State legislators in Hawaii got a lesson in capitalism recently. And it’s a lesson that should be shared with the rest of the world. The lesson: supply-and-demand works.
Here’s what happened:
Last year, the citizens of Hawaii were in a state of revolt. Gasoline prices were at an all time high. For a state that already pays the highest prices for just about everything, that was just too much to bear. How could they scoot around on those interstate highways in Hawaii if they couldn’t afford to fill their tanks? Something must be done. The perpetually Democratic Hawaiian legislators were more than eager to act.
So they did what any good blue-state lawmakers would do. They increased government intervention into private market forces. Yep, the way to keep gas prices low was simply to pass laws that put ceilings on the price of gasoline.
But the lawmakers forgot that free-market enterprise is rarely a respecter of idiot laws.
Guess what happened? The price of gasoline went down — yes, down — in the 48 states. The sudden increase of prices had been simply the marketplace reacting to what it perceived to be a supply-and-demand force. Capitalists all over the world knew it would eventually self-correct. And it did.
Except in Hawaii.
What did the gasoline dealers in Hawaii do? They left their prices, uhm, high. Yeah, high. They were scared to death that they wouldn’t be able to raise their prices at a later date. So they refused to lower them. Soon, the state that already was paying the highest prices for gasoline was paying prices that were 50% above the market level.
The legislators were confused. Waitaminnit. How can laws that are supposed to keep prices low actually increase prices?
Last week, after it was determined that their ridiculous policies had actually cost Hawaiian citizens $35 million dollars in excess gasoline costs, the red-faced, blue-state lawmakers hastily and overwhelmingly reversed their previous decision and repealed the law. The marketplace promptly and politely responded with lower gasoline prices.
Here’s a lesson in Economics 101 for all liberal law makers. The definition of a commodity is a product that is so ubiquitous and so homogenous throughout the marketplace that it can only be differentiated by, well, price.
Gasoline is a commodity.
You don’t mess with Mother Nature, Superman’s cape, or a free-market economy.