Government as a producer of scarcity
In an April 2020 episode, Bob Zadek told guest Don Boudreaux that the COVID-19 experience had made clear to him how effective and single-minded government has been in a country of plenty in creating scarcity of goods and services. Boudreaux, described by Zadek as an economics professor at George Mason University in the Mercatus Center who writes the blog Cafe Hayek, agreed and went further: governments, he said, are historical and world champions at creating unnecessary scarcity, and no one could possibly beat them at it. The Single Most Common Economic Fallacy in COVID-19 Reporting (2020)
The concrete example both men returned to was price gouging. Zadek noted that 26 or 29 states criminalize price gouging, and called it the most perfect example of a policy that appears to protect people while actually protecting them from getting enough of what they need and are willing to pay for. Boudreaux described “price gouging” as a derogatory term applied to the spike in monetary prices during crises—hurricanes, earthquakes, blizzards, and the coronavirus panic. The Single Most Common Economic Fallacy in COVID-19 Reporting (2020)
Boudreaux’s argument was that market prices are not arbitrary facts but reflect underlying realities. In the coronavirus episode, those realities included increased demand for face masks, hand sanitizer and toilet paper, and decreased supply caused mostly by government preventing people from going to work. Higher prices, he said, simply reflect that scarcity. When government forbids prices above a prior or permitted level, the main ill effect is that it fails to incentivize suppliers to produce more and to move goods to where consumers buy them. Laws against price gouging, though meant to help consumers, perversely hurt them by keeping supply lower than it would otherwise be. The Single Most Common Economic Fallacy in COVID-19 Reporting (2020)
Boudreaux offered the analogy of a price as a report—an objective report on the scarcity of something. A reporter sent to observe a fire that killed two people should report that a fire killed two people; no one would ask the reporter to write a lie and say only marshmallows were roasted. Writing a false report does not change the underlying reality, and preventing prices from rising to market-clearing levels hides the true state of the market from consumers and producers, who then respond less well than they would if fully informed. The Single Most Common Economic Fallacy in COVID-19 Reporting (2020)
Zadek extended the point to hoarding. Hoarding, he said, means those first in line buy up all of a product because it is cheap and below its market price, further exacerbating the absence of supply. At the market price, hoarding would diminish because the hoarder would pay the real price rather than the fake one; the outcome would be more small-d democratic, since everyone would have a shot rather than only the person first in line, and those who need the product most would outbid those who need it less. The Single Most Common Economic Fallacy in COVID-19 Reporting (2020)
Regulatory scarcity in lending and health care
A May 2020 episode with a guest identified as Cole returned to what Zadek called government-created scarcity and regulation. Zadek said that in a time of unbelievable comfort, wealth creation and high standard of living, government set about creating scarcity, and that its first reaction to the crisis was to shut down the economy, creating scarcity. He pointed to rigid and pointless licensing regimes that limit the supply of labor, including state-level medical licenses not respected through reciprocity from one state to another—as if, he said, a doctor trained in New Jersey would kill somebody in New York because he does not know how to practice medicine the New York way. The Future of Lending after COVID-19 (2020)
Zadek added that this licensing patchwork profoundly hurts the military, because military couples move from state to state more than perhaps any other occupation, and a non-military spouse who is, for example, a therapist cannot practice her profession in the new state. He also cited Certificate of Need laws, under which a new hospital cannot be built unless the community’s need is proved and other hospitals agree there is a need—a competitor’s veto. The result, he said, was a shortage of hospital beds when the virus hit, and decisions to flatten the curve dictated by the lack of beds rather than by good medicine or good economics. All those regulations, he said, fell by the wayside and were repealed quietly and quickly by the states; the question is whether they come back as the virus recedes. The Future of Lending after COVID-19 (2020)
The scarcity rationale for broadcast licensing
A February 2021 episode with Paul Matzko examined scarcity as a legal justification. Zadek framed the history: when radio was created and starting to be regulated, it was licensed, and he asked listeners to imagine newspapers or magazines having to apply for permission to operate. He called “license” one of the more despicable words in government because it means you need permission to do something. The Radio Right and The Fairness Doctrine (2021)
Matzko described the licensing regime as deeply arbitrary but rooted in the politics of the 1920s. Herbert Hoover, then Secretary of Commerce, with limited oversight of the airwaves, said he did not want a truly free market in radio, and his politics were relatively progressive—a Republican, but a progressive Republican. Matzko said Hoover disliked immigrants owning radio stations, broadcasting in languages other than English, and Catholic-owned stations, at a time of intense anti-Catholic prejudice. Pressure grew to use licensing to ensure that broadcasters served what was called the public interest, convenience, or necessity—a phrase Matzko noted raises the question of who decides what is necessary for the public, and answered that it would not be the public but a handful of lawyers at the Federal Radio Commission, later renamed the Federal Communications Commission. The Radio Right and The Fairness Doctrine (2021)
The technical justification, Matzko said, was that there is a limit to the number of radio stations that can be licensed, so someone must choose who gets that limited slice of the electromagnetic spectrum, and it should be the government. He called this an ex post facto justification—an argument made in court, never codified in law, and balderdash. The FCC, he said, has never actually met the technical maximum number of stations possible, not then and not now; one of its first acts was to shrink the number of licensed stations to the benefit of big corporations and the nascent radio networks. The Radio Right and The Fairness Doctrine (2021)
Matzko drew a parallel between radio before the FCC and the internet. Early radio stations coalesced in the 1910s and broke out in the 1920s, with the FCC bulking up in 1927 and 1934—a span of about 15 years; the consumer internet’s growth from the 1990s to the present spans a little more than that, about 25 years. He said we may be looking at a 1927-type situation in which government seeks to clamp down on a new medium born free and unregulated, making it less interesting, less weird, and more mainstream. The Radio Right and The Fairness Doctrine (2021)
Matzko also described a two-track system of free speech. In print, he said, the First Amendment is a very high bar to clear, strengthened over the 20th century through court cases, and somewhat unique in world history. In broadcasting, because of the scarcity principle excuse, it is a very low bar: government could decide whether you could own a radio station based on whether your speech appealed to those with power, whether it was in the public interest, whether it was fair and equitable. There is, he said, a First Amendment in print but not a true First Amendment in broadcasting. The Radio Right and The Fairness Doctrine (2021)
Water as a scarcity problem
A November 2021 episode with Robert Glennon, introduced by Zadek as an expert on water policy and author of Unquenchable: America’s Water Crisis and What to Do About It, framed water as a subject of unresolved, profound issues: who owns it, who gets to use it, and most importantly how much it is worth. Zadek noted that Glennon has received two National Science Foundation grants and has appeared often in print and broadcast media. Robert Glennon on Water Scarcity (2021)
The excerpt of that episode ends shortly after Glennon’s greeting, before the discussion of water rights, prior appropriation, groundwater, or market pricing begins. The episode’s listed topics include water rights, scarcity, prior appropriation, groundwater, conservation, market economics, public resource, agriculture, and greywater, but the excerpt does not develop them. Robert Glennon on Water Scarcity (2021)
Across episodes
The same question—whether scarcity is natural or produced by policy—runs through the April 2020, May 2020, and February 2021 episodes. In the earlier treatments, Don Boudreaux and Bob Zadek argued that price-gouging laws and licensing regimes manufacture scarcity of goods, labor, and hospital beds; in the later treatment, Paul Matzko argued that the scarcity rationale for broadcast licensing was an after-the-fact justification that the FCC never actually honored. The water episode touches the topic but its excerpt breaks off before the argument is developed.
What the sources do not cover
The excerpts do not state the outcome of any price-gouging prosecution, the text or holding of any case, or the name of any bill. They do not give the founding date of the FCC beyond Matzko’s references to 1927 and 1934, nor the full details of the water-rights regimes the Glennon episode promises. The Glennon excerpt ends before any substantive discussion, and the February 2021 excerpt ends mid-segment, so neither can support claims about what was said next.