A friend commented recently, in a protected LiveJournal, entry, that the recent shortages (and associated price increases) in gas, sugar and produce were “simply about supply and demand.” He’s right: prices rose in response to shortages, when demand outstripped supply. In such a situation, those who are capable of paying a higher price are willing to do so so that they can get the scarce commodity that is denied to those who are not capable of paying it.

As a result of the shortages, oil companies posted record profits for the third quarter, and indicators are that the fourth quarter will also be very strong.

In other words, a shortage drives profits up. In that case, why on earth would a company want to keep producing at the pre-hurricane levels? Why not just limit supply to those who can afford it? From a financial standpoint, it makes perfect sense.

But there’s a human element here as well.

In a shortage situation, those who depend on gas and heating oil may or may not be able to afford it. Some of the people who wanted to evacuate ahead of Hurricane Katrina could not do so because they could not afford the gas for their cars (if they even had any). How many of them died? This coming winter, how many people will die because they cannot afford the heating oil to keep their homes warm? How many more will forego necessities such as adequately nutritious food? How many will survive but with temporarily or permanently ruined health, leaving them unable to work?

Does “Big Oil” have the right to deprive people of basic necessities just for the sake of higher profits? On the other hand, does “Big Oil” have the responsibility to ensure people have these necessities, at the expense of their profits?

This is why supply-and-demand economics cannot be the basis of public policy. In classical economics, it is the function of the government to place restrictions upon supply-and-demand in order to maintain good public policy. My opinion is that allowing people to lose basic necessities for the sake of profit might be economically efficient, but it isn’t the best thing for society because it (a) causes overall quality of life to decline and (b) reduces people to mere economic units, valuing them solely based upon their contribution to the economy.

In other words, there’s more to it than supply-and-demand. In the absence of good corporate citizenship on the part of “Big Oil” — where are the stories of the donations to those in danger of freezing to death? — the need for government regulation becomes obvious. The presence of that need is a sad commentary about the value others place upon life in this society.

Many assume that liberals like me prefer government regulation. That’s not always true; I’m far from alone among liberals in feeling that government regulation is not something to be desired. In fact, I consider the entire social welfare system to be indicative of a massive moral failure in the United States. The reason I support it is because I don’t believe in making those without economic power suffer while we wait for those with economic power to develop a conscience.

It isn’t about supply-and-demand. It’s about the preservation of life.