Well, either that, or the owner’s got to get together with the owners of the other gas stations and engage in price-fixing so that he can go on with his price-gouging.
Thanks, Bob, for being the first to bring up the “M” word. The fact that some people lose their moral compass when profits loom (as in the aftermath of a natural disaster) underscores the reason for laws like the Florida anti-gouging statute. The “free market” arguments advanced here tend merely to justify actions which are morally indefensible.
The freedom in the free market is no more absolute than the freedom in free speech. All freedoms in a civilized state are limited to actions and words that do not harm others. Just as free speech is limited by laws against slander, or shouting “fire” in a crowded theater, the “free” market is limited by laws against gouging and other unfair practices. If everyone could be counted on to behave in a moral manner laws against gouging would be superfluous.
A “free market” doesn’t function properly if it’s not “free.” There is a difference between leaving the market alone and letting government intervene via emergency assistance versus trying to control the market. Controlling the market doesn’t work, period. That’s already been established. The question is, how can you let the markets continue to work and still be reasonably humane? Simple. The government
determines a level of emergency need and buys a certain amount of goods at a set price. The market price is allowed to go wherever the hell supply and demand dictates. This gives supply a chance to increase via the actions of profiteers reacting to the increased profit incentive. The price will be lower, the supply will be greater, One Lung Granny get’s what she needs, and supply will be rationed to those in emergency need by the governement, and to those who “want” by the market.
But you see- that wasn’t “price gouging” at all. That store just charged their normal full retail price- they simply offered no special discounts. There is nothing wrong with that at all, IMHO (Don’t get me wrong- it would have been very very nice to just hand them the water for free, and that would have been the “right” thing to do). It’s just this nasty “hate mail” thing about Starbucks that has made this into “price gouging”. And posters like you who spread the crap around- of course.
Now this is taking things another step further entirely- we here are split on whether or not “price gouging” is moral. But should a business be expected to sell their product below cost (or give it away) during an emergency? I think it is a nice gestyre, and I certainly will remmeber that nice gesture if they do so, but not doing it doesn’t make them evil. Even if you do think (like I do) that “price gouging” is immoral.
I just called my wife. She works retail- for a food company that is very progressive. They do not have any policy- at the individual store level of any sort of “distaster” discounts. She said “I’ll have to ask- it just is soemthing that never came up”.
Now let us go to this Starbucks store near Ground Zero. There is some poor retail drone- scared shitless. An Emergency crew comes up and wants water. You have water. Now- there is no policy on this. Nor is there any way of getting ahold of the Division Manager or whoever.
Your choices are:
- Buy the water out of your own pocket- which you can’t afford.
- Give them the water and hope Corp backs you and doesn’t both fire you and makes you pay it back.
- Charge them for it like anyone else.
What would you do? It’d be a tough call. I’d like to think I’d go for #2, but that’s a very brave thing to do- I *was * fired for something like that once.
And yet you are free to criticize your government, even though “free speech” has reasonable restrictions, and you are “free” to charge whatever you want for goods and services, although in normal circumstances your potential customers are free to reject you. Why do you think reasonable restrictions in special cases make the free market any less free? Where do you get the idea that, in a disaster, gouging is just the free market functioning properly? Have you never explored the difference between freedom and license?
As I said, along with others, it’s a moral issue. If morals meant nothing there would be no need for governments or laws at all. The Florida law, as I read it, seems reasonable, and I don’t see how it restricts the legitimate process of free enterprise. We seem to be in disagreement about what is legitimate, but I guarantee you that a gouger would rather face Florida law than more immediate “justice” from enraged citizens. Vigilantism is illegal, too, but if you permit one kind of immorality you pretty much have to risk the other.
A law against gouging isn’t controlling anything but the impulse of some unscrupulous individuals to take unfair advantage of others. It’s no more restrictive of the free market than a law against looting is restrictive of shoppers.
What is the moral issue? To provide for the poor, or to prevent profiteering? If the former, there are better ways to do that. If the latter, then you need to explain further why that should be a matter of legislation.
It restrticts the free enterprise system by suppressing the supply side of the equation. Price is the mechanism we use to communicate demand to the suppliers. Interfere with the price, and you distort market information.
I think we’re all just repeating the same stuff over and over at this point, so I’m pretty much done with this thread unless someone brings up some new arguments.
I think people are missing the poing that these ‘price gougers’ are simply charging what the market will bear. They aren’t holding a gun to anyones head to buy from them. They aren’t preventing organizations like the Red Cross and other disaster groups from coming in to help out. They are simply charging prices that people are willing to pay in the short term…lets say that again real quick. They are charging prices THAT PEOPLE ARE WILLING TO PAY IN THE SHORT TERM. If the price is too outrageous then people won’t buy it…they will either do without in the short term (i.e. they will simply be without power in their home or without fuel for their car) or they will go somewhere else if they can.
I’m sure that somewhere someone will be hurt by this…but then, in any crisis someone is always hurt, good intentions or no. If you control the prices for ‘moral’ reasons and there is goods become scarce, then someone could and probably will be hurt by that fact if they are unable to get what they need. If firewood costs the same (or is only slightly increased in price) during the winter when the power is suddenly cut, then people will run out and buy as much as they can. I’ve been in just this situation during some nasty storms in Maryland where I used to live…because the price of firewood at the various stores that sell it didn’t increase markedly and people (including yours truely) rushed out and bought it all up. People who came later were just out of luck, no matter what their need was. And after the crisis of course you had a lot of folks who had extra firewood they really didn’t need, but bought anyway…why not, since it costs the same? As for the resupply situation, it simply wasn’t worth the effort it took for the stores to hurry out and restock, so they just left it to the normal delivery schedule. Result? Things like firewood become scarce until the crisis is over.
If you allow the market to act, then someone could be hurt by the fact they can’t afford the short term price of some good or service that they vitally need. (I don’t have a real world example of this from my own anacedote well, but I’m sure it happens).
In both cases the result is the same, but in the later case there is at least the possibility that if people are allowed to set their own prices and a good or service jumps radically in price that more of those types of goods or services may become available due to demand (like the power generator example). In my firewood example I can guarentee you that if the stores had of doubled the price of firewood it would have been worthwhile for them to make the extra effort to ship in more of the stuff. In addition a lot of the firewood that was purchased by individuals wouldn’t have been, allowing more people to buy the wood. If firewood costs double (or more) than you are more likely to buy just what you need instead of buy all that you see.
I think these anti-gouging laws are simply pandering to the people by the politicians out there. I’m sorry but ‘morality’ doesn’t factor in…nor should it factor in to a business decision. If you want ‘morality’ then send your donations to organizations that provide disaster relief to hard hit areas…you will be doing your moral duty. But to me its simply stupid and pandering to make laws that don’t allow businesses to adjust radically to changing conditions and set their own prices based on market conditions. We’ve seen what this kind of controlling of goods and services, or setting and fixing prices can and does do in other nations (even in our own), and its not a pretty sight. For all the best intentions it causes more harm than good.
-XT
Yikes–I hadn’t thought that $130 might be the regular retail price for three cases of water. You can tell I don’t buy it, myself.
Because a price ceiling isn’t reasonable. Free speech is not absolutely critical to the function of a government, whereas the clearing aspect of free prices are absolutely critical to the function of a market. You can’t violate the rules of human nature if you want a market to work anymore than you can violate the rules of physics if you want an engine to work. You may have a choice in determining how to use the output of an engine, but not in determining the laws that make one work.
I’ve already stated in a previous post that dealing with the disaster is a moral issue and that free markets and morality aren’t mutually exclusive. Capitalism is amoral, which is why it makes a good economic system but not necessarily a good political system for those who value morality. That’s what Democracy et al is for.
Price is a market input like Gasoline is an engine input. When you want the engine to do something different, you don’t give it different gas; you use the power the engine generates in a different way. Likewise, when the government wants to control the distribution of a resource, they shouldn’t dictate the price; they should control the distribution of the resource! Government assistance programs can work alongside free markets just fine. Just don’t try to crossbreed them.
Are you saying that people in business do not or should not value morality? Reread your own sentence. “Capitalism . . . is not necessarily a good political system for those who value morality.”
That was exactly my point, that Capitalism, as expressed in the market. is amoral.That is precicely why regulation by an entity (government), part of whose purpose is to uphold moral behavior in its citizens, is necessary to make it fair. An entirely unregulated market is like a car without a driver. It may go like hell, but it’s likely to run over a lot of people in the process.
I am not advocating anything like communism or any other government control of production or output. Capitalism works better than such systems. But I am saying that anything, including ones personal life, that lacks regulation is chaotic. Even self-regulation alone is not enough, because we live in a society with millions of others. A balance is necessary. Laws like the Florida anti-gouging law referred to earlier help to provide some of that balance. They do not derail the free market system. They merely derail the machinations of the greedy. None but the greedy need complain of such laws.
The only difference I can see between gougers and looters is that the looter accomplishes his goal by open theft while the gouger does so by unfair leverage. They are equally criminal personalities IMO. Criminal laws are designed to deal with the one as regulatory laws are designed to deal with the other. Neither law impedes a fair free market, but both are necessary to an orderly society.
Ack! Your missing my point. Yes, Capitalism is amoral, which is why our political system is Democratic (or Constitutional Republic). But let’s forget all this for now and just talk about the how the government can best achieve a compassionate yet efficient distribution of a resource in a crisis. I’m going to assume that you agree–and tell me if I’m wrong–that a compassionate distribution essentially means that those in dire need of a resource, but can’t afford an inflated price, can still get it. Grandma and the Iron Lung. Now if those who absolutely need it, get it, does the price matter? A crisis is about need, not wants. The government can handle the needs so the “wants” should be left to the market like they usually are. Let’s say that during some natural disaster, a city’s water distribution is destroyed and people must depend on bottled water to drink. The government has a number of options but we’ll just look at two ways to ration the remaining water:
Option 1: Set the price of the remaining water
Option 2: ** Buy an amount of water determined to meet life or death need at a reasonable profit to local merchants and distribute it where it’s actually needed while letting the market price to general consumers float. **
The important thing is to get granny her water while rebuilding supply lines. Here is how the scenarios play out:
Option 1: The price of water is low, but anyone can buy it. Those in dire need are probably the least able to get to the store to buy the water. Even if they are, they have to get there first and beat out the guy who wants to water his roses. Since water costs the same as it always does, there is no extraordinary incentive for entrepreneurs to set up supply lines as fast as possible to profit off the higher price.
Result: Granny may or may not get her water, though probably not, and supply trickles in like it usually does because the price hasn’t changed. Mission failure.
Option 2: A government task force buys 1/3 of the existing supplies (or whatever amount is absolutely needed) at the “suggested retail price” or perhaps at a reasonable premium to facilitate compliance. The task force then triages water distribution on a case by case basis for those who can give evidence of dire need.
Some water is given to a hospital to be distributed as they see fit. Grandma get’s her water. Since supply has been significantly reduced, the price of water on the open market rises 500%. People like the OP see an extraordinary opportunity for profit and decide to buy water and ship it down to the disaster area.
Result: Granny probably gets her water. The supply of water to the area is increased by those seeking to profit from the extraordinay opportunity so the market price normalizes faster. Mission accomplished.
emphasis added
See, that’s the problem. They can’t because of a disaster. Dude, I lived through Kate in '85. We were told to drive only when absolutely necessary and then *only to the *nearest ** store for almost a week. No driving around looking for better prices. There were trees and power lines down everywhere. Where’s the free market in that situation? Due to the situation, our free market choice to shop for price were removed, so the government removed the seller’s free market choice to set the price as high as possible. Sounds fair, right?
Whoosh? I can think of 39 guys from 1787 who would disagree with you… Well, okay, I guess the missing word “legitimate” before the word government might make this true.
Yes, if they can. And if they can’t, they can’t. It does and will happen, though I seriously doubt it will happen all that often…people will generally find a way to get what they vitally need in an emergency, even poor people. Unlike the other side where if prices are left the same and goods run out because people horde or simply buy more than they need…just in case. I’ve seen that first hand myself, but thanks for your own anacedote. The point is, no matter what you do people will be hurt by it. Someone will always be hurt, its just a fact of life…and more so when there is a disaster.
Does it sound ‘fair’? Whats ‘fair’ exactly? Is it more ‘fair’ that the first come first served buy out, and everyone that didn’t get there’s is simply screwed? Oh, and since the prices are fixed the various stores/companies don’t exactly rush out to restock so it stays like that pretty much for the duration of the emergency as they have no real incentive to do so? Or is it more ‘fair’ to let the market decide, causing the prices to rise steeply as the demand for certain goods rises? Oh, and since the prices are variable its in the stores/companies best interest to restock as quickly as possible to increase their profit for the duration of the crisis?
I don’t know what’s more ‘fair’ in those two scenerios…and frankly I don’t care. Its not about being ‘fair’ IMHO, though I think that letting the market decide the prices is actually more humane, as more people will be able to access those goods in demand, and the real possibility exists that critically needed goods (whos prices have steeply risen) will flow more quickly into such areas. Greed is good sometimes and can be benificial.
-XT
Immediate profit is not the only incentive. You seem to be ignoring that. Stores will do everything they can to restock as quickly as possible because they don’t want their customers getting used to buying other places and to steal other stores customers. There’s plenty of incentive to restock.
Ask Starbucks how well this works out and they weren’t even gouging. Again, immediate short-term profit is not the only incentive out there and is, in fact, a lousy way to run a business.
Thanks, Mr. Gecko.
I feel compelled to offer a real-world situation that some may find useful as a debating point.
I’m in Orlando, and in the first few days after Charley, when nearly everyone was without power, talk radio here became a virtual swap meet, as someone would call in saying what part of town they were in and what they were looking for (“I’m in Union Park and I’m looking for bottled water”) and someone else would then call in with help (“The Target over on Alafaya is getting some later today.”)
One of the most-sought commodities was gas: there was a severe shortage as the stations that could pump quickly ran out, and as tankers found many roads impassable (Also a pipeline from Tampa was broken). Many people were out driving around for hours looking for gas … and when they got it, they went home. No doubt some of these people were looking to gas up generators; but it seemed that many of them just wanted the peace of mind of a full tank, or else just wanted to enjoy driving around in an air-conditioned car rather than a 95-degree house.
Meanwhile, in between the where-to-find-gas talk, the announcers would repeat the power companies’ and the police’s requests for people to please, please, please get off the roads. Cops who could have been employed elsewhere stood for hours in the sun directing traffic, and utility trucks heading to repair lines were stuck in gridlock.
I never once heard a radio person (and I was stuck listening to radio for 48 hours ) comment on the mixed message they were sending; but that’s not the irony. The irony was that the same public officials who were begging people to stay home would also say – in the very same press conference – that they would vigorously prosecute gas station owners who raised their prices.
Let him who has ears to hear…