California’s Terrible Price-Gouging Law Puts Markets at Mercy of Ambitious Prosecutors

“Value grocery chain Smart & Final has agreed to pay California $175,000 because, between March and June 2020, it increased the price of four different types of eggs during a period in which stores were struggling to keep their shelves stocked.

This was in the early days of the pandemic, when Democratic Gov. Gavin Newsom declared a state of emergency. That declaration triggered California’s “price-gouging” law, which says that businesses cannot raise prices by more than 10 percent during state emergencies unless they can prove the price increase is due to increased production or labor costs. According to Attorney General Rob Bonta, Smart & Final raised prices for some eggs by as much as 25 percent.

The Los Angeles Times notes that Smart & Final did have a reason for raising the prices—suppliers were also jacking up prices of eggs. But apparently Smart & Final acknowledged that suppliers were raising the prices of “standard” eggs, and that the chain commensurately raised the price of “premium” eggs.

Laws against price-gouging are bad, wrong, and counter-productive, and Bonta’s own observations about this case, quoted by the Times, explain why. He notes that, “When California first went into lockdown at the beginning of the pandemic, there was a run on essential supplies, and unfortunately, some businesses saw this as an opportunity to pad their bottom line.”

“While these were premium products, remember that during this time, shelves were often bare, there weren’t a lot of choices. Consumers had few, if any options.”

This is an economically illiterate grasp of why stores jack up prices in a crisis situation. The “run on essential supplies” caused absurd amounts of hoarding and over-purchasing, which many customers were able to do largely because stores were prohibited from raising prices. That sharp increase in demand travels up the supply chain, ultimately leading to some combination of empty shelves and higher prices as suppliers ramp up production.

Price-gouging laws simply attempt to legislate away basic economics at the retail point, and the end result is reasonable prices for goods that are seldom or never available. It doesn’t matter how much eggs cost when a supermarket doesn’t have any in stock. If people actually had to pay more for goods in an emergency situation, they’d be more careful about what they bought and we wouldn’t have had people pushing entire carts of toilet paper out of the grocery stores (and then attempting to resell them online).

The way Bonta describes the store’s situation is that people were buying the more expensive premium eggs due to shortages of the standard eggs. The same demand issues were most certainly going to come into play if people continued to purchase the premium eggs at the same rate they purchased the standard eggs.”

Does California’s Latest Mass Shooting Show the Country’s Strictest Gun Laws Are Not Strict Enough?

“While these incidents supposedly underline the need for gun control, they simultaneously cast doubt on that argument, since California already has the strictest gun laws in the country.”

“California does have a relatively low rate of gun-related deaths: the seventh-lowest in the country, according to data from the Centers for Disease Control and Prevention. Its ranking is less impressive, however, when you focus on firearm homicides, which is what Everytown for Gun Safety ostensibly is talking about in this context. Based on data from 2010 through 2017, California’s gun homicide rate was middling: lower than the rates in 24 states but higher than the rates in 25 states, including many with looser gun laws.
If you want to make the case that California’s firearm restrictions have resulted in fewer homicides than otherwise would have occurred, you need to look at what happened after those laws were passed and compare it to what happened in otherwise similar places that did not enact such laws. The observation that “California continues to have one of the lowest rates of gun violence in the country” (if you include suicides) as legislators pass one gun law after another hardly shows those laws are working as advertised.”

“The converted handgun that police recovered after the shooting was stolen, which is not the sort of transfer that would be affected even by perfect compliance with a law requiring “background checks on all gun sales.” According to a 2019 study by the Bureau of Justice Statistics, just 10 percent of guns used in crimes were obtained from a “retail source” such as a gun store, a pawn shop, a flea market, or a gun show. Nine out of 10 were obtained from informal sources, including friends or relatives, the “underground market,” and theft.

It makes sense that criminals would prefer such sources, especially if they have felony records that disqualify them from legally possessing firearms.”

An Off-Duty Cop Murdered His Ex-Wife. The California Highway Patrol Ignored the Red Flags.

“When law-enforcement officials believe that someone has committed a crime, they often go to great lengths—and can be quite creative—in coming up with charges to file. Criminal codes are voluminous, and it’s common for prosecutors to pile up one charge after another as a way to keep someone potentially dangerous off the streets.

When the accused is a police officer, however, agencies typically find their hands tied. “Nothing to see here,” they say, “so let’s move along.” Their eagerness to protect their own colleagues from accountability can have deadly consequences. A recent lawsuit by the victim of a California Highway Patrol officer’s off-duty shooting brings the problem into view.

The case centers on Brad Wheat, a CHP lieutenant who operated out of the agency’s office in Amador County. On Aug. 3, 2018, Wheat took his CHP-issued service weapon and hollow-point ammunition to confront Philip “Trae” Debeaubien, the boyfriend of Wheat’s estranged wife, Mary. As he later confessed to a fellow officer, Wheat planned more than a verbal confrontation.

“I just learned this evening that Brad confided in an officer…tonight that he drove to a location where he thought his wife and her lover were last night to murder the lover and then commit suicide,” an officer explained in an email, as The Sacramento Bee reported. Fortunately, Debeaubien had left the house by the time that Wheat arrived.

Initially, Wheat’s colleagues convinced him to surrender his CHP firearm and other weapons and they reported it to superiors. Instead of treating this matter with the seriousness it deserved, or showing concern for the dangers that Debeaubien and Mary Wheat faced, CHP officials acted as if it were a case of an officer who had a rough day.

They essentially did nothing. “Faced with a confessed homicidal employee, the CHP conducted no criminal investigation of its own, notified no allied law enforcement agency or prosecutor’s office, and initiated no administrative process,” according to a pleading filed by Debeaubien in federal district court. “Nor did the CHP notify [the] plaintiff that he was the target of a murder-suicide plan that failed only because of a timely escape.””

“Two weeks later, Wheat took the same weapon and ammo and this time found his ex-wife and her boyfriend. He shot Debeaubien in the shoulder, the two struggled and Wheat—a trained CHP officer, after all—retrieved his dislodged weapon, shot to death his ex-wife, and then killed himself.

Now CHP says it has no responsibility for this tragic event and that its decisions did not endanger the plaintiff’s life. This much seems clear from court filings and depositions: CHP’s response centered on what it thought best for its own officer. Any concern about the dangers faced by those outside the agency seemed incidental, at best.”

“CHP officials expressed concern about protecting Wheat’s career, and one worried that Mary Wheat or Debeaubien might file a complaint. Even when a colleague asked Wheat to relinquish his firearm, he did so as a friend—not as CHP protocol. Again, CHP treated Brad Wheat as the focus of sympathy, not as the potential perpetrator of domestic violence.”

“”Giving a gun to a then-weaponless man who ‘had driven to a location where he thought his wife and her lover were to murder the lover and then commit suicide,’…creates an actual and particularized danger of his using the gun to attempt murder a second time,” the filing notes. That would seem obvious to anyone, except perhaps a police agency more interested in protecting itself than the public.”

How California Deputies Became Highway Robbers

“An organized group of Southern California bandits has brazenly hijacked armored cars and grabbed hundreds of thousands of dollars in cash. The heavily armed thieves reportedly have damaged trucks, hassled their victims, covered up video cameras—and even celebrated their haul. “Wowee!” and “way to go, buddy,” they allegedly cheered, after pulling a recent heist.

You’d be forgiven for assuming that this is the latest example of California’s ongoing crime wave, epitomized by “third world” scenes of pilfered freight trains and brazen smash-and-grab robberies. But it’s nothing of the sort. Actually, it’s more pernicious than the usual crime spree because a sheriff is the mastermind and his deputies are looting the armored cars.

For instance, San Bernardino County deputies stopped the same Empyreal Logistics armored-car driver twice and took a total of nearly $1.1 million in cash owned by legal marijuana dispensaries, per news reports. The government has not charged the armored-car company nor the cannabis firms with any crimes, but the sheriff keeps the cash, anyway. Critics are right to call it highway robbery.

Welcome to the dystopian world of civil-asset forfeiture, a drug-war relic that allows police—often at the behest of district attorneys—to take people’s cash, cars, and properties based on their suspicion that the property was involved in a crime. Officials never have to prove that the property’s owner was involved in a crime.

The agencies have every incentive to employ this strategy routinely given that they keep the proceeds and spend the money on vehicles, guns, and whatever. News reports found police so adept at abusing this process that they sometimes target people who own the kind of fancy SUVs and sports cars that they’d like to have available in their motor pool.

Not only does this process deprive Americans of their Fourth Amendment right to be safe against the government’s searches and seizures, but it undermines the credibility of law enforcement by turning cops into our adversaries. San Bernardino County Sheriff Shannon Dicus claims that “80 percent of marijuana at dispensaries was grown illegally.” If that’s true, then the sheriff simply needs to, you know, go to court and prove it.”

California Escalates Its War on the Marijuana Black Market

“Having utterly failed to end the marijuana black market in California, lawmakers have decided to backslide into the drug war by increasing fines on those who operate outside of the state’s very costly and tightly regulated legal cannabis system.

California will begin 2022 not just by increasing taxes on legal marijuana cultivation but also by introducing new fines against anybody “aiding and abetting” any unlicensed dealers in the state.”

“California’s implementation of recreational cannabis regulations, authorized by the passage of Proposition 64 in 2016, has been a massive mess. The ballot initiative allowed for municipalities to decide whether to allow cultivation and dispensaries, and two-thirds of them still refuse to do so despite the public vote. The state levies high cultivation and excise taxes that are escalated further by local sales taxes in any municipality that does allow for dispensaries to open up shop.

The result has been price and availability issues so severe that experts estimate that between two-thirds and three-quarters of all marijuana purchases take place through unlicensed dealers, which means that the state isn’t getting its share of the revenue. The problem is so severe that the editorial board at the Los Angeles Times recently acknowledged that high taxes for goods fuel black markets.”

Will New York Copy California’s Most Successful Housing Reform?

“In a truly rare turn of events, California’s successful approach to legalizing more types of housing is serving as inspiration for reforms elsewhere in the country.

Over the past several years, lawmakers in the Golden State have passed a suite of bills that make it much easier for homeowners to build accessory dwelling units (ADUs), sometimes called granny flats or in-law suites, on their property, while also making it harder for local governments to stop such construction.

It’s proven to be one of the few YIMBY (yes, in my backyard)-inspired zoning reforms that has actually led to more housing being built. Now other states and cities with their own affordability crunches are passing or considering their own ADU deregulations.

Last week, New York Gov. Kathy Hochul, a Democrat, released her 200-page State of the State legislative agenda. Among other things, it took a swipe at local rules that prevent homeowners from turning their garage or attic into a new housing unit.

ADUs “can provide an affordable multi-generational housing option that helps families live closer together,” reads the State of the State book. “Current land use restrictions prevent homeowners in some communities from building ADUs.”

The governor’s agenda says she’ll propose legislation that would require localities to allow at least one ADU on owner-occupied residential lots. This legislation, per the agenda, would also prevent localities from adopting rules that legalize ADUs on paper, but prevent their construction in practice.

That reflects a lesson learned from California’s ADU experience, where state laws allowing homeowners to build a backyard apartment have technically been on the books since the 1980s.

For decades, however, cities were able to stop them from being built by imposing infeasible requirements that they come with off-street parking, be a minimum size, or receive special, discretionary permits in order to be built.

It took the passage of several additional bills between 2016 and 2019 limiting what localities could require of ADUs, and then several lawsuits to actually enforce those new rules, to really kick off new ADU construction.

The results have been pretty amazing so far.”

“To be sure, neither California’s nor New York’s high housing costs are going to be completely solved by more granny flats. But these reforms are an important piece of the puzzle.”

California’s weed market should be flourishing. But bureaucracy is blunting it.

“Complicated local rules, understaffed city departments and slow communication with state regulators have made starting a weed business in California a protracted and risky ordeal. Red tape and paralyzing legal battles are stunting the market’s growth, leaving aspiring entrepreneurs in cities such as Los Angeles, Pasadena and Fresno waiting months or even years for permission to open, often while leasing empty storefronts.”

California Promised Street Vendors More Freedom. Instead They Got More Rules.

“the Los Angeles Times published an excellent editorial on Los Angeles County’s continued and outrageous mistreatment of the city’s “iconic” street-food vendors.

The editorial centers on the county’s failure to implement California’s Safe Sidewalk Vending Act. The much-touted, statewide law, which I touched on after then-Gov. Jerry Brown signed it into law in September 2018, was supposed to decriminalize and legalize street vending for the estimated 10,000 underground food vendors in Los Angeles County—and others across the state. As the Times editors detail, that hasn’t happened in Los Angeles.

“Street vending may be legal in California, but for the vendors selling sliced fruit, tacos and other food items it’s nearly impossible to get a permit to operate without fear of penalty, particularly in Los Angeles County,” reads the lede. They blame “state and county public health regulations for selling food from a street cart [that] remain so complicated, impractical and expensive that the vast majority of vendors have not—and cannot—get permitted.”

Hence, years after the law was passed, L.A. County has only issued permits to around two-percent of the underground vendors who sell there. One of the most onerous requirements to obtain a permit, the Times explains, is the rule that vendors must spend thousands of dollars to buy a needlessly fancy food cart that features “four sink compartments, multiple water tanks for washing cookware and hands, and mechanical exhaust ventilation… which is just not practical for vendors who earn $15,000 a year, on average.””