without. Allocating resources to those who value them most is one very important reason why our economy outperforms economies where resources are allocated by political action...

Price controls are offered as a means to cushion the blow on the poor and to ensure a more equitable distribution of fuel.

Price controls, however, come at a cost. Lower prices result in more demand for fuel than do higher prices. That’s why the first thing we notice about price controls is that they lead to shortages. Price to the left of the intersection of the supply-and-demand curve and you are guaranteed to vaporize whatever you are attempting to keep inexpensive.
Shouldn't then Spitzer be honest with New Yorkers about what his crackdown on so-called "price gouging" really is.