How do you keep your self respect by being forced to give away something for less than it’s worth?
What you are missing is that by enforcing a price ceiling you are discouraging other sellers from entering the market. This isn’t hypothetical"
"John Shepperson was one of the “gougers” authorities arrested. Shepperson and his family live in Kentucky. They watched news reports about Katrina and learned that people desperately needed things.
Shepperson thought he could help and make some money, too, so he bought 19 generators. He and his family then rented a U-Haul and drove 600 miles to an area of Mississippi that was left without power in the wake of the hurricane.
He offered to sell his generators for twice what he had paid for them, and people were eager to buy. Police confiscated his generators, though, and Shepperson was jailed for four days for price-gouging. His generators are still in police custody."
So not only did no one benefit from the use of the generators, no one else in their right mind would bother driving 600 miles to try and sell much needed supplies because they would just be confiscated.
I wasn’t trying to accuse you specifically of making anything up. Perhaps it would have been better to ask if the ‘rights’ you and DT were speaking of were the same kind of rights. (inherent natural right, legal right, or morally “right”). The point I was trying to make was that the argument seemed to be nothing more than “it’s my right”… “No it isn’t”… “yes it is”… “no it isn’t” And all too often when I see this, it’s because the rights that are being argued aren’t based on anything but rather seen as “self-evident”.
I think that’s an overly capitalistic view. Can you not even conceive of someone giving me something simply because they want me to have it? Can you not imagine that someone may build something of value knowing full well it will be taken away, because they actually believe the world will be a better place with the thing built and benefiting whoever has it even if it’s not the one who built it?
This problem is not with the idea of dictating, by force, who should get what, but rather with the integrity (or lack thereof) of the process for deciding who really has ‘need’ of what.
shrug
It was the advocates of price-caps which were talking about ‘reasonable prices’ so I figured, whatever they thought that was, that’s what one could sell for. Perhaps, the price the generators are selling for elsewhere… perhaps the full cost of acquiring them and bringing them into the disaster zone (so that the public wouldn’t have to pay for it)
But doesn’t that rest on the assumption that ‘medical equipment guy’ has enough money to pay the higher cost? I’m not trying to defend price caps here… just pointing out that the free market just doesn’t have the ability you seem to be describing, of allocating resources to who needs them the most. If ‘TV guy’ and/or ‘insulin guy’ have a lot of money, it could end up allocating the generators, not to he who needs them the most, but rather to he who already has the most.
You don’t know that medical equipment guy has enough money to buy it at the regular price. At the higher price, at least he’s got a fighting chance to get one, because there is still a generator for sale. Hell, he can go to the store manager and pitch his sob story, show proof that he’ll die without the generator, and maybe get a price break, or layaway, or something. For the anarchists out there, he can steal it if he wants and deal with the legal consequences later. If the generators are all gone, the point is moot, no matter how much you need one, you’re not getting one.
The economic point is that the law of supply and demand only works if the price can be set in the market, artificially low prices always create a shortage because you hit a point on the chart where supply is less than demand. The suggestion here is to have limit prices for a product that is already in short supply, it’s only going to make the shortage worse.
Since there is a documented shortage of generators in our scenario, someone, somewhere is missing out on the generator they desperately need, regardless of the way you allocate them, that’s the nature of a shortage.
One cannot be “overly capitalist” any more than one can be “overly free”.
Charity and philanthropy are one thing. But people should not be expected to just give away their labor, ideas and possessions just because it will “make the world a better place”.
…and?
I think I made it clear I am not trying to defend price caps.
I am merely correcting a misconception which seems rampant in this thread. The idea that the free market can be expected to allocate goods according to the needs of the people. You gave an example where ‘TV guy’, and ‘insulin guy’, “drop out” as a result of high prices leaving ‘medical equipment guy’ (whose need is greatest) to buy the generator. I am only pointing out that in this example, the greater need of ‘medical equipment guy’ is not the determining factor in whether he gets the generator. The result of who gets what, is determined by the, all too often unspoken, factors of these sorts of scenarios. Namely, the relative amounts of money available to ‘TV guy’, ‘insulin guy’, and ‘medical equipment guy’.
I didn’t say anyone was overly capitalist. I said absolutely nothing of the sort, so I’ll thank you to build your strawmen elsewhere. I said his view seemed overly capitalistic, because his statements were completely focused on capitalism to the point of overtly denying other aspects of human behaviour.
Cell phone bandwidth is a public good and the government can do whatever the heck it wants with it.
The better question is why can’t oil and gas companies gouge when there is a hiccup in the supply considering how hand to mouth our oil supply/demand is?
I think the misconception is that someone has suggested a better allocation method than the free market. The free market is not perfect, but I think it does a better job of “need based” allocation than price caps or a lottery.
The other factor besides money is the availability of viable substitutes. In my scenario, both TV Guy and Insulin Guy have viable substitutes to purchasing a generator, when you raise the price, it’s not just that they need to pay more, but the substitutes begin to look more attractive. TV Guy and Insulin Guy no longer WANT the generator, they will take their substitute instead. Even if they have enough money to buy one, they don’t. The greater need of Medical Equipment guy isn’t the sole factor, but his lack of substitutes is a major factor in the decision making process.
Outside of having a tribunal rule on proposed generator purchases, I’m not sure what “non-market” method is going to distribute these generators without just as many (if not more) folks who really need them getting nothing.
Trying to make everything into a comparison with price caps and lottery won’t help you. They aren’t effective for “need based” allocation, but that doesn’t change the fact that the free market isn’t either.
Introducing new terms won’t help you. “viable substitutes” is just an attempt to transform ‘need’ into a binary value. Re-labelling those who have less need to those with “viable substitutes”. Viability’ is a red herring. ‘medical equipment guy’ has viable substitutes too. Even if he substitutes running “some extremely important medical device.” with laying down in a ditch and dying, it’s still ‘viable’. Since there are always viable substitutes, the question is what is preferable? All the viable substitutes in the world won’t change the fact that if ‘TV guy’ has enough money, the generator will remain the most preferable option even at prices above what ‘insulin guy’, and ‘medical equipment guy’ can afford.
Unless they have more money than ‘medical equipment guy’.
Unless they have more money than ‘medical equipment guy’.
His decision making process has little bearing on the outcome if ‘TV guy’ and ‘insulin guy’ have more money. You seem to be going to great lengths to ignore this fact.
Again, trying to compare the effectiveness of the free market to other solutions, is assuming that the free market has any effectiveness at all in addressing the problem. How about if someone, bought up what supplies they could afford, took them into the area with the shortage, and simply gave them to those who needed them most? Since they’d be using their own judgement, I dunno if you’d count that as a tribunal. They might be more effective, if they bought more than they could afford and then tried to make the money back by appealing to the good nature of the less needy in the area of the shortage. (I’m just guessing that those who are in close proximity to a problem will be more willing to make personal sacrifices to address it) There are endless variations like only selling to ‘TV guy’ if he’ll make a contribution to help pay for everyone else. In the end, the degree to which the problem will be addressed is exactly equal to the degree to which people are willing to make their own effort and personal sacrifice to do the right thing. This is only made harder by those who cling to the myth that magical free-market pixies will somehow transform their sloth and selfishness into good deeds.
That would be great if FantasyLand is ever struck by a natural disaster.
Since we don’t want to be dependent on people’s charity, whim, or acting contrary to rational logic, I’m going with free market. A guy with a truckload of generators (like the example in the link I provided) should be able to drive in and sell or trade them for whatever he can get for them. Insulin Guy or I Don’t Want My Ice Cream to Melt Guy or whoever can trade for them like everyone else, or if he doesn’t, he can negotiate with I Own A Refridgerator Guy. Because at the end of the day, it’s his generators and if he reach an equitable settlement, he is better off just going home with them.
Yes, introducing a fancy economic concept like “substitute” doesn’t have any place in this discussion. Especially when the discussion centers around the concept that dying is a “viable” substitute to living.
I didn’t say my example was what will happen. I’m saying it can happen if just one person decides to address a problem instead of hoping the free-market pixies will do it for them. The world is what we make of it… not what we pretend it is.
Refusing to acknowledge reality will not make it go away. Your faith in the free market doesn’t give it the ability to protect you from being dependent on people’s charity.
I’m sure this will surprise anyone as determined as you are to construct a false dichotomy… but I agree.
I understand perfectly well what the free market is. If I’ve made any statements about the free market which were incorrect, all you have to do is point them out.
Do you have a cite for this? Your statement is lacking in various important details, such as what “stabilized” means in this context, and I think that might be important for this discussion.
You don’t understand what the free market is. “Need” is determined by the individual actors. Each actor determines their own need, and they assess their need via the price mechanism. On that factor alone, actors in the free market are going to have more information and make better assessments about their need than lotteries and price caps. Yes, it’s not the most perfect system to allocate goods and resources according to need, but unless you are omniscient, there is no better mechanism.
“Viable substitutes” is an economic term, and if you don’t understand this, you do not understand the free market. Having viable substitutes prevents bidding from going through the roof and prevents individual actors from putting all their resources to one transaction.
Having more resources or wealth to acquire more goods is not what actors will use to gauge whether or not to enter into a transaction, all things being equal. Even in areas of extreme supply shock, the more rational people are going to act. If TV Guy only needs a generator to watch tv, there is no rational reason for him to pay more money than Insulin Guy (or whoever) who needs the generator to live. What if the really needy one doesn’t have any resources? Well, sucks to be him. His situation is just as bad as if there was not a shortage.
You would rather depend on a system of charity then a free market pricing mechanism? Even the deep pocket philanthropist isn’t going to know who to give generators to. What if the really needy isn’t as good a beggar? To think that a system of good deeds, generosity and charity is better than the free market is antithetical to the understanding of human nature. You really do not understand how markets work.
It’s not quite so black and white, as there are a shitload of people that fall between “no resources” and “overly sufficient resources.” What if the really needy one has limited resources? His situation is far worse with gouging than without. He might have put away enough to cover emergencies, but failed to take into account that there are plenty of people out there willing to raise prices beyond his means, without giving a shit about how that impacts him. Should we punish him for not accounting for the “greed train” coming through town?
Some of the arguments made in this thread are highly specious. There are those who claim that there is no economic incentive to bring more goods to town, if the vendors can’t raise prices to the gouging level. That’s actually pretty stupid, as if there was no incentive, there would be none to bring any supplies at any time. Profit margins are already built into the generators that are being sold on a daily basis and those margins don’t suddenly disappear during a disaster. If the vendor can make a rational argument that his costs are higher due to the emergency, such as getting generators into a flooded area, I doubt if you’d have a whole lot of bitching, but it doesn’t take $450,000 in additional costs to get a hundred $500 dollar generators into the area. If you could prove that it does, then you wouldn’t be gouging, and there wouldn’t really be a problem.
