Russia and China had this system where some bureacrat decides who “needs” what. It always turned out the bureaucracy needed everything and the rest of the people could do without. Millions died in the famines caused by this.
These countries have realized this is not a good system. Because what happens when people know others can come and take your stuff is that you tend to not have any stuff for others to take. Or you hide it well. Why would you bother to put work into something when others can just come and take it?
Here’s one case in which banning gouging has a definitely negative effect.
Because power companies have no possibility of profit in the event that they are functional after a rare crisis, they will not invest the relatively small sum necessary to keep their operations online for those crucial few days.
Hmmm. So we have five generators, being sold by S-Mart for $5000, but they can had for $500 in LA. If A, B, C, D and E buy them, can F kill one of them because he needs the generator? It is about survival.
What if, on the way out, C mentions that he’d sell his generator for $1 Million. Can he be killed as a profiteer by F? Does it matter if C meant it or not?
What if D decides that his family living in Guatemala could live comfortably for the rest of his life on $500,000. He offers his generator for that, knowing he will be as likely as anyone without one to die, but it would be worth it for his family to be taken care of. Is he fair game as a profiteer?
I would like to point out that allowing prices to rise to the market-clearing level in a disaster doesn’t just solve the allocation problem and act as an incentive to get more disaster goods into an area after a disaster - it acts as an incentive to stock extra supplies before the disaster. The possibility of windfall profits should a storm hit will cause stores to stock extra inventory of those goods just in case. Fix the prices at pre-storm levels, and they have no such incentive.
All of this has the overall effect of improving the efficiency of the market and maximizing the utility of generators and other necessary disaster goods in disaster-prone regions. It’s all good. The only argument against is the typical class-warfare notion that ‘excess profits’ are intrinsically evil and must be prevented even if it results in shortages of critical materials when people most need it.
Look, here’s the deal. I will keep all my generators but I will provide electrical power and protection to anyone who provides me with appropriate tribute.
Sorry I haven’t been able to take the time to read every post, so if I’m repeating something (obvious), my apologies.
The big problem with killing the profiteers is that the next time there’s a flood there will be no one willing bring them into the area of shortage. Would you? I sure as hell wouldn’t.
I think that what the statists are doing is basing their arguments on unusual possibilities. Like that the profiteers will get together to keep their prices high. That’s kind of funny. So the guys from New Orleans will get together with the guys from Mobile at some prearranged spot. They’ll keep the slower drivers and the guys from Atlanta from “flooding” the market. Sure.
It just doesn’t work that way. In fact the vast majority of times that prices have been kept artificially high has involved government monopolies and cartels. Look at ATT before regulation, or cable TV right now. Or doctors or dentists.
The government isn’t in the same position as those in a disaster area, they have more options. Everyone in the whole country (perhaps the whole world) would have to jack up their prices in order to prevent the government from buying at a reasonable price. Ok there’s always the likelyhood that government officials would deliberately choose to buy overpriced goods to funnel money to their cronies, but that’s a whole different problem.
I think the same could be said of ANYTHING the government spends money on.
I was not attempting to assign any blame or moral state to anyone in any hypothetical scenario. I merely thought it was strange that all the ideas presented here seemed to be about how best to encourage certain behavior from people in a scenario where you really don’t need to control everyone’s behavior to solve the problem. Since none of the ideas presented seemed to come close to adequately addressing the problems of the scenario you were talking about, I just thought it was interesting that nobody was talking about the possibility of actually bringing supplies into a disaster area and selling them for a reasonable price rather than trying to encourage others to bring the supplies, or force people to sell below a certain price.
That’s the problem I see on the entire concept of rights. They don’t seem to be based on anything, so if you can say that people have certain rights just because… then Der Trihs can make up anything and say that’s a right too. There is just as much basis for those rights as anyone has for any other rights.
I do not think anyone here is saying property rights are given by God and cannot be taken away. I think what most of us are saying is that societies where property rights are respected and there is freedom to buy and to sell are societies which are better off than societies where the government decides who gets what.
These “rights” are based on the concept that freedom is better than slavery. That choice is beter than being dictated to. That fair exchange is better than thievery.
Everything you have is the result of you willingly entering into an agreement with some other party to exchange labor, goods or services. When you prevent people from freely entering into those agreements and instead dictate, by force, who should get what, based on some arbirtrary sense of “need” that basically amounts to theft and slavary. The logical extreme of such a philosophy that because of my “need” I should be able to take whatever you have or force you to provide you labor.
And of course, the unintended consequence of such a “might makes right” kleptocratic society is that no one will ever build anything of consequence. Why create a business or build a house or do anything of importance if it can be taken away by someone who “needs” it more.
And it often turns out that those with the greatest “need” also tend to be the biggest and strongest with the most guns or swords.
Yes. The current economic state and the low, low tax bills and high, high pensions we’re willing to future generations stand in glorious testament to the wisdom of not interfering in the ‘free market.’
Please articulate how exactly the current economic state has anything to do with free markets. Because it isn’t as intuitive to the rest of us as it is to you.
Maybe he’s talking about how the government pressured lenders to make riskier loans in the 90s under Clinton so minorities would have a greater opportunity for home ownership?
I’m more interested in hearing his explanation as to how
Mortgage lender A, using deposits from bank customers B, money from shareholders C, and funds from commercial lenders D
Makes a loan to borrower E that goes bad
and it affects him, a Straight Dope Message Board poster. And his wallet.
I’m not claiming that it hasn’t affected him. In fact, I will stipulate that it has.
But I want to see his explanation for HOW it has affected him, without invoking government interference, regulation, socialization of losses and/or guaranty. Because that isn’t a free market, is it?
Here’s a different way to look at the generator problem.
I’m a store owner in New Orleans 2 days after Katrina. My store has 15 generators on the third floor of a building that are untouched and in great shape.
In order to sell said generators I have to arrange some sort of boat or very big truck or amphibious vehicle to get through the floodwaters to my building. I have to scrounge up labor from whoever’s still there and willing to work. I likely have to feed and water said people as well.
Then, I have to set up some sort of storefront to sell the generators, keep the riff-raff from walking off with it, and try to sell them.
Do I not deserve extraordinary compensation for the trouble I went to in order to put these generators on the market? If I’d sold them at the pre-Katrina price, I’d likely have lost money after arranging for transport, a site and labor.
Let’s say that we have 300 people who want these generators. Isn’t it just as reasonable to pick the 15 by their willingness to pay instead of something equally arbitrary as skin color, position in line, zip code, etc…? At least this way, I know that the people are at least willing to meet that price.
What about if I held an auction? In that case the people are setting their own prices, and I’ll damn well guarantee that the winning bidders would be higher than the pre-Katrina prices.
How about a lottery? Calculate a fair price including your additional expenses, plus a reasonable profit, then hand out numbered tickets, one per customer. Draw the winners and conduct the transaction. You make a profit, the customers get generators at a non-inflated price.
I am sure this is an outrage to free marketeers, but for the life of me, I can’t spot it.
Yes, those lottery winners get the non-inflated, price but many will turn right around and sell it an the inflated price to other customers downstream.
If there is money “left on the table”, it will be exploited. If it’s not exploited by Home Depot, then the first customers or lottery customers will exploit it.
If you pass a law making it illegal to sell at high prices, then people will go underground via black market to sell at at the high price.
You can’t pass a law and expect for humans’ DESIRE to fetch a high price to disappear.
It’s not an outrage, but it misses much of the point behind allowing economic factors to manage the distribution of a scarce resource. The 300 people who want to buy generators at a fair price don’t all have the same need for generators. One guy wants to run his TV and refrigerator so he can live in relative comfort, another guy wants to run his fridge to keep his insulin at the proper temperature, another guy wants to run some extremely important medical device.
All three are willing to pay normal prices for a generator, all three have the same chance to win the lottery. Raise the price and TV guy drops out, raise it some more and insulin guy figures he can get by with a cooler and lots of ice. Depending on how scarce the resource is, changing the price can help ensure that medical equipment guy has first crack at the generator.
If you want to keep your self respect, raise the price to a market appropriate level and give the extra profits to charity. Providing inventory to the black market shouldn’t make you feel better about yourself.