Livingston Today

A complaint about government-imposed price controls that result in shelves emptying more quickly during an emergency has led an American economist, speaker and author to explain how grocery stores are affected by price controls in a time of crisis.

The complaint was due to a price-gouging incident that happened on March 8 in Dearborn, according to the Michigan Department of the Attorney General. 

“Everyone is afraid of the COVID-19 coronavirus. There [is] no more hand sanitizer in large retailers and small stores. All stores were out of stock. However, the Dearborn Fresh supermarket was selling an 8 oz. hand sanitizer for a price of $10. This is clear price gouging during this panic. $1 hand sanitizer is now $10. They are causing consumers to panic. This is illegal and against the law. Please look into this matter as soon as possible. Truly inhumane and no regard for the people," the complaint read, according to Michigan Capitol Confidential.

The Milton Friedman Distinguished Fellow at the Foundation for Economic Education, Antony Davies, said this isn't a great argument against the government-imposed price controls.

“A price is not a lever that one throws so as to alter reality,” Davies told Michigan Capitol Confidential. “A price is a metric that responds to a reality that already exists. The store does not cause people to panic by raising the price of hand sanitizer. The store raises the price of hand sanitizer in response to the fact that people are panicking.”

He said consumers who complain and don't like the higher prices that an emergency brings about are being shortsighted and selfish. 

“They aren’t thinking about their neighbors or the poor. They are annoyed that they have to pay more than they’d like,” Davies said. “How do I know this? Because the people who are most upset that the store is charging a high price are the people who are fortunate enough to show up at the store while there is still product on the shelf. These people stand there looking at a bottle of hand sanitizer and become outraged that they will have to pay $10 when they would rather pay $1.”

Davies said in his email that if stores were forced to sell hand sanitizer for $1, the shelves would simply be empty.

“If we force the store to charge $1, these people will show up and see a $1 price tag but no hand sanitizer. Why is there no hand sanitizer? Because the selfish people who got there first, demanding that the price be held at $1, bought it all,” Davies explained.

He also said that anti-price gouging laws ultimately would be choosing between a $10 bottle of hand sanitizer or no hand sanitizer on the shelves.

"When we outlaw price gouging, only a small group of privileged people get $1 hand sanitizer. Everyone else gets nothing," Davies said.

The Attorney General said the Dearborn complaint was one of many similar complaints about prices rising due to the pandemic. There were approximately 1,600 complaints in the state related to price gouging, according to Michigan Capitol Confidential.