THE LIBERTARIAN PARTY OF HAWAII

625 Keawe St, Honolulu, HI 96813 (808) 537-3078

TESTIMONY   

RE: HB #2338 to be heard Wednesday, February 6, at 2 PM in conference room 325

Dear Committee Members:

We oppose HB#2338. 

In a free market profits tend to equalize. When it becomes known that a particular business for example petroleum products make very high profits, that fact in and of itself will attract investors to invest in or form companies that compete with that high profit business. 

Initially, the new competitor will have a zero percent market share and will therefore lower prices in order to gain market share. Therefore, consumers  benefit due to the reduced prices caused by the increase in competition. Also, the investors will gain from the high profits. 

The process of attracting more investors and therefore more competition and therefore lower consumer prices continues until the profits of the business is considered only marginally attractive compared to other investment opportunities. At this point consumer prices should be similar compared to other regions when an adjustment is made for transport costs. In this scenario most everyone benefits and especially the consumer benefits. This is an example of the consumer benefiting by the invisible hand of capitalism.  Consumers are not necessarily aware of  this process, nevertheless they benefit from it in the form of lower prices.

The best thing government can do to facilitate this process is NOTHING. As long as businesses are not prohibited from making large profits and investors are not prohibited from competing against them the invisible hand of capitalism will do its work and result in lower consumer prices which benefit everyone, even politicians. 

HB 2338 imposes a profit cap on petroleum products business, which will distort the free market and scare away potential investors who might otherwise compete with the established petroleum products businesses. Furthermore, why would you want to penalize a business for it's success? This bill is a step in the wrong direction. Just say no the the insatiable appetite of the taxman.

The proper course is to remove any legal or regulatory barriers which stand in the way of free and open business competition.

Competition results in the most efficient use of resources, both capital and human, and results in the greatest prosperity for the people of Hawaii. There is a direct correlation between individual and economic freedom and prosperity. The great people of Hawaii  deserve freedom and prosperity.

John Orendt