I thought I'd check out DimBulb's (Limbaugh's) website to see what he might be saying but I didn't get down too far from the top before I saw a transcript for
"The Laws of Supply & Demand Work But liberals don't believe in them.."
I am so sick of conservatives blindly believing the supposed Laws of Supply and Demand and that it applies to every situtation (while they or their friends make big money) that I thought it would be interesting to point out the fallicies of the moronic unthinking lemmings as they and others tumble over the cliff.
Make the jump with me.
It starts out with Rush receiving an email from a listener (arguing with him).
"Rush, we need those prices frozen. It's gotten way too expensive. You're wrong about this. Freezing gas prices would help!"
And thusly, the logic brainwashed into every conservative since they were two years old, unfolds in the form of Rush's reply...
What do we have here? We have six-dollar gasoline in Atlanta, for example. We've got rumors all over the Southeast and East that they're running out of gas. There isn't going to be any gas. What is this causing? This is causing panic. This is causing people--there were 40 and 50-car lines at gas stations in Atlanta during the afternoon rush hour yesterday, and it's going to be happening all over the place and people are going to be lining up to get gas because they think there isn't going to be any. Okay, in the midst of all that, here comes some brilliant idea to freeze gas prices. Now, two questions. In the context of the existing panic, what is the freeze of gas prices going to do? It's going to cause even more people to head to your local gas station; it's going to lengthen the lines and it's going to cause the gas supply that's already there to evaporate even faster.
And to be fair to Rush, he is partially correct, there was a form of panic but not because of the hurricane (directly). No, I believe its because of the reactionary price gouging that occurred immediately afterwards. Look folks, I know diddly about mainstream (the kind taught in college) economics but if they hadn't raised prices because of speculation, not fact, then maybe there wouldn't have been a higher demand and mini-panic. Even before many gas stations refilled and saw prices raised from wholesalers, the retail gas stations were raising prices. I'll expand on this later.
If you think freezing gas prices is a great idea, Senator Nelson's idea, if you think that's a great idea, if you want to run out of gas twice as fast and sooner than you ever hoped or thought you would, then freeze the price today and you'll find out by Sunday you won't be able to get any. You freeze the price, and it has a market impact, folks. Supply and demand.
But if that were true, then why are stations already running out of gas? They were running out of gas yesterday, there's no need to wait until Sunday or a price freeze. My argument is that had prices remained the same or went up 10 or 15 cents instead of 50 cents, there would not have been a rush to fill up (before prices were raised even further).
If the price is allowed to fluctuate according to the laws of supply and demand, they always work, if meddling hands are kept out of the way. If you just keep your hands off of it and let the price go as it does, there will be an impact, and there will be a reaction, and it will cause less lines, it will cause less panic in the long run than freezing the price, because freezing the price would just compound the problem that exists today because the problem is not price.
But here's where the stupidity of the "law of supply and demand" shows itself. Gasoline isn't a product where people could necessarily do with a lot less of, or with none. It is a product that everyone has to have. The concept of the "law of supply and demand" indirectly states that eventually when the prices get too high, demand goes down. And while demand may drop down slightly, hey people have to get to work. People have to have food and clothing delivered to stores or they won't eat.
And now getting back to a point I was trying to make earlier, Rush's argument that lowering prices (after having raised them dramatically) will cause major panic and gas to run out faster. Let me ask you something, if gas went up 15 cents per day for five days would you rush to the gas station? And if so, what day would you do it on? Everyday? Or, just maybe one of the five days. Well, the answer is most likely just on one of the five days because you would have no concrete evidence that gas prices would continue being raised from day to day. But when you see gas prices going up 50 cents or more in 24 hours....DUH-H-H Maybe, I'd panic and get some more gas before they run out!
On the other hand if you raise prices slowly, people realize that prices have gone up and still have no idea where it will top out, but they don't panic, they start evaluating decisions on maybe conserving or how the extra money for fuel (and eventually any merchandise that is transported) will impact them.
Now, I said earlier, that prices were raised because of speculation and I have no reason to believe that at the time gas prices were raised, that the oil companies, gas refineries, and speculators knew exactly what the impact of the hurricane would be in the short term and long term. Correct me if I'm wrong. As I understand it, we're still finding out today. Maybe, they had enough information to go on a day or two ago but I highly doubt it.
Conservatives love to preach the "law of supply and demand" as the one and true axiom for all situations and all times. I had several discussions with conservatives about how price control is sometimes necessary. For instance, in the presciption drug industry.
Besides the point of americans paying double to quintuple the price for medicine that other countries are paying (which many incidentally do have price controls), drug companies gouge sick people. I used the example of when the first AIDS drugs came out, there were only two or three companies manufacturing the drugs and they were charging outrageous prices to consumers. Meanwhile, other countries were receiving vast discounts on the same drugs. People were dying because of this disparity. Had price controls been in place, many lives would have been saved but that's for another diary.
But my point is the "law of supply and demand" doesn't really work (actually it does if you exclude thousands of sick people dying) in every situation. People died but drug companies got richer. To me, the "law of supply and demand" is a model. A model that can't fit every situation.
Thus, Rush is correct that its the supply that is the current problem (see the transcript). But raising prices isn't going to decrease demand (dramatically). It's only going to make oil companies' profits higher.
Based on all of this information, wouldn't a moratorium on the amount of a price increase per day be better (proposed) regulation than a blanket frozen price? After all, there were moratiums put in place for the greedy insurance companies, after the great depression, to stop policy holders from cashing out their cash value policies. Insurance companies didn't want to see a run on banks (or themselves) again which I believe was the basis for FDIC, so they pressured (lobbied) to get an exemption for themselves.
Didn't we place a moratorium or limit on computer based stock purchasing to limit over reactionary behavior (in selling) to protect the market and ourselves?
Why can't we do the same to the oil/gas industry? And, if a moratorium is passed, then the "laws of supply and demand" become unapplicable and were unnecessary in the first place in regards to gas pricing. If the speculation for an event such as the gulf hurricane's impact on supply is wrong, then very little damage is done to the consumer and economy. And isn't the fact that it takes so long for the market to correct itself after wrongful speculation part of the reason why it takes so long for prices to come down? Why is the market super-reactionary going up but only slighly reactionary going down? We know why. So, that the people in the know can make the most money.
Am I on track here? What do you think?