Sunday, April 25, 2010

Doing the Right Thing

A company announces that it will institute a new fee for its services. In response, Senator Schumer announces legislation that will prevent any of the companies in that industry from instituting the fee. The Senator seems to have some mechanism for determining when price increases are inappropriate. This mechanism is somewhat mysterious but takes effect whenever he sees a public relations opportunity for himself. He has taken a firm stance that prices should not go up - a can’t lose position. But the issue is determining who should set the appropriate price consumers should pay for goods and services.
There is no reason other than the Senator’s self-promotion efforts for this legislation. The airline industry has plenty of competition. Customers are free to determine whether they want to pay this fee or fly another airline. It is another instance of elected officials doing things that they should not be doing and a step toward price controls that never work.

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