Townhall.com
Walter E. Williams

Thirteen states -- Alabama, Arkansas, Florida, Georgia, Indiana, Louisiana, Mississippi, New York, North Carolina, South Carolina, Tennessee, Virginia and West Virginia -- have enacted laws to combat what is seen as price gouging in the wake of natural disasters. Price gouging is legally defined as charging 10 to 25 percent more for something than you charged for it during the month before an emergency. Sellers convicted of price gouging face prison terms and fines.

Price gouging in the wake of natural disasters is often seen as evil exploitation by sellers to rip off desperate customers. Let's hold off on that conclusion until after you give thought to some very important questions. First let's see what we can agree upon.

When a natural disaster occurs or is anticipated, supply conditions change. There is going to be less of what people want and need. Under such conditions, what actions are consistent with the public good? My answer is that people should voluntarily use less of everything and waste nothing. That would include economizing on water, gasoline, food and anything else necessary for survival. How about an example?

Take the case of a hurricane like Florence. Let's assume that evacuation 200 miles or so inland would guarantee safety for North Carolinians. Say the Jones family's car has three-quarters of a tank of gas, more than enough to drive to safety. The Smith family's car has less than a quarter-tank of gas, which is not enough to drive away from danger. We can multiply this scenario by tens of thousands of families in the Joneses' condition and thousands of families in the Smiths' predicament.

Here's my question: Who should forgo purchasing gas in the storm-threatened area? My answer would be all those people who have enough gas to drive to safety -- people such as the Joneses. By not purchasing gas, they'd make more gas available for those who really need the gas in order to drive to safety, such as the Smiths. We might also ask how considerate and caring it would be to their fellow North Carolinians who desperately need gas for people who have enough to evacuate to purchase gas just to top off their tanks.

If people such as the Joneses won't consider the needs of their fellow man voluntarily, the North Carolina attorney general could station government officials at each gasoline station to determine who should be permitted to purchase gas. You say, "Williams, it would be sheer lunacy for scarce state resources to be used that way, especially in the face of a natural disaster!" I think you're right.

Another method would be for the governor, mayors and church and community leaders to admonish North Carolinians to purchase gasoline only if they really need it. That way, plenty of gas would be available for those with nearly empty tanks. You might say, "Come on, Williams. Aren't you being a bit naive thinking that would work?" You're probably right again.

What I think would make gas available to those who really need it are rising prices. Suppose the pre-hurricane price of gas was $2.60 a gallon. As the hurricane approaches, dealers could let the price rise to $4 a gallon. That would give families who have enough gas to evacuate incentive to voluntarily forgo purchasing gasoline. Their voluntary decision would make more gas available for people who desperately need it. By the way, gas available at $4 a gallon seems more preferable than gas stations shut down because they have sold out of gas at $2.60 a gallon.

You might reluctantly agree that allowing prices to rise during a natural disaster helps allocate resources, but that's not the intention of sellers who raise prices. They are in it for windfall profit. I say: So what? It's what their actions accomplish that's important -- namely, getting people to conserve during a natural disaster. Also, higher prices create incentives for suppliers of all kinds of goods -- such as plywood, bottled water, generators and repair services -- to pitch in to help to restore people's lives.

Link

I still remember the evening of 9/11. Gas prices at mom/pop shops were over $5.

Obstacles to the free market doing it's thing is a misguided idea.
I am old enough to remember Nixon's wage and price controls. Price fixing by the government caused the gas shortages.

Some call it gouging, some call it capitalism.

quote:

Originally posted by Ronin1069:
I still remember the evening of 9/11. Gas prices at mom/pop shops were over $5.

The government option is to keep the price at $2.90, the only problem is that nobody has any to sell at that price.

1973 all over again.

can of worms getting opened....

i think we can agree that gouging to make an obscene profit during a legitimate life / death emergency is morally wrong

but it's a loaded question that is answered by supply / demand economics

and if we say 'No Gouging!' we pretty much MUST institute limits to volume purchasing ie 'rationing'

ok - gas stays at $3 / gal but you can only get 8 gallons ...

As much as we love to hate on Walmart - think about their 22LR policy during the great ammo famine - they never raised prices on 22LR - and when they got some - 'neckbeards' would buy 50 boxes at once. Hence the 'limit' of 3 boxes per customer. And the morally acceptable concept 'everybody gets some but not as much as they might want'.

like I said -- can of worms and all that.

And rationing is a well-established concept. We 'rationed' extensively during WW2.

------------------

Many years ago after one of California's earthquakes, some folks got hammered for selling water for $4.00 a gallon. Meanwhile 7/11 was charging .99 cents a quart.

By opportunists (price gougers if you are a Democrat at heart) rushing in to make a quick buck, the problem (supply) is solved more quickly and prices decline more quickly.

Those that don't learn from history......
I know, this time it's different. Except it isn't.

quote:

Originally posted by Sig209:
and if we say 'No Gouging!' we pretty much MUST institute limits to volume purchasing ie 'rationing'

What about those items that are not "volume" purchasing? Generators, snowblowers, etc...?

(devil's advocate)

I have no problem with bumping prices during these times. None whatsoever. If you fail to plan, well...you know the rest.

We don't get hurricanes and tornadoes around these parts, but we are prone to wildfires and snowstorms. Everyone here should know that, and if they don't they are already behind the 8-ball. Have your snowblower and sprinklers available should you need them ahead of time. If you snooze, you lose.

It's almost comical to watch people throwing a tizzy at the local hardware store when a big blizzard is coming and they are all out of shovels and/or snowblowers. Supply...demand. It's an Econ 101 concept. You want one? Well...we can get you one, but it's going to cost you. "How DARE you! I need this!"

What plan do these states have for the cost of food and beverages at sporting events?

quote:

Originally posted by LoungeChair:
What plan do these states have for the cost of food and beverages at sporting events?

Or airports.

$19 for a bottle of Budlight and a shot (actually about 1/2 a shot) of Jameson at JFK.

I screamed "PRICE GOUGING!!!!". It didn't help.

quote:

supply conditions change.

Abso-freaking-lutely. And what does elementary economics tell us about supply and demand setting prices?

Example: When the stumblebums set the control pumps for the gasoline pipeline on fire (twice) there were areas that were affected by the pipeline being shut down, and areas that weren't. This happened twice, and since NC handled it differently, it was as close as you can come to a controlled experiment.

Absent idiocy, what you would have expected is that gas stations in the areas that couldn't get gas supplied cheaply via pipeline would pay extra costs to get gas trucked in from unaffected areas. Those extra shipping costs would get passed on via slightly higher prices. There would be no shortages, no lines, and people who had enough gas would wait it out.

Well, let's veneer some idiocy (er, sorry, 'anti-gouging regulation') onto the problem. The first pipeline outage, NC put in some idiocy, and prohibited price increases. Stations couldn't sell gas for prices that would cover shipping costs, so they didn't have any shipped in. They sold what they had and waited for the pipeline to get fixed. Lines, and shortages, which fed the fear of running out of gas, so many of the cars in line were just topping up. The supply chain did not react to meet demand because it was prevented from doing so.

The next time the pipeline went out, the NC governor did not restrict prices. Stations got gas from the neighboring unaffected states, and no lines. Prices went up a bit but since there were no lines, nobody freaked out and just got what they needed.

Economics is not hard, it's just not always popular.

quote:

Price Gouging

There is no such thing as Price Gouging.
Every sale is an agreement between a willing buyer and a willing seller. It's simple: if you don't like the price, buy it somewhere else or wait until the price drops.

No business owner is getting rich off of very rare price spikes. When they run out of product and have to close their doors due to supply disruptions, their bills don't stop. The business loans and mortgages aren't suspended. The health insurance premiums of their employees are still due. If there are no supply disruptions and they raise prices just because they think they can, that will be a PR disaster for them once things calm back down. But then we've all seen gas stations across the street from each other with huge differences in prices, and the much more expensive one is never less busy. Plenty of folks will pay $.30/gallon more just to avoid having to make a left turn when they can make a right turn.

John Stossel's "In the Classroom Series" price gouging contest for High school and College finals concluded six months ago.

He put out this video about a month ago.

Link to original video: https://www.youtube.com/watch?v=IqMFBdWkfo0

Link to the Price Gouging contest winners

“Gouging=supply
Price control=scarcity

It’s economics.

True story.
After hurricane Ivan in 2004 power grid and generation were gone.

A guy In Michigan rented an 18 wheeler, bought every generator he could on his way to Pensacola.

He got to Pensacola and was selling the generator for double what it cost him. People were lined up buying the generators.

Dogooder channel 3 found out about it and had a hissy fit and turned him in. Authorities told him he couldn’t sell them for that much.

He loaded up his wares and went back home returning the unbought generators to where he bought them along the way.

The people were “saved” from being “gouged”. Except they had no generators that they were perfectly willing to buy a that price.

Now, who did this help? The so called “victims” of gouging? No.
Perfect example of .gov overreach.

quote:

Originally posted by Sig209:
can of worms getting opened....

i think we can agree that gouging to make an obscene profit during a legitimate life / death emergency is morally wrong


------------------

No we cannot agree. Economic reality is neither moral or immoral. It is akin to saying that gravity is "morally wrong." (Akin, not exactly the same - don't take the analogy too far.)

Chellim1 is right, there is no such thing as gouging. If the market will pay a price, that IS the market price.

quote:

Originally posted by jhe888:

quote:

Originally posted by Sig209:
can of worms getting opened....

i think we can agree that gouging to make an obscene profit during a legitimate life / death emergency is morally wrong


------------------

No we cannot agree. Economic reality is neither moral or immoral. It is akin to saying that gravity is "morally wrong." (Akin, not exactly the same - don't take the analogy too far.)

Chellim1 is right, there is no such thing as gouging. If the market will pay a price, that IS the market price.

figured the lawyer would show up at some point to school us on morals

------------------------------------------------------------

I would just have items listed as a separate sku at the "gouging" price. Generator A, $400. Slightly different Generator B, $4000.

Hurricane hits, just pull Generator A off the shelves. Generator B is still being sold at pre-price gouge prices.

Alternatively, you can set up a separate sku that bundles the generator with a high profit margin item. Generator A plus 600 CR123a lithium batteries, individual retail cards (MSRP $6 each), for $4000. Mark the batteries as final sale. Pull the stand alone generstor sku from the shelves.

I’m going to disagree with you guys. Obviously there are exceptions to any rule. Ie the guy who rented a truck bought generators traveled halfway across country to sell a product. That kind of enterprise should not be covered under the “gouging” law in my mind. Stores and suppliers that existed before the event and will be there after should be limited from jacking up prices in a declared emergency. If their cost to get the product increases they can increase their price but the intent of gouging law ideas remain.

Simple facts here. We don’t live in a pure anything. We don’t live in a pure representative republic, a pure democracy, a pure capitalist society, a pure socialist society, etc. We have elements of all the above and more. Spouting pure capitalist ideas like that is the only economic force at play in America is silly. Name any element of our society and you find lines that are blurred between economic ideals. It’s just reality of life in America.

This discussion of jacking up prices in the midst of emergencies tends to center around certain items. Gas, water, food, hardware. What if your utilities decided to play the same game? Oh you want electric power to fix your shit? Ok, the electric rates just tripled. Water? Same thing. Except quadruple. They don’t do that because the optics black eye they suffered would come back in spades at the next public utilities meetings.

How about this? Ever brick and mortar location that “gouged” during an emergency was taxed at double their previous rate for the next two years? Hey, they got theirs now it’s payback time.

Part of the social contract in my world is that you don’t kick people while they are down.

Obviously you guys disagree. Which is fine, but don’t spout capatilism as the end all mantra. We don’t live in a pure capitalist society. There are limits and they are excercised in all elements of our life every day.

To me the solution is a combination of limiting brick and mortars to certain price constraints during declared emergencies. Allow the use of limits on product sales to minimize profiteering. And lastly, make it a fineable event for people to clear out product and then sell that product during this time frame. We don’t allow people to sell wholesale product out of their garage within the proper permitting and/or licensing so why allow it during natural disasters?

The idea is a solid one. The implementation, as usual, is shit. Human nature in disasters come in two distinct flavors. It brings out the very best in many and the absolute worst in others.

You think it’s great because that is what defines America? Well go try and sell a P239 mag for a hundred bucks on the classifieds here. Gouging is gouging. Just ‘cause it’s legal doesn’t make it right. Fuck the lawyer talk bs.