This holiday season, several gasoline retailers found extortion notes from the state AG in their stockings. In Illinois:
Illinois State Attorney General Lisa Madigan asked 18
operators whose prices jumped significantly after Hurricane Katrina to
donate $1,000 to the American Red Cross or risk a potential consumer
fraud lawsuit, reports the Chicago Tribune.
I would define consumer fraud as getting something from a retailer different than was promised. I am not sure how it is fraud if retailers put their prices on a great big sign right on the street, and then actually charge those prices as promised. Unfortunately, we seem to have filled positions of political power with the economically ignorant, who are stuck on cost-based pricing:
"When we're in an emergency situation, such as we were,
retailers have the obligation not to increase their prices to the
general public over what wholesalers are charging them," Hagan told the
Uh, why? Retailers move their markup around all the time. Most every retailer has drastically higher markups on December 1 for Christmas tree ornaments than they do on December 27, but no one seems to complain. Workers increased the price of their labor post-Katrina, sometimes by a factor of three, and their costs weren't going up at all, so why weren't they gouging? Its just bizarre how we treat gasoline so much different than every other product we buy. Perhaps its because they are the only retail product that actually posts their current prices right on the street.
As I read this article, AG Hagan reminded me of my least favorite Aspiring Governor, fellow Princetonian and enemy-of-Antarctica Eliot Spitzer. So it was funny when the article continued on to discuss similar actions taken by Spitzer. This was the quote I loved:
Spitzer told the Press & Sun-Bulletin that
he "hoped it would send a clear message to others that 'you cannot,
under New York law, use an environmental emergency to raise prices.'"
OK, but can I use a massive supply-demand imbalance caused by an environmental disaster to raise prices? And I sure bet that politicians can use an environmental emergency to raise taxes (in fact, since NY's gas tax is a percentage of the price rather than fixed, the state of NY did indeed contribute to the post-Katrina price hike).
Here is my quote back to Mr. Spitzer:
"I hope to send a clear message that the state Attorney General position cannot be used for grandstanding forays against innocent but unpopular business entities* in order to raise one's profile to run for higher office"
*See Dick Grasso, Microsoft, et al.
Update: More at Professor Bainbridge on Elito Spitzer (and here)