Three Cheers For "Price Gougers"

TechCentralStation ^ | September 2, 205 | Rand Simberg

[savedbygrace]

Agreed.

[NRA1995]

"Some analysts warn move may spur supply problems."

Read: analysts with whom we strongly disagree and would throw into dungeons to silence them

[Red Boots]

Florida has had an anti-gouging law since Andrew and we haven't seen the slippery slope you're talking about. There does seem to be a decrease in scum of the earth who show up to take advantage of people, though.

I don't understand how any voluntary transaction between a buyer and a seller can be characterized as "taking advantage of people"? It's a voluntary transaction, by definition one cannot be taken advantage of when undertaking a voluntary transaction.

It seems to me like the definition of gouging, or "taking advantage of people" boils down to no more than people paying more than they would like to.

[billbears]

The author is calling for not capping prices and letting the market handle the situation. That's a conservative approach. What's the error in this article? Perhaps the liberal governor of Georgia could have done with reading this before signing the legislation he did last week. As other politicians, Democrat and Republican, could have done so as well before practically threating 'price gougers'

But like all politicians they play to the simple who want the government to think for them and to take care of them. I just hope the gas station in Atlanta made a killing off $5.87 gas

[staytrue]

LEAVE THE MARKET ALONE.

The ability to gouge is not the logical market result of supply and demand reaching equilibrium, but the result of a temporary monopoly and a desperate, irrational, consumer whose life and limb are threatened.

The market does not work in these cases, because there is no market at all.

[savedbygrace]

Does your State not have anti-price-gouging laws?

My personal approach to retail operations that make large price increases at times like these is to NOT buy from them in the future, after things have calmed down.

There are three stations in our little town that I have not purchased gasoline from since 9/11, when they knee-jerk upped the price for no real reason, other than panic anticipation.

It's amazing the way all the gas stations here seem to set their prices to the same price on the same day, WITHOUT ANY PROVABLE COLLUSION. Simply amazing.

[Tax-chick]

But like all politicians they play to the simple who want the government to think for them and to take care of them.

Way with words, billbears!

[Red Boots]

So should electric companies be able to sell their product to you for whatever price you are willing to pay? That would mean huge sections of the country would go dark overnight. A free market is not always the best for the common good

How ridiculous !

100 years ago, electricity was only available in New York City. Now it is available everywhere. It got that way not because of government actions, but because private utility companies,acting under free market conditions, used their profits to expand into unserved areas, so they could increase their profit base.

By contrast, those countries, like the Soviet Union, where everything was "regulated for the common good" still have large scetions without any electricity. The government, which was based on the idea of serving the public good, had no money to expand service to those areas, so it didn't.

[flashbunny]

If only we could emote our way though life, not relying on facts or the laws of economics.

Try filling your gas tank with good intentions when the government puts price caps in place to prevent gouging.

AGain, I put two questions to you, since you seem to have taken over in the "emotion over logic" vitriol spewing.

1: Would you rather be able to buy gas at $3.50 a gallon, or have no gas to buy at $2.50 a gallon.

2. Please explain your brilliant anti-gouging proposal, and explain exactly how you would legally define gouging, and what penalties you would set for someone convicted of it.

Also explain how you would set up your system to prevent the shortages, gas lines, and other problems that always occur when you set artificial price caps.

Or should I not hold my breath and expect you to only spew petty, childish insults?

Telling the world how virtuous you are for opposing price gouging is not an economic plan. It is not compassionate. Price caps don't work,and have disastrous, even deadly effects. When your imaginary paradise meets the real world, your way is revealed to be an utter failure. Every time.

[flashbunny]

"and you sound exactly like the "educated" liberals who boast a diploma in place of morality.. a brain won't keep you from going to Hell.. but a heart just might."

Ah, good, can you be like the others and give me some bible quotes, too? That really backs up your position. Let's ignore history, let's ignore every disastrous time the government capped prices, and do it again...because otherwise we'll all go to hell.

Talk about a sign of a weak argument. Why don't you just call me a price gouging nazi....or is that the next step?

[freepatriot32]

Libertarian ping.To be added or removed from my ping list freepmail me or post a message here

[traviskicks]

The good Dr. On Florida Price 'gouging', by a 'Republican' (Jeb):

http://www.townhall.com/columnists/thomassowell/ts20040914.shtml

[IronJack]

Why do you assume that anyone who criticizes gougers is advocating government regulation?

[flashbunny]

because they usually call them criminals, which means they want a law against it, which means they want government action.

They praise anti-gouging laws, but when asked for specifics on their proposal to prevent 'gouging' but maintain supply, they clam up.

Anyway, it's easy to criticize. It just takes a computer and an internet connection, and the whole world will hear your whine.

But it doesn't do any good. It's just a waste of everyone's time. Demonizing a person who is taking risks and supplying goods people need isn't productive. It's a counter productive witch hunt.

Hell, I could respect them more if they offered or supported a government plan. But petty complaining and whining while offering nothing constructive is just childish.

[konaice]

The market does not work in these cases, because there is no market at all.

If there are no markets, then there can be no gouging. QED.

Really, take a few courses in Economics, its very clear you have no idea what you are talking about.

[IronJack]

It seems that in the past government has regulated profiteering, with some measure of success. Not that I'm proposing such a plan, but doesn't it seem cavalier to just discount the notion entirely, especially on the grounds that the free market will always work better?

[flashbunny]

"It seems that in the past government has regulated profiteering, with some measure of success. "

Some measure of success?

The gas lines of the carter era? What 'measure of sucess' were those?

Anything the government does to artificially limit the free market is a recipe for disaster.

[flashbunny]

the following is from http://capmag.com/article.asp?ID=1164

Even the Department of Energy's study found that price caps -- which, let's not forget, are what got California into this mess in the first place -- won't improve the energy situation. In fact, they'll likely make it worse.

The study concluded that a $150 "hard cap" on electricity bills -- like the one proposed by California Gov. Gray Davis -- will make it much more costly to produce power, leading some companies to shut down. This could wipe out as much as 3,600 megawatts of generating capacity in the state. That's enough power to keep the lights burning in more than 300,000 homes.

And the most popular alternate price-fixing scheme -- a "Cost-Plus-$25" proposal -- would discourage "only" 1,300 megawatts from being added to the state's capacity. Reasonable people may disagree on how to solve California's crisis, but surely no one would argue for less capacity.

Price caps also "could double the number of rolling blackouts from 113 to 235 hours and increase the number of households in the dark to about 1.575 million," the study says.

Mere guesswork, critics may respond. Fine, but they can't shrug off what history teaches us about price caps. It's all laid out in a book published more than 20 years ago by The Heritage Foundation titled "Forty Centuries of Wage and Price Controls: How Not to Fight Inflation," by Robert Schuettinger and Eamonn Butler.

The book outlines the unqualified failure of price controls from ancient Egypt forward. Consider what happened when the Pharaohs, under the guise of preventing famine, tried to control the wheat supply. Over time, control gave way to direction and direction to outright government ownership. Farmers, with no profit motive left, produced less and less wheat until -- surprise! -- famine set in. The economy collapsed, workers abandoned the cities and, finally, in about 3000 B.C., the reign of the Pharaohs ended.

Hammurabi's legacy to the world is that he authored the first-ever formal written law codes. But his legacy to the Babylonian empire is the extensive wage and price controls he included in that first code. They weakened the economy so much they eventually brought down the empire itself.

The Roman emperor Diocletian tried wage and price controls in an effort to right the market after earlier price controls had failed. In the fourth century B.C., the Roman government bought corn and, in times of shortage, re-sold it at a low fixed price. In 58 B.C., it went further and granted every citizen free wheat. Farmers began streaming into Rome because they could live and eat without working. By the time of Julius Ceasar, one in three Romans was receiving government wheat.

The government tried to fix things by coining more money. But that just added skyrocketing inflation to the mix. Diocletian imposed wage and price controls and ordered that anyone who violated the controls or withheld goods from the market be killed.

The result, in the words of one historian: "The people brought provisions no more to market, since they could not get a reasonable price for them, and this increased the dearth so much that … the law itself was set aside." Soon thereafter, Diocletian found himself set aside --forced from the throne after just four years.

Then there was the former British colony of Bengal. In 1770, its rice crop failed, and the government imposed price controls. A third of the population died in the ensuing famine. Nearly a century later, Bengal again faced famine. This time, the government encouraged speculation in rice. Merchants went elsewhere to buy rice, brought it back to Bengal, sold it at a profit and averted the famine.

Americans haven't been able to resist the lure of price controls, either. From the time of the Continental Army, when price controls nearly brought a ruinous end to the American Revolution, to the 1970s, when President Nixon attempted to overcome creeping inflation with wage and price freezes, American consumers have taken their lumps from these failed policies.

So will Congress listen to the Department of Energy and to history? Or do we again have to learn this lesson the hard way?

[IronJack]

You've jumped the argument from one of oil to one of electricity, but let's assume the commodity being sold is irrelevant.

How does putting a price cap on electricity make the electricity "much more costly to produce"?

I would also think that temporary price controls -- "anti-gouging" legislation -- falls under a slightly different set of constraints than indefinite wage/price regulation.

I'm having trouble understanding how gasoline which was being sold profitably for $2 a gallon is suddenly not profitable unless it's being sold at $6 a gallon. Or how jacking the price to $6 a gallon is actually doing consumers a favor by discouraging them from buying, so there'll be gas available to those who need it. That is only true if "those who need it" happen to have $6 a gallon for their gasoline.

For a tactic that was implemented to discourage consumption, the price gouging in Atlanta seemed to have exactly the opposite effect. Lines formed around the block, and stations sold out for the first time in decades. And that was after the price tripled overnight.

I wonder if some of these fantasy market pressures are actually just greed dressed up in an economist's suit. Pure, raw, unbridled moneylust would go farther toward explaining the recent gas price surges than any market mechanism.

Again, I must stress that I'm not arguing for price controls, or government intervention of any sort. But it seems to me that some of the reasons for rejecting that suggestion are pretty flimsy. Or maybe I just misunderstand this whole free market argument.

[OCgolfer]

Really, take a few courses in Economics, its very clear you have no idea what you are talking about.

The economics courses I took in college were really eye-opening to me. Probably the best courses that I took in college because they are so relevant today. I suggest people read a few good books on micro and macro economics. Sorry, I don't have any specific books to recomment but probably if you look for authors Milton Friedman and Adam Smith, you won't wrong. Read up and maybe more people will understand what we're all talking about.