Cafe Hayek: Jason Brennan on Michael Sandel on Queuing

            by DON BOUDREAUX

            Over at Bleeding Heart Libertarians, Jason Brennan summarizes an analysis that he and Peter Jaworski will make in response to Michael Sandel's argument that (quoting Brennan�s interpretation of Sandel�s claim)


            Jason does a nice job exposing some of the many flaws in Sandel�s argument that queuing is more egalitarian than are markets.  Here�s yet one additional problem with Sandel�s argument.  (Jason and Jaworski might well make this additional argument in their larger work.)


            But it�s not the case that for every one-unit decrease in the money cost of acquiring the good that is in short supply there is only a one-unit � an equal-value � increase in the time cost of acquiring that good.  The total amount spent, measured in value, in order to secure a chance of actually acquiring a unit of the good that is in short supply is greater than is the total amount spent if the money price were allowed to rise to its market-clearing (�equilibrium�) level.

            Readers familiar with standard supply-and-demand analysis can picture an effective price ceiling that causes the quantity supplied not only to be less than the quantity demanded, but less than what the quantity supplied would be at the higher, market-clearing price.  That is, the price ceiling makes the good (say, gasoline) less abundant than it would be otherwise.  The marginal value of each unit of the now-lower quantity supplied of gasoline is, therefore, higher than it would be were gasoline�s price allowed to rise to its market-clearing height.  Because the price-ceiling raises the marginal value of gasoline � yet does so in a way that prevents gasoline suppliers from profiting from this higher value � the value of the bundle of nonmony resources (e.g., time) spent by aspiring buyers to maximize their chances of actually acquiring some units of gasoline will rise until it is equal to the difference between the marginal value of the good and the capped money price.  The total amount spent to buy each available unit of the good � the value of the bundle of nonmony resources plus the capped money price � will be higher than would be the total amount spent to buy each available unit of the good in the absence of a price cap.


The total (monetary and nonmonetary) per-unit cost of a gallon of gasoline will be higher if the money price of gasoline is capped than if it is not capped.  In short, price controls raise � they do not lower � the cost of acquiring goods and services whose prices are controlled.

            It might still be the case that people who are especially rich in time will be better able to afford such price-controlled goods and services than they would if the price controls were abolished.  (Although, for other reasons, even this possibility isn�t all that high.)  But make no mistake: price controls meant to lower the cost that consumers in general pay for goods and services do the opposite: such controls raise the cost.




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