Gas station owners who are price gouging are bad. Conveinence store owners charging $5 for a gallon of water are horrible…but are the honest* contractors who are flocking to the south to get tons of work (most likely through the winter) are they doing something wrong?
*I’m talking about the guys and gals who are not wanting to rip anyone off, they just want steady work for several months…
I don’t think so. After all, someone’s gotta rebuild. If they can pick up and head down there, and they are only charging their regular rates, I see nothing wrong with it.
As long as they don’t gouge anybody, I say let 'em at it. Work is work.
I’m confused. Are you talking about people going down there to do honest work at an honest price so that the people there can rebuild?
Still, what is price gouging? If you force the price to remain at a level below the market clearing price, other ways will be used to allocate the scarce resource.
Not saying it is fair, but it is a fact of free markets.
Yes that is exactly what I am saying. I have a buddy in CT who is packing up his RV and taking a small crew down there next week. Their sole purpose is to work over the winter and make some decent money. The first thing out of my mouth upon hearing this was, “Are you going to inflate your prices??”
Absolutely not he said… So I truly don’t see anything wrong with it.
I say it is essential for contrators be paid well and probably above the regular going rate back at their home. New Orleans is going to need every single construction crew it can get as fast as it can. If contractors from other areas feel that they can make money by working there then they will flock there and provide the needed labor. If they can only make as they do at home, then why are crews going to want to go there to rebuild? There will still be market forces in effect but obviously demand way outstrips supply.
Absolutely not, as long as the prices are fair. Some of the money they make is going to go right back into the community for food and lodging while they work. The quicker the rebuilding, the quicker the local economy gets back on track.
Now that I reread your question Phlosphr, I am confused why felt the need to ask the question at all given the way it is phrased. It seems blindingly obvious that every honest construction crew in the U.S. is needed and will be welcome there.
How do you define “fair” prices? If someone is willing to pay a certain price, then that price must be “fair” to the one paying it, regardless of whether or not some third party thinks it’s to high. There is a huge need for contractors in New Orleans now. How are you going to lure them from across the nation unless you are going to pay them higher prices than they would get than if they stayed home? In many cases, it will probably have to be substantially higher prices. And of course they will be vilified as the bad guys because they are “gouging.” They are simply responding to market forces – when you have a very scarce resource (contractors) the price is quite high.
For the same reasons I also disagree with the OP statent that gas station owners and convenience store owners are evil for charging high prices for their products.
Supply and Demand is an honest, cold fact of life.
OK, I’ve got 10 gallons of gas that I MUST sell at $2.50 per gallon when the market rate is $3.00. Since I"m not going to make a profit on it, I need to find another way to allocate the gas. Will I give it to a hot blonde and turn away the senior citizen? Will I only allocate to members of my church or my own race?
Letting the market set the price is the only fair way. In very confusing times, such as this, there is a lot of confusion which is why there is a lot of wild up and down movements in prices of items.
Many contractors in the north cannot work with as much frequency in the winter as in the Summer. As it does not snow in New Orleans they will undoubtably make more by being able to work through the winter. I don’t mind what anyone says about the efficacy of price gouging, I still think it is inherently wrong. Especially for those in the lower classes.
People do have some sense of what is a fair price, and identifying the whats & whys of it is something economists are trying to figure out.
Then you are in error. The benefits of the free market obtains if and only if the market is economically competitive. Having good information, ease of entry & exit, and such are important components. Under a situation like this, especially when the flooding was an unexpected event that occured after the storm started to subside (that’s my understanding), you’re not dealing with an economically competitive market. Because of this, any and all claims to the benefits of the free market are simply incorrect.
Why? No one has a claim on the good or services of another. If the owner of those goods and services wants to charge a high price for them, why is that “inherently wrong”? It seems inherently wrong to me to demand that people part with their labor or property at a rate of exchange with which they disagree.
First of all “price gouging” is not “charging more than you think is fair”.
Secondly, if there are that many contractors going down to New Orleans, it will be very difficult for anyone to “gouge” because of competition.
What? A fair price is only dependent on the potential buyer and the potential seller. If it is mutually fair to those two, then it is fair. It’s not up to an economist to figure out what is “fair.” Everyone values things differntly. For instance, I see a hardcover book at $29.00 and I say that’s not a fair price. So I don’t buy it. However, obviously someone thinks that’s a fair price because bookstores stay in business. Similarly, I look at a one-bedroom condo in my neighborhood for sale at $300,00 and I say “unfair!” so I don’t buy it. Other people think this is quite a fair price and scoop them up.
Economists have nothing to do with it. Whether or not a price is fair is dependent on the one selling and the one buying.
Not necessarily. If work is slow at Carpenter Joe’s home, he may as well head to Louisiana to get work. OTOH, if he’s abandoning projects at home hoping to make wads of money, he deserves to get splinters in every appendage.
Just how free is the market going to be when rebuilding starts? The “free market” mantra only holds water if there is any kind of balance. When the scales are tipped so that one party gets whatever he has the nerve to ask for, then it isn’t a free market.
What error? I disagree that the market is uncompetitive. There is no external rationing of resources, additional contractors will soon flood the market, there is no monopoly on price or supply. Any perceived market inefficiencies will be relieved in time. As others have stated, without artifical constraints on price, the market will more efficiently distribute resources where needed.
Care to elaborate? :dubious: How are the scales tipped such that “one party gets whatever it asks for?”
When demand is ridiculously in excess of supply, the suppliers can get whatever they want. This isn’t a free market. It’s hard to quantify where free markets end and gouging begins, but like pornography, you know it when you see it.