Price Gouging Is A Myth

[KD5NRH]

I can assure you, there is not a socialist bone in my body.

Except for the ones trying to tell people what they are allowed to charge for their property, of course.

[flintknapper]

I can assure you, there is not a socialist bone in my body.

Except for the ones trying to tell people what they are allowed to charge for their property, of course.

Sir, if you want to continue to label me a socialist then please do so by PM, I will be happy to get it all straightened out for you. Because right now, you are treading on pretty thin ice!

[KD5NRH]

Preparation is good, I am staunch advocate of same. But, fuel and perishable goods are not always something you lay in store long before the need for them arises.

What perishable goods? Ranch style beans have a shelf life that may outlast the sun. Fuel stabilizer is cheap, and gas cans are cheap as long as you buy them *before* you need them. (i.e. at WalMart, not at the gas station closest to your empty car.)

What a calloused point of view. Those least able to remove themselves from harms way are summarily dismissed with the penning of "leave early".

Then how about they don't move themselves into harm's way in the first place? How many of those retirees didn't live in a hurricane-threat area before they retired?

It makes me sad to see that we live in a time so abundant with hardened hearts.

That's because all the bleeding hearts refused to let people pay for their mistakes.

[KD5NRH]

Sir, if you want to continue to label me a socialist then please do so by PM, I will be happy to get it all straightened out for you. Because right now, you are treading on pretty thin ice!

I don't care whether you accept the label or not, that is what you are when you start demanding control over others' property.

Feel free to stop complaining and go open your own gas station that never raises prices.

[flintknapper]

I don't care whether you accept the label or not, that is what you are when you start demanding control over others' property.

I certainly do NOT accept the label, nor do I agree that anyone (me, state, govt) is trying to "control" the goods/prices of merchants (except during times of emergency) when they may be restricted. Sorry, but we live in a world of regulations and restrictions. Whether you like it or not, there are PG "laws". We wouldn't need these laws if not for the shameful practices of certain merchants/businessmen. If this doesn't sit well with you....do something to change the laws.

Feel free to stop complaining and go open your own gas station that never raises prices.

This is more than "ridiculous" (but not unexpected). Of course, fuel (and many other essential items) have certain costs that fluctuate. Add to that....inflation (or other increased costs of doing business) and "price increases" become necessary. This is proper and a normal part of doing business.

Under NORMAL conditions the retailer may set any price he/she wants...and the market will or will not bear it. However, EMERGENCY conditions require new considerations. No one is saying that an across the board "freeze" is to be put on prices. Only, that IF a merchant raises the price (many times the previous average) on items of "necessity" (and there is no other available source) then certain "restrictions" can apply. That is not socialism!

Please don't misconstrue ANY raising of prices to mean "price gouging" (I don't), but it does exist. More common...is to see a rather significant price increase (even on non-essential items) for no other reason than to take advantage of an opportunity to make money off of people who are displaced. This is generally not illegal, but I submit it is greedy and immoral. A good number of "smart businessmen" would disagree of course.

[John]

I really didn't see any price gouging, but then I was pretty well stocked up and did not go looking after the storm. I think I paid 3.69 or 3.89 a gallon for gasoline a couple of days after the storm. Before the storm I saw people paying outrageous prices at home depot for everything from $26 / sheet paneling to $54 3/4" lumber core birch to board up their windows. Yikes... Not gouging, that was all Home Depot had left to offer and folks were buying it up. This was Friday, mid-day.

After Katrina I had to go and help my parents and it was sad to see gas prices a dollar or more higher in Texas (Orange/Beaumont area) than in Louisiana. I saw that as gouging. Not a fan of gouging. In an emergency when many thousands, in this case millions, of people are affected we should all show compassion to our fellow man. Certainly if a vendor’s costs increases, he should pass those increases on to customers. I picked up a 5000 watt (edited to correct kw to watt) generator at Home Depot a week before the storm for $600.00. There was a truck on the main feeder to our neighborhood selling similar generators for $2000.00 (price was stated by a neighbor) after the storm. Is that gouging? Probably not, they were filling a need and making a profit. I have no way of knowing what their costs were for the units, the truck, the fuel to get to that spot… They might have driven in from Florida as far as I know and paid $1500 each for the units. I’m seeing the same unit I purchased on Ebay now for over $900.00 Even if none of these is true, they were not part of the standard supply chain for the area. Carpetbaggers and opportunists are going to charge more.

Free Market ideologies go out of the window in emergency situations. If it costs the fuel station a grand extra to have a truck of fuel on standby for after the storm, he’s got a right to pass that cost on. If it cost extra to expedite a truck load of generators to an area, people are going to pay the extra cost. That kind of stuff isn’t gouging. Gouging, in my opinion, is increasing the price of on hand merchandise to profit off of other’s dire need. And I do mean dire need, not wants.

-John

[pt145ss]

http://www.conciseguidetoeconomics.com/ ... ceGouging/

http://www.capmag.com/article.asp?ID=4683

http://marketpower.typepad.com/market_p ... gougi.html

http://internationalecon.com/Opinion/Pr ... ouging.php

[mr.72]

Well this topic has sure started some spirited debate.

Figured it would.

Flint, I am sorry to say, but the type of price controls you are advocating, even in a time of emergency, are either socialist in nature, or at at the very least they are an extreme invasion of government control in the free market. However, our government does this routinely, because in the USA, we are gradually drifting towards socialism in the name of social welfare, economic welfare, and government guarantees of half of the things we do. I fear we are on a slippery slope and there is no way for us to recover. Certainly, vehement arguments in favor of government intrusion by those who also claim to be supporters or rights and liberty do not help.

Just look at the buyouts and bailouts of banks and unqualified mortgage holders we have had lately. This is another example. Government controls and regulations allow banks to and homeowners to get into high risk loan situations, the lenders lose money predictably, and then the government bails everyone out using our money. How is this not socialist in nature to take my tax dollars and use them to pay someone else's mortgage, and also to buy the very banks who hold these bad loans? This is very much like the government owning the houses, controlling the money... these are the roots of socialism. But some of us readily support planting even more roots of socialism.

There may be a legal definition of "price gouging" and it may be against the law, but it is still a myth and the thing that is against the law is actually fair market pricing in transient times of short supply. The government controls all kinds of private commerce and this is only one area. That still does not make it right for the government to do so!

At the heart of this debate is the idea that the government is responsible for caring for those who cannot care for themselves, or providing for those who cannot provide for themselves. This is antithetical to the idea of liberty. Free men are free to help their neighbor, and are free not to help. This is the very core of socialism.

[Xander]

This is easily said (and readily accepted) by those of us with average means. It would probably be looked at a bit differently by a single Mom with 3 kids, the Elderly on fixed incomes, certain young folks just starting out, etc...

There is an entire "economic group" that your line of thinking doesn't exactly "work" for.

When we expand this support for high prices to other essential goods (not just fuel), you quickly make them unavailable to some folks by means of price alone.

All of the sudden... a single Mom with kids can't afford to "fill" her car (at $8-12 a gallon) in order to escape a Hurricane. Or perhaps she can afford the fuel, but doesn't have enough money to feed her children because the "smart businessmen" have tripled the price of food. But, lets say she brought some food along. Good... the children are fed, but they will have to sleep in the car tonight since all the "smart businessmen" along her route of escape have jacked up the price of a hotel 3 times the normal rate....because, well....its the "smart" thing to do.

The piece that you're not taking into account is that price control does not equal general availability. As has been mentioned before, keeping the price of gas low doesn't do single mothers or those on fixed incomes one whit of good if by the time they reach the gas station there isn't any gas to be had at *any* price. When demand increases exponentially, and supply doesn't increase to match, only an exponential increase in price can maintain equilibrium to ensure continued availability. My argument isn't about what is and isn't "smart business" but about the steps that need to be taken to ensure that supplies continue to be available throughout the crisis. We're certainly called as Christians to be charitable to those in need, but price control isn't charity, it''s a recipe for general disaster.

[mr.72]

Right on, Xander.

And on the [absurd] idea of rationing by the fuel retailer: if I own a gas station, how do I decide whom I sell to, or how much? Do I just give each of my friends a tank of gas? Do I decide that 10 gallons should be enough, and if you have a family of 10 and require a full size van to evacuate then you are only going to make it halfway? Or do I sell it at $3/gal to the single mom in the beater Corolla and $10/gal to the single guy in the Mercedes?

Really there is no system that works in accordance with human idealism. The very best thing government can do is get out of the way and let the free market manage the supply rationing based on price. At the very least, price is fair. It's the same price for everybody.

The thing that people seem to forget is that those who have enough money to buy all the gas they want are also likely smart enough to not buy more gas than they need at some temporary, high price. You don't get rich by making foolish financial choices. Those who have the money to pay for an overpriced hotel are not taking up space in a free shelter. Classism may feel good, but it is counterproductive.

[lunchbox]

How does the D.A. go about prosecuting a myth crime is it like the game warden arresting the guy for hunting unicorns out of season

Just thought I'd open up a new thread to discuss so-called "price gouging".

It is a myth.

Supply is limited, at all times, for virtually everything you may want to buy and this rule does not exclude necessities like fuel or food or evacuation supplies simply because you believe you need them right now. Given limited supply, the only thing that works against unmitigated demand depleting the limited supply is price.

The classic example is a hotel room. Neal Boortz made this example after Katrina, and since he has a home in FL he saw this as a close-to-home issue. Let's say your family of four and your mother-in-law have to evacuate from a coming hurricane. Now, normally the hotel you are going to get is $50 per room. So you would prefer to get at least two rooms, one for you and your family, and one for your mother-in-law. Maybe you want three rooms, including one for the kids. But the prices are raised to $150 per room, 3x their normal price. Since the price is higher, you won't get two, or three, rooms. You will just get one and grandma or the youngest kid has to sleep on a cot. As a result, the hotel can accommodate more guests, and therefore more people can find shelter even at the elevated price.

Someone else on this forum in one of the Ike-related threads pointed out the gasoline situation. Gas station owner is selling gas normally for $3.50/gal, but they are limited to only the gas in their current inventory and they expect that the supply line (freeways with fuel trucks) are going to be restricted, blocked, or at least delayed. So given the huge amount of demand for people trying to refuel so they can evacuate, gasoline prices are raised to $5 per gallon and gas cans are raised to a very high price in order to discourage people from buying more fuel than will fit in their own car's tank. This higher price increases the number of people who can be served by the fuel, since it discourages anyone from buying more than they actually need.

So if you are the person paying $150 for the hotel room and having to keep your mother in law with you in the room, or if you are the person spending 40% more to fill up the tank than you would have otherwise, then you are annoyed and you cry about "price gouging". However if you are the person with the mother and law and kids in the car having to sleep in the car because there are no more hotel rooms available, and then having to walk because the gas stations ran out of government-price-controlled fuel, then you might not be so opposed to so-called "price gouging".

IMHO!

Discuss :)

[KD5NRH]

How does the D.A. go about prosecuting a myth crime is it like the game warden arresting the guy for hunting unicorns out of season

I'm betting if you wander around with a rifle in Kansas, and tell the game warden you're hunting manatees, they'll find some way to charge you.

[lunchbox]

How does the D.A. go about prosecuting a myth crime is it like the game warden arresting the guy for hunting unicorns out of season

I'm betting if you wander around with a rifle in Kansas, and tell the game warden you're hunting manatees, they'll find some way to charge you.

thats whats wrong with L.E. these days they are just looking for a way to put you away

[aardwolf]

Yes "Price Gouging" exists. The definition of PG can be hard to put your finger on, but this one works for me:

Noun 1. price gouging - pricing significantly above the market price when no alternative retailer is available.

You mean like when Apple charged a lot for iPhones when they first came out then dropped the price later when demand slacked off?

You mean like when Toyota dealers charged full MSRP for a Prius at the same time they discounted non hybrids because of demand?

You mean like when airlines charge more for a plane ticket tomorrow than they do for the same trip next month?

You mean like when airlines charge more for a popular flight than a less full flight on the same day?

You mean like when union members get paid overtime?

You mean like when hotels in tourist areas have different rates for high season and low season?

You mean like when first run movie theaters charge $7 or more to see the same film that will later show at a $1 theater?

You mean like when ticket resellers charge different rates for different sporting events, concerts, etc?

You mean like when the shops inside the airport charge more than walmart for snacks or pharmacy items?

You mean like when the movie theater charges more for candy than walmart?

You mean like when phone companies charge higher rates during business hours than nights and weekends?

You mean like when movie theaters have lower matinee prices because demand is less that time of day?

You mean like when market forces like supply and demand affect prices every day?

[lunchbox]

Yes "Price Gouging" exists. The definition of PG can be hard to put your finger on, but this one works for me:

Noun 1. price gouging - pricing significantly above the market price when no alternative retailer is available.

You mean like when Apple charged a lot for iPhones when they first came out then dropped the price later when demand slacked off?

You mean like when Toyota dealers charged full MSRP for a Prius at the same time they discounted non hybrids because of demand?

You mean like when airlines charge more for a plane ticket tomorrow than they do for the same trip next month?

You mean like when airlines charge more for a popular flight than a less full flight on the same day?

You mean like when union members get paid overtime?

You mean like when hotels in tourist areas have different rates for high season and low season?

You mean like when first run movie theaters charge $7 or more to see the same film that will later show at a $1 theater?

You mean like when ticket resellers charge different rates for different sporting events, concerts, etc?

You mean like when the shops inside the airport charge more than walmart for snacks or pharmacy items?

You mean like when the movie theater charges more for candy than walmart?

You mean like when phone companies charge higher rates during business hours than nights and weekends?

You mean like when movie theaters have lower matinee prices because demand is less that time of day?

You mean like when market forces like supply and demand affect prices every day?

uh yeah i would call those PG. they just cant make a case a prosecute them

dont you think $20 for a bag of is is outrageous