Work a Day for a ...Stick of Butter?

Butter is at the ridiculously high price of $4 per pound on Norwegian shelves when you can find it. Usually you can't. Filling the gap, websites peddle the stuff, a staple for Norwegian Christmas treats for $100 per pound.  What a great example of the foolishness of price ceilings, the extremism of the "buy local" movement, and the need for free trade.

The problem would be solved if imports were allowed in the country. Instead smugglers rule. Norway International Network (see above link) writes:

The butter shortage is expected to continue through the end of the year, and may leave Norwegians re-thinking their protectionist policies aimed at preserving local agriculture and keeping cheaper imports out of Norway. In this case, the policies clearly have backfired, at the height of the Christmas baking season.

 If Norway won't allow imports, perhaps they will allow the market to self-correct. Nope. My guess is "price gouging," also known as letting the price rise until it is at equilibrium with demand, is illegal. The stores are forced to sell butter at an artificially low price (a price ceiling), which results in a shortage, the difference between qD and qS in the price ceiling graphic figure above. Many Norwegians will have to do without their Christmas treats this year. Why would Norwegian farmers put more butter on store shelves (even if they could) if they won't be paid $10 or $20 per pound for their trouble?

Left to its own devices, the market does a much better job of allocating assets, and in the long run, keeping prices as low as possible.