In Defense of Price Gouging

American Enterprise Institute | John Lott

[HiTech RedNeck]

But those who do have committed the sin of blaspheming the god Economius.

[muawiyah]

Cash flow ~ "selling more at a lower price" or "selling less at a higher price" may well result in the same cash flow.

It's the loss of cash flow that puts you out of business.

Any street vendor in Mumbai or Calcutta can tell you that one!

The other big problem is not being able to obtain stock. There are two reasons for that ~ 1) short supply, or, 2) no supply. In the Great Depression, as it began, folks were unable to differentiate between "short" and "no". Once they figured it out all they could do was "dump stock" at less than the price of current acquisition and hope to escape with something. The result of this practice on a wide scale throughout the economy was deflation. This, in turn, did not increase the availability of goods. Which, of course, takes us back to cash flow as a problem.

The rule is, it doesn't matter how low the prices are if you have no cash flow!

[muawiyah]

That Jefferson thing was not a question of the duties of government but rather the duties of the federal government versus the states, or other entities.

[chronic_loser]

Price regulation by government leads to two things and ONLY two things:

1) shortages

2) a feeling of smug satisfaction among halfwits who have no understanding of how markets work but only know that they resent the "big guys" taking advantage.

Evidently,2) above is sufficient moral justification to allow 1) above to exist....., at least in the minds of some posturing politicians and the airheads who listen to them.

[muawiyah]

It's always forgotten.

[HiTech RedNeck]

In other words, you agree that there are more answers to the conundrum, than gouging when predicted replacement costs go up. You assumed fixed volume of unit sales in your formula didn't you??? Admit it.

[HiTech RedNeck]

You have a very tunnelvisioned understanding of real world when you claim that.

[grjr21]

"The first fire department was a private contractor in ancient Rome. They'd show up at a fire and begin by price 'negotiating'. The name of the first fire chief was Crassius, from whom we got the word "crass"."

I just checked a map .
Can,t find any Roman Empire ?
Wonder why?

[chronic_loser]

You are correct, and I stand corrected, and should have qualified myself. It is a sad day when I say "government" and assume everyone knows I am talking about the fed, and that I assume others talk about the fed when they use the word.

I have no problems with state governments offering aid, morally or constitutionally.

Thank you for the correction.

[Racehorse]

Thomas Jefferson vetoed such a bill on the grounds that it was unlawful (unconstitutional).

Jefferson was so well regarded by the framers that his friend Madison wouldn't tell him he was Publius.

Madison kept the truth from Jefferson until the newspaper articles were sent to the press for publication in book form.

[jwalsh07]

Price controls don't work, they create shortages. Gouging actually serves a purpose in the marketplace by forcing folks to conserve who otherwise would not conserve. The market works, leave it alone.

But there is another side to that coin. When everything settles down one would hope that people would have memories and by that I mean they should vote with their walletts by remembering those charging usury prices and those simply charging what the market will bear. There is a difference.

[muawiyah]

No.

100% of what I said is based on my Great Grandmother's experience in going bankrupt in 1931.

[notigar]

nice!

[southlake_hoosier]

I just checked a map . Can,t find any Roman Empire ? Wonder why?

Sorry, have to disagree. It is still there. It's headquarters are still in Rome, just goes by a different name.

[muawiyah]

No, I have a very broadminded view of the world.

Otherwise, there'd be no Mitsubishi, Krupp, Bayer, etc.

[JustAnAmerican]

One thing that all the "It's not really gouging", folks seem to be missing here is that gas is not a Luxury, it's a necessity. If it were T-Shirts or some other item that people did not need in order to survive, I would have to agree with the market will take care of itself statement.

[muawiyah]

No, no, it's headquarters are in Athens ~ (as confusing as that might be).

[RFEngineer]

"I just checked a map .
Can,t find any Roman Empire ?
Wonder why?"

So if only they would have sold gas at the price YOU wanted to pay, things would have turned out better?

[Balding_Eagle]

And who don't give a d*mn that God forbade usury.

Those people fit into category #2.

[HiTech RedNeck]

But would they have been greater had not many people had memories?