The N.C. Republican Party is generally considered the most free-market option for voters in this state. The party sets forth its free-market bona fides in their 2022 party platform, specifically Article II, entitled, “The Economy.” Article II states, among other things, that the party supports capitalism and free-market solutions for societal issues. It also states that economic freedom is essential to human liberty and dignity, so government must provide an environment for individual initiative and enterprise.
I couldn’t agree more, which is why I am continually baffled that the free-market party in N.C., the majority party in the N.C. legislature, doesn’t do more to repeal anti-free-market laws. One such law is N.C.G.S. 75-38, our state’s “price-gouging” law. This law was enacted in 2003 under a Democrat-controlled General Assembly, yet the GOP-controlled General Assembly has made no changes to the law since becoming the majority party back in 2010.
The bad economics of “price-gouging” laws have been covered by far better minds in past editions of Carolina Journal (Dr. Roy Cordato, Jon Sanders, Brian Balfour, and John Trump to name a few). We are also fortunate in this state to have some great economists, like Dr. Mike Munger at Duke, Dr. Mark Steckbeck at Campbell, and Dr. Matthew Metzgar at UNC-Charlotte, who have opined against “price-gouging” laws elsewhere, so I don’t want to dwell on the economics of this issue.
Our state’s “price-gouging” law ostensibly acts to prohibit unreasonable price increases for goods or services during a declared state of emergency. What the law accomplishes in practice is placing arbitrary price ceilings on certain goods/services that result in shortages due to prices not acting to curb consumer demand. The law also encourages the Attorney General to turn citizens against each other by actively soliciting consumer complaints on social media. Does everyone recall the Great Toilet Paper Shortage in 2020?
This and every other shortage during declared states of emergencies — whether of generators, ice, hotel rooms, fuel, etc. — is almost always a direct result of our state’s “price gouging” law. If this law was repealed, prices would be allowed to be raised during declared emergencies and good/services would be rationed according to the needs of consumers and not the whims of politicians.
So, then why does the pro-free market N.C. GOP, the majority party in the General Assembly since 2010, not take any action to repeal such an anti-free-market law like N.C.G.S. 75-38? Because, the political reality is that elected officials don’t tend to waste political capital on items that don’t further their chances at re-election. Even though this law harms the general public during every declared state of emergency by encouraging hoarding, the general public unfortunately prefers security over economic freedom, and politicians gladly shift the blame for shortages to greedy corporations instead of themselves.
Republican leaders would rather take credit for the latest poll listing N.C. as one of the top places to do business than to repeal a law that actually harms businesses and consumers alike and risk economically ignorant campaign attacks by Democrat opponents. It’s easier to maintain the status-quo than to take a principled stand against a law like N.C.G.S. 75-38 in accordance with your party platform when only a handful of economic cranks statewide are calling for its repeal. (And while we’re on the subject of free market solutions in accordance with the GOP platform, when are GOP members of the general assembly going to seriously work to abolish the state controlled monopoly on liquor sales in NC??)
But, while the GOP members of the General Assembly focus their efforts elsewhere, Josh Stein, our state’s Attorney General and leading Democrat contender for governor in 2024, will continue to use the “price-gouging” law as a way to campaign as a champion for consumers on twitter and during press conferences. Don’t believe me? Just do a quick search on twitter for @joshstein_ and price gouging.
If the free-market GOP can’t be convinced to repeal a harmful law like N.C.G.S. 75-38 by reasoned arguments from some of the brightest economic minds in the state, then maybe a shameless political appeal will do the trick! Take away Josh Stein’s ability to pander to voters about protecting consumers from “price gouging” in the upcoming 2023 legislative session by repealing N.C.G.S. 75-38 before he’s elected our next governor in 2024!