There's been some mention of "why I'm no longer a Libertarian".
Miguel has an epic rant about John Stossel and price gouging.
Stossel is provably correct that gouging is precisely how a free market works and how it signals demands against supply.
The core of Miguel's rant is that it's unseemly to take advantage of people when they're most vulnerable.
I agree.
He made mention of the Cajun Navy who took their little boats out and saved lots of people in the floods and how admirable that was and how there were libertarians saying, "they should have charged them for the rescues."
I have news for the Libertarians: Charity is not incompatible with Libertarianism!
Nor does being a Libertarian mandate you have to be a prick about things (though you'd never know it from talking to some of them.)
The thing about gouging... There's a technical term for it.
Arbitrage.
Which is better: No generators at any price or a few at extortionate pricing?
Which is better: No incentive to help past your generosity or a strong financial incentive?
The core of the price signaling argument that Stossel was making, and might have needed more explanation for the layman, is if you let people gouge; it encourages more people to bring in items from a market where they're cheap and available to one where they're unavailable and now expensive.
Remember, the risk of traveling to a place where such generosity is merited is non-zero.
Arbitrage.
It might be unseemly to do it, but it might also do more good than harm in the longer run.
Allowing gouging might also penetrate a common psychological blindspot. There's people who don't prep because reasons. A substantial number of them, however, would prep if they had an example where it was 10x as expensive after the shortage than before; but wouldn't if they knew shortage was maintained because of anti-gouging.
Yes, that attitude is stupid; but people tend to be.
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Neil Boortz, back when he was on the radio, used to rail about 'price gouging' laws. His example? Family of 6 escapes Miami ahead of a hurricane, and goes to a motel in Georgia. Rents three rooms at $19 a night, thus taking up 3 rooms. Another family comes up to get a room and no rooms available. Whereas during 'price gouging,' motel charges $69 a night, so family of 6 packs into one room, and now there are two rooms available for other people.
ReplyDeleteEven better, say a sports event, like, well, here in Gainesgrad in Alachuastan, Gator Football or Gatornationals. Government has no problem allowing hotels and motels to double, triple, quadruple or even quintuple their rates during sports events or big conventions or stuff like that. Where 6 people cram into a 2 bed room.
But during a hurricane? Oh, no, can't price gouge. That's... bad and mean and nasty.
I love what one convenience store owner did during one hurricane evacuation. He split all the bottled water into individual bottles. People had no problem paying $1.99 a bottle. But charge $22 for a case of 12? Oh, no, that's price gouging. (Insert .gif of staring off into the distance, flashing necklace, saying "Norman coordinate," tilting head to side.)
Does price gouging suck? Yes.
Is it good business? Maybe. Like if this is the last opportunity for you to make some money before your business is shut down for 4 weeks and you have no way to pay employees or yourself.
Ah, well, I blame all the people screaming about price gouging on socialism in the schools not teaching business math or even regular math anymore. Cause and effect, logic, and so forth and so on.
Friggin socialists.
It's time for God to cull the herd. Natural selection is a very real process... Don't try to save the stupid, use their agonizing deaths as a teachable moment for your children and subordinates. Gouging doesn't exist. Price elasticity does exist. Government intervention ALWAYS does more harm than good. ALWAYS... EVERY. TIME.
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