Posted on 08/17/2004 3:49:10 PM PDT by beaureguard
Yes. Higher prices encourage conservation and provide incentives to increase supply. They also allocate use to the highest valued users.
I suppose if you think that monetary transactions are the only true measure of moral interaction, then I suppose be makes his case.
However, if one believes there is a moral difference between "can" and "should," (i.e., I "can" charge $25 for a gallon of water, but "should" I?) then I would say that he has not made a case for anything except his own moral obtuseness.
Whether it's immoral or not is beside the point.
Human beings react instinctively against gouging. That's why this author's point, whatever it is, will always fall on deaf ears.
This doesn't work: you're applying long-term market considerations to an intrinsically short-term problem.
Capitalism is freedom. Anything else is not.
"Does this guy make his case?"
Yes. Let the markets work. Selling anything for less than the market price should be a voluntary act of charity.
I will concede he has made his case when they stop going after scalpers at sporting events... It seems to me that if it OK to "gouge" those that are in need from a disaster, it should be fine and dandy to get outrageous prices for scarce tickets to games...
It works in the short term too. If a store only has 500 gallons of gasoline, does it sell it to the first customers who come along? If consumers fear a shortage, people could start hoarding by filling up their tanks. If the price remains the same as prior to the disaster, the store quickly runs out of fuel. Then no fuel will be available at any price. Also, those who filled up before the store ran out would be in a position to sell fuel from their gas tanks on the black market.
As somebody who has been a contractor for 30 years dealing with these situations, I can tell you it is much more costly to provide services to people in these kinds of catastrophe situations.
It takes longer to get from place to place. I have great difficulty getting supplies and materials and they cost me more. I may have to pay more to get labor. The "friction" of business increases exponentially.
So either I need to charge more for a similar service or I can't afford to provide the services they desperately need.
Human beings react instinctively against gouging.
In a vacuum he makes his point.
I operate a small grocery store in Virginia's Northern Neck. When Isabel came through here last year we were without power (and everything else) for a minimum of four days, some places, as much as two weeks. I kept the store open with a battery powered calculator, a cigar box, and a sidearm. I was the only game in town. I raised not one price. My ice and water went in a matter of hours.
I could have raised prices but would be paying for it today. As it is, people still comment on the fact that I was available and didn't try to take advantage of their grief. They even talked about me on one of the local radio stations that was up on a genset.
Had I, I would have far fewer customers today.
I understand the laws of supply and demand perfectly but profiting on the backs of my own neighbors during a time of universal suffering is not my idea of how to run a business or be a responsible member of a small community. I have to live here when the weather is nice too.
My two cents worth from personal experience...
Let me use your extreme example a different way:
Suppose the dying person doesn't have $25 for that life-saving drink of water. The water seller can refuse to sell him the water at a lesser price. The question is, should the water seller refuse, and thereby let him die?
I hope the extreme example illustrates what reading my post failed to -- namely, the possibility that there is a difference between "can" and "should".
Wow. Excellent post.
I've often wondered how effective these restrictions on price gouging are, anyway. Couldn't a business owner circumvent them by simply announcing that he was selling his scarcest products at an open public auction in his parking lot?
He falls in the same category as those who blame the weather service. I'll have to say he's quite detailed and extravagent in his reasoning. Would have been far more efficient to say, "here's my dumbass idea".
How about this: Some yahoo with a truck who lives 500 miles from the disaster sees a report on TV about price gouging and decides to get some of that $25 per gallon for himself. So he loads up his truck with bottled water and sets off to make his fortune.
If he gets there quick enough he might sell some of that water for several bucks a gallon, but most likely he will have to sell it for a small profit if at all. That's because there are lots of other yahoos with trucks who watch TV and would like to make a quick buck.
God bless yahoos with trucks and God bless America.
well I suspect if someone tried selling water for $25 a gallon he would have no store left by the next day, some "natural" disaster would hit it in the middle of the night..
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