In the case of an emergency, I see three options for what the ‘market’ can do:
Rationing (requires a huge amount of administrative overhead)
Price gouging (supplies lasts longer)
No price gouging (supplies run out very quickly, price gouging returns via black market suppliers)
Are there more options?
I’m sure there are entire economic texts written about what happens when supply is static but demand skyrockets. I’m not sure what all happens though aside from what you said. Rationing, price gouging, black markets, etc.
In a survival situation as was said above, there isn’t always the option to increase supply to meet the higher demand.
ONLY if they’re near the front of the line.
Otherwise, the artificially low price will encourage over-consumption, and only the lucky few will get any at all.
This opposition to “gouging” is stupid, incredibly short-sighted, and remarkably disingenuous and intellectually dishonest.
If you have to evacuate, and your gas tank is nearly empty, which situation would you prefer?
(A) The price is so high that you can only afford 3 gallons. (Which, by the way, in any reasonably modern car, will get you outside the most immediately-affected area, even allowing for a decrease in gas mileage caused by congestion and stop-and-go traffic.)
(B) You wait, and wait. When you pull up the pumps, you are told that because the price did not go up to reflect the changed circumstances, the first people in line filled their tanks to the brim. This caused a shortage (because, after all, the gas station is not going to be getting any deliveries for a while), and therefore there is no gas at all left for you.
The free market, if it exists, is not rational, despite what free market proponents will tell you. It needs rules as proven by financial and economic crisis after crisis started by bad actors.
Charging excessive prices for water, gas, HIV drugs, hotels because customers are in a desperate situation and are frightened and have or feel they have no alternative is predatory behavior, not being a good business person, who instead creates or innovates a great product and can justify a higher profit margin.
Just have a sign saying “One per customer”, and have the checkout people enforce it. Not a huge strain.
Thank god for price gouging. It’s the only reason I have gas in my truck right now. (DFW)
All price gouging does is reserve resources for the rich. They don’t have to be at hand or even first come, the goods will be waiting for them and their money bags whenever they arrive.
Clearly as God Ordained. Gotta love those Christian values!
The ‘it encourages quicker resupply’, can only be true if the massive profit goes to the supplier not the greedy retailer. But that’s not what happens.
How do you think? The same way thousands of people have been coming in and out of Houston all week. The place is not islanded. The normal supply chain is broken. With some roads closed and wider disruption to the electrical distribution system.
You could be bringing goods in right now, it just has higher cost than normal.
You can limit hoarding by enforcing purchase limits. One case of water to a customer. Limit the gas pumps to cut off at say 5 gallons. All gouging does is ensure that only the wealthy have access to the necessities of life. Plus make obscene profits for the retailer.
This is the key to the dilemma. Just because the gas station charge $10/gal for gas, BP is not incented to supply more fast because they don’t see any of that.
Blatant gouging in health care often doesn’t end well for the gouger. And while it may not happen as quickly and efficiently as we’d like, pressures are brought to bear on those perceived to be profiteering.
Damned if I know why some people see a disaster as a quick way to make a lot of money, or why others make excuses for them.
There is pretty much always going to be someone who can’t afford your product. Is it only during a disaster that you are obliged to meet their price needs?
As a society, we should ensure that people have the necessities, even those who cannot afford them. We should not place that burden on some subset of society (i.e., merchants).
Are the ~$40 cases of water really an example of gouging? I’ve read a lot of angry articles about stores doing that, but at my school’s cafeteria, a case of water is $54, every day.
The bottles are $2.25 each, so if you buy a case, they charge you 24x2.25. Many of the stores that have done this don’t normally sell cases of water, so they probably did the same thing, not knowing the fair price for buying a case at a time.
What kind of burden are we placing on merchants? If they were happily selling something for $3 before a crisis, why is it a burden for them to sell it for $3 in limited quantities during the crisis? They aren’t meeting price needs only during a disaster, they are selling for what the free market dictates. The minute that disaster strikes, the free market breaks down. In this case, scarce resources should be allocated to as many people as possible, not to those with the fattest wallets.
But prices change all the time. Would you argue that merchants should be “happy” if the government mandated their profit margins be fixed at a certain rate at all times?
The burden is that they be turned into emergency supply depots. That is the job of the government.
That’s nonsensical. They aren’t emergency supply depots, they’re just selling what they normally sell. All I ask is that they sell at the same price they normally sell for and limit quantities to discourage hoarding. When the market functions after the crisis, let the free market do it’s thing. I’m not going to excuse the exploitation of disaster victims.
People keep writing this as if it’s a given. The supply chain with all of its efficiencies breaks down but is not eliminated. Goods and people were and are still moving in and out of Houston. If the Oak Farms dairy processing plant on Leeland had to shut down, then they have to bring in bottled milk instead of tanker milk at added cost. H-E-B installed natural gas generators at 18 grocery stores around Houston. That has cost. Or they could just shut down if you prefer.
If there is additional cost, they are justified in raising the prices as needed to reflect those costs. But they are not justified in taking advantage of a captive market in dire straits.
What **Little Nemo **said.
Also, people often cite an example of a monopoly charging rip-off prices as an argument *against *capitalism, when in fact capitalism is all about busting up monopolies by introducing competition. The more suppliers there are, the more the price of a good tends to drop. The arguments that socialists use against capitalism are often the best arguments in *favor *of capitalism - that is, capitalism done the right way.
Capitalism is “about busting up monopolies”? Capitalism has no opinion about monopolies. It has been perfectly comfortable with them. That’s why they have laws.