It's pretty hard to find an economist who doesn't scoff at the Senate's latest hearings on oil price manipulation. But these hearings raise an awkward question for me: Since I've praised the gas tax cut (in print and on t.v.) as a placebo that helps placate the masses, I've got to wonder: Is it possible that senatorial grandstanding against "gouging" is a placebo too? Perhaps senators can placate the public's wrath by sneering at a few scapegoats.
It's possible, but I'm skeptical. The more likely result of denouncing a few scapegoats is to pave the way for harsher measures against a larger body of scapegoats. Attacking oil and hedge fund execs on t.v. might seem cathartic, but I fear that it only makes the public angrier.
I'm still keeping my fingers crossed against price controls and even stranger forms of populist folly. Oh well, I guess in the worst case scenario I can bike to work and tell my students that if they don't like how I smell, they should blame the public's economic illiteracy.