This is the Cato Daily Podcast for Monday, July 18th, 2022.

I'm Caleb Brown.

As the pandemic began to wane and inflation took hold,

Senator Elizabeth Warren saw something, record profits among some

corporations. Her conclusion, the federal government must crack down on price

gouging. Cato's Ryan Bourne details why Warren is sadly mistaken.

Whenever we have a natural disaster, a lot of state attorneys general say, well, you better look out folks.

I'm going to be looking for price gougers. You may not take

advantage of this horrible disaster in order to turn a quick buck on things like lumber, water, ice, and other sort of basic necessities that might get knocked

out, or the supply chains might get knocked out after a natural disaster.

And those, we can argue about those, but for the most part,

there I know it when I see it, right?

Different states have different anti-price gouging statutes in the way that they work and in effect they try and dissuade companies from

raising prices by a high degree during emergencies through the threat of fines or other legal action against the firms.

Now this is all predicated on the idea that price rises in emergencies are kind of unfair,

they're immoral in a certain way, but you know if you're

an economist thinking about the allocation of resources what we're worried about is what

the actual impacts of these statutes will be on the availability of goods and services and the simple

fact is that prices in a market economy tend to only rise sharply for two reasons.

Either there's been a massive increase in demand or there's been a massive

contraction in supply and in both of those kind of instances the price mechanism helps allocate products such that those who value the most,

those who really, really need them,

...