Censoring Pleas For Help Essay

This essay has a total of 956 words and 4 pages.

Censoring Pleas For Help

In the article "Censoring Pleas for Help", Dwight R. Lee talks about government price
controls. The author likens government price controls to government censorship, arguing
prices are how markets communicate with one another. The example used to demonstrate this
point is the price regulations the government enforces after a natural disaster, freezing
prices on such items as labor, construction materials and basic necesities. However, the
article demonstrates later how these regulations, while seemingly in place to help protect
consumers (in this case disaster victims), actually hurts them. While the intent of the
"price gouging laws" is good, they actually do more harm than good. By controlling the
prices of these materials, these laws limit the supply of these materials and effectively
stop the free market from communicating its increasing demand. Further more, these laws
seem to go against the very idea of a free market.

The free market communicates by the fluctuation of prices as the market deals with
shortages and surplus until an equilibrium point is found where the price of an item
generates an equal amount of quantity supplied and quantity demanded. If the price falls
below this point, quantity demanded is greater than the quantity supplied and there is a
shortage in the market. This causes the price to rise, and with it the quantity supplied.
As the price rises, the quantity demanded falls. Eventually it reaches the equilibrium
point. If the price rises above the equilibrium point, there is more of a quantity
supplied than a quantity demanded and that will create a surplus. This causes the price to
lower, increasing the quantity demanded and decreasing quantity supplied until it reaches
equilibrium again. The market depends on these fluctuations in price for communication
between suppliers and consumers. With out this communication the market would be in chaos.
Suppliers would not know how many products to supply and consumers would have no way to
inform suppliers of their wants.

These laws misdirect the flow of supply by not allowing the increasing demand for these
items to be reflected in the market as an increase in price. This can be demonstrated by
looking at a graph representation of the supply and demand curves relative to construction
materials. Before the natural disaster struck, the market for construction materials was
at its equilibrium price point of Fifty dollars. There is no surplus or shortage of goods
at this point. However, after the natural disaster strikes, the demand increases, shifting
the demand curve to the right. Since there is a change in demand, at the current price
there is not enough supply to meet current demand. This shortage would normally cause the
price to raise and the higher the price, the greater the quantity supplied. This is how
the market communicates its need for more construction materials after the disaster. With
the government enforcing price controls, the price cannot rise, even though there is a
greater demand for the materials. Since the price does not rise, even though demand has
risen, there is a shortage of supply in the market. A shortage normally would lead to an
increase in price and supply to meet the rising demand for an item, but in this case, no
such price rise and subsequent rise in the quantity of the supply follows due to the
Continues for 2 more pages >>