In May, the House of Representatives passed a bill that could lead to fines as high as $3 million per day for gasoline price gouging, which it defined as charging a price that “grossly exceeds the average price…offered for sale by that person during the 30 days prior†or “grossly exceeds the price at which the same or similar gasoline…was readily obtainable in the same area from other competing sellers.†It now stands a good chance of passing as part of broader energy legislation.
Unfortunately, however, a law built on an undefined term such as “grossly exceeds†fails to meet the basic purpose of law. That purpose is to make clear beforehand what is not allowable, so that decisionmakers know the limits on their actions. Effective social cooperation can only be built upon clear rules which constrain government arbitrariness as well as abuses by others. But a law whose essential basis is an undefined term would leave every decision’s legality subject to the whim of a judge or government entity, exercised after the fact. No one can know what actions are “safe†from prosecution. And a law combining arbitrariness with huge potential punishments (discriminatorily applied to “big oil†as well, since only firms with over half a billion in annual sales would be subject to the law) is an open invitation to government abuse. It only demonstrates that such lawmaking grossly exceeds Congress’ competence.
In fact, the gouging law is so vague that it should be rejected because it expands Americans’ exposure to arbitrary acts (such as inherently selective prosecution), rather than offering protection against them. And those arbitrary acts will be backed by government’s coercive power, which far exceeds any alleged “market power†it is supposedly combating, which has to be continually earned in the face of competition. It invites exactly the sort of governÂment abuse the American Revolution was fought to stop and our Constitution’s framers tried to preÂvent from reappearing.
Since gouging in the House legislation is currently undefined, any prosecution undertaken under it would effectively create the law after the fact, and apply it to prior acts. The unfairness, as well as arbitrariness, of applying rules retroÂactively is obvious. What would happen if referees could change the rules of a game after the fact? What if casino payoffs could be changed by the house after the roulette wheel stopped? What if your employer could retroactively lower your wages for last year?
Not only is unfairness inherent in what would effectively make law retroactive, it also violates the plain wording of Article I, Section 9 of the Constitution. It bans ex post facto laws, reflecting Federalist 44, where James Madison desÂcribes them as “contrary to the first principles of the social compact, and to every principle of sound legislaÂtion…all of them are prohibited by the spirit and scope of these fundamental charters.”
Why would Congress consider, much less pass, a bill that fails basic standards of logic, fairness and constitutionality? Because it would give them power without responsibility.
With the standards for prosecution, which is very costly for the accused, never spelled out, politicians can manipulate firms’ behavior by threatening prosecution and preen as defenders of “the people†without being bound by effective accountability or constraints. It works the same way civil rights legislation, whose supporters explicitly denied creating quotas, led to them—firms didn’t know what would be called illegally discriminatory, so to protect themselves from the uncertainty and cost of litigation, they often began relying on quotas.
If the most intelligent law Congress can pass about gasoline pricing essentially criminalizes behavior that is legal until, after the fact, it can be selectively redefined as illegal, they don’t know enough to advance Americans’ general welfare. Their grandstanding and abuse of government power only reveals their gross incompetence in yet another area of our lives. But unfortunately for Americans, that seldom deters Washington from “helping†us.
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I have a tough time seeing this law stand up in a court of law.
Phillip,
In a rational world you’d be correct. But you’re referring to the same court system that ruled that people growing pot for their own recreational use could be prosecuted under the Constitution’s commerce clause.
This has nothing to do with logic and everything to do with the exercise of raw power.
Aren’t many statutes written so that they can be interpreted as the cops decide?
We’ve already had such logic in anti-trust, you can’t sell “too” low, can’t sell “too” high, and can’t sell the same as the competition. It is arbitrary, but that’s not the worst part. The worst part is that it is a win/win/win for government and bureaucrats. It gives the State more strings to manipulate businesses to as they bid (or else), if they do decide to prosecute, they will most likely win and get a nice payout into the treasury, and third, they look good to Joe Public. And all this at the price of making de facto criminals out of those who are the most productive for simply engaging in business.
Which leads to another concept – I had an online argument with a fellow over whether Western Democracies were Totalitarian. It is the addition of these types of “laws”, the ones so far removed from preserving life and property from direct threat, that has pretty much put the economy in the hands of the State. This, along with a massive ~$50 Trillion accrual basis debt, the US has claim over every last bit of equity yet produced, and will have presumed control over the nature of future production. It IS beyond question economically Totalitarian.
But the counter argument always centered around that there needed to be massive deaths, mass graves, smoke stacks spewing ash to prove that a State is Totalitarian. I see such as simply the logical end the the pre-existing Totality of the State. It is the endgame of Totalitarianism, not its defining feature. It almost to say that you can’t call it Totalitarianism until the ovens and mass graves are used. Waiting for hindsight in this case is ignorant.
Too far off the path? I don’t think so. Such laws, as stated above, are there to placate Joe Public. Such laws have much to do with the psychological aspect of the masses. The State offers itself as the only entity that will make things “fair”, and it’s always and easy sell. It has more than a whiff of “The Volk” or “The Proletariat” about it.
Anti-trust and anti-gouging laws, and the function that creates them, are a manifestation of Totalitarianism when things are reasonably fine. It is when the State ultimately fails, having strangled the productive out of existence, and the economic vitality is shattered, and the “bad times” hit, and Joe Public has an empty belly that such psychological interplays between the two tend to turn nasty. This is when the triangulated minorities to “blame” for it all are fed into the grinder.
Maybe too feverish on my part, but arbitrary laws to me are the sign that we are entering into a dark age of governance as the State has stopped being the supplier of protection of property and lives (debatable anyway I guess) to being a Patriarch. And this has historically led to persecutions and pogroms.
Well put, Brad. Unfortunately, the political meme-space has degraded to the point that a rational protest by gas station owners, such as closing the gas station when it’s impossible to make a profit withough “grossly overcharging,” would simply encourage the pro-rationing undercurrent to lobby Congress for the real thing. Given this political risk, it’s unlikely you’ll see closed gas stations with signs saying “Closed Due To Egregious Law,” outside of a work of fiction.
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