Carpe Diem

Anti-price gouging laws are really ‘pro-shortage’ laws

If the goals were to: a) extend the gasoline shortages in New Jersey for as long as possible, b) make the lines at the pump as long as possible, c) discourage as many gasoline stations as possible from re-opening, and d) maximize the suffering of the citizens of New Jersey, there couldn’t be a more effective method of achieving all four of those outcomes than to vigorously enforce the state’s “anti price gougingguaranteed shortage and maximum suffering laws.

From the New Jersey Star-Ledger:

The New Jersey state attorney general’s office announced Friday that it has issued subpoenas to 65 businesses, part of an ongoing investigation into more than 500 consumer complaints regarding alleged price gouging.

“Having visited some of the hardest-hit areas of our state, and having seen firsthand the suffering people are experiencing, I assure New Jersey’s residents and retailers that we are taking a zero-tolerance approach to price gouging,” said Governor Chris Christie. “Fuel, electricity, food, and a place to sleep are not luxuries, certainly not for individuals who have been displaced from their homes and in many cases have limited resources at their disposal. We are not asking businesses to function as charities. We require that they obey New Jersey’s laws – or pay significant penalties.”

The complaints have come from all areas of the state, Attorney General Jeffrey Chiesa said.

“We have deployed 45 investigators into the field, and our investigative teams will continue to take consumers’ calls and investigate complaints through the weekend,” he said. “We expect that, by the end of the weekend, we will have issued 100 subpoenas to gas stations, requiring them to provide their receipts and other information to demonstrate their prices, and the costs they faced, both before and during the state of emergency.”

MP: Maybe there’s hope in the future for greater economic literacy in New Jersey.  The state now requires 2.5 credits in Financial, Economic, Business and Entrepreneurial Literacy as a requirement for high school graduation, but it only just recently went into effect. Unfortunately, Gov. Christie and his generation of politicians and bureaucrats graduated from high school years ago and missed that basic training in economic literacy, especially the section on the “economics of price controls.”

HT: Methinks

93 thoughts on “Anti-price gouging laws are really ‘pro-shortage’ laws

  1. You need to add one objective and then you’ve got it nailed.

    e) Pander to a populace that places a higher value on equalizing suffering than minimizing it.

    And why not? We have an entire party that thinks our biggest economic problem is too many “millionaires and billionaires”.

  2. Even if every single politician understands the economics of pro-shortage laws, they’ll pander to the the ignorant populace just as the SEC does with it’s rules restricting shorting (or “anti-liquidity, pro-volatility, invitations to manipulate” rules”, as I call them).

    The average long – and even lots of educated professionals in the field – just either don’t understand the economics of those rules or they don’t care and beg the SEC to increase barriers to shorting as they cling to the myth that shorts make financial markets lose value. Most of the bureaucrats at the SEC understand this isn’t true AND that they are tasked with maintaining a “fair and orderly market” (which can only be achieved my maximizing liquidity), but they will pump out rule after rule that worsens the very situation the masses are complaining about because that’s what the ill-informed want.

    Even if some do have a glimmer of understanding, I agree with SeattleSam, the populace places a higher value on equalizing suffering than on minimizing it. If it’s tougher for one person to buy the good, then it should be unavailable to all. Except, they always exclude themselves from this rule and will lean on every connection and even resort to stealing to get it.

    The populace also doesn’t understand that money is not the only currency. “Vee have vays”, as they say. Those with connections will get the goods instead and black markets are an excellent place to sell goods at their true market value (albeit at an even higher price to compensate for the additional black market risk). And, of course, the store owners may not find the risk of navigating the streets to sell their goods to desperate customers worth the artificially low price. The poor are made even worse off because, instead of having the option to make the trade-offs necessary to obtain the goods and services they think are urgently necessary, they are now stuck with empty shelves and no connections to obtain the goods via other means.

    Price controls are an excellent way to ensure that “the poor” are even more disadvantaged. And yet, it’s often people who consider themselves “poor” (which is, apparently, most of the population), who beg for price controls. I’ve lost all sympathy for them.

  3. I don’t believe that school teachers, government workers, union workers, will teach the truth about economics. Isn’t that one of the biggest problems in this country: government workers are teaching the next generation to vote to give them a raise, ie to be political liberals?

    • 65trolgikhgv6 says: “Isn’t that one of the biggest problems in this country: government workers are teaching the next generation to vote to give them a raise, ie to be political liberals?“…

      IMO that’s a pretty succint description of the problem…

    • I am a high school teacher and I teach every year that anti-gouging laws (and price ceilings in general) lead to shortages. Hundreds of young people will testify that I climb on top of my desk to show a price trying to rise to equilibrium but prevented by government action. As far as I know, this is standard teaching (except the part about climbing on the desk). The textbook also clearly shows that price ceilings lead to shortages when set below equilibrium prices. I am a union member, a liberal, and a government worker. Why do you think that should interfere with a sound understanding of economic facts?

  4. Obviously, many people missed classes in Ethics.

    Unlike the rolling blackouts in California, which was the result of poor economic policy (California was forced to buy energy from other states, to prevent blackouts, and then sued them for “price gouging”), the storm was a natural disaster.

        • peak: “You mean taking advantage of a natural disaster to exploit the misery of people for additional or maximum financial gain.”

          No, Peak, that’s not what free market pricing enables during a crisis. Rather, the expectation of higher prices:

          1. motivates both consumers and suppliers to stockpile additional goods before the disaster;

          2. enables suppliers to sign contracts with their suppliers which guarantee availability of supply during the crisis.

          Once the crisis occurs, and prices rise, the higher prices:

          1. give consumers an incentive to purchase only what they immediately need (rather than stockpiling and leaving others without the goods)

          2. compensate suppliers for taking extraordinary measures to move supplies into the crisis area.

          If you understand basic economics, then you understand how prices convey information to consumers and suppliers and provide oth consumers and suppliers to find an equilibrium. When prices are artifically constrained, the important information is not conveyed and the equilibrium between supply and demand is never established.

  5. re: “equalizing suffering” is one way to look at it.

    sharing resources equitably is another.

    and the decision point is what most citizens prefer.

    that’s elective governance.

    that’s why I keep asking what’s the preferred alternative to elected governance when is comes to shortages during disasters.

    Most people – do not like the auction idea but instead prefer the everyone stands in line idea.

    notice that the “lexus lanes” label has been applied to dynamic pricing of highways?

    which I find interesting when the folks who advocate market price for disasters don’t care for HOT lanes at all.

    HOT lanes are an AEI idea … and you’d think a natural thing for those who want “markets” to support.

    • Larry,

      The question is not about sharing or even what citizens prefer. The question is how do we get the scare resources we have (water, food, fuel) to where they are needed most. Rationing does not accomplish that.

      These laws are not the will of the people, but rather the will of the politicians, but that is a different topic.

      The vast majority of people do not have a basic understanding of economics. They have extremely short-sighted views, and because of that their blame is often misplaced.

      • Jon,

        Would it also be fair to say economists do not have a basic understanding of the vast majority of people? Is so, would an economic “solution” that the vast majority of people do not agree with really be considered a success?

        We tend to forget on this economics’ blog that economics is only 1/3 of what constitutes most public policy decisions: the social aspect, the political aspect, and the economic aspect. Abraham Maslow said in 1966, “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”[

        • Would it also be fair to say economists do not have a basic understanding of the vast majority of people

          I don’t know what you mean by that, but some economists have a pretty good understanding of human nature and some (plenty) are bad economists and sloppy thinkers. If the cost and bother of providing you a good oe service rises rises, then the price will rise. If the price isn’t allowed to rise, you’re not getting it – at any price.

          You can wax philosophical about “other goals” and tie yourself into knots about the percentage of policy that’s “economics” and what have you until you’ve confused yourself into a stupor.

          If you want to buy gas, however, you’ll need to pay the supplier enough to make it worth his while to supply you. It’s that simple.

          • “If you want to buy gas, however, you’ll need to pay the supplier enough to make it worth his while to supply you. It’s that simple.”

            I agree. The conflict is who determines who determines “worth his while.” Gov. Christie imposed odd-even rationing in twelve counties at noon today (my state, Michigan, determines/defines gouging by partially looking at bulk gasoline delivery invoices).

            It’s not always easy or even possible to represent people when you “know” what is best for them and they do not agree for whatever reason. Been there, done that :) It’s a ton easier finding solutions to problems on blogs.

          • There’s no conflict, Walt. The supplier determines what’s worth his while just as surely as you determine what’s worth your while…and what isn’t.

            The dummies in New Jersey bitched and moaned until they got price controls and now they’re waiting in endless lines where they’re getting into fist fights, assaulting station workers, and shoving guns into each others’ faces. As far as I’m concerned they got the solution they wanted and now they’re wallowing in it.

            I’m happy as a kitten.

          • Methinks,

            Again, you do not have a solution if the people affected do not think you do even if it is the solution. Sadly, sometimes you do not get to implement the solution not matter how hard you work on something or how sure you are it will work.

            In 2008, Obama had the majority of the popular and Electoral College vote, so regardless of any current popular opinion poll, Obamacare was driven by majority representation in two branches of the government and upheld by the Supreme Court in the third branch.

            Yes, plural possessive because the study of the economy is made of various singular fields (micro, macro), so economics is plural by definition. That’s my story, and I’m sticking to it. :)

          • Methinks,

            Again, you do not have a solution if the people affected do not think you do even if it is the solution. Sadly, sometimes you do not get to implement the solution not matter how hard you work on something or how sure you are it will work.

            Obama had the majority of the popular and Electoral College vote, so regardless of any current popular opinion poll, Obamacare was driven by majority representation in two branches and upheld by the Supreme Court in the third branch.

            Yes, plural possessive because the study of the economy is made of various singular fields (micro, macro), so economics is plural by definition. That’s my story, and I’m sticking to it. :)

          • I’ve got no solutions for you, Walt. All I’ve got is trade-offs.

            Obama had the majority of the popular and Electoral College vote, so regardless of any current popular opinion poll, Obamacare was driven by majority representation in two branches and upheld by the Supreme Court in the third branch.

            I don’t know what you’re trying to say. I’m pretty sure you don’t know what you’re trying to say (or you don’t know how the American government works because you’re deeply confused about who votes for what), but Obama shoved his Obamacare down America’s throat. Two thirds of Americans were against it and remained against it after it was passed. That’s why he’s not proudly babbling about it during this campaign. So, clearly, shoving things down people’ throats is not something your beloved political clowns are against.

            This is an “economics” blog. There’s no need to make “economics” possessive.

          • Methinks,

            If 2/3 of the people are now against Obamacare, where were they when their votes counted? This was not a surprise after the election, and it will not be a surprise if he is re-elected.

          • It’s not always easy or even possible to represent people when you “know” what is best for them and they do not agree for whatever reason.

            Translation: when you can’t convince someone to sell you something at the price you prefer, simply enlist the police state to steal for you.

        • No, I think we economists do have an understanding of the majority of people, we just don’t communicate it well. For example, people want it so that the resources aren’t only available to a small group of people, that everyone who needs it can have access to it. Allowing prices to rise and not restricting supply accomplishes this. However, us economists get bogged down with things like “price ceilings” and “price floors” and “shortages” and “consumer surplus” and “profits.” What we should be doing is making the ethical case for prices.

          I realize that not everyone has a degree in economics, but we are not making it easy for people to understand either. Of course, you have a few: Milton Friedman, Frederic Bastiat, Steven Landsburg, but most of us use jargon no one knows. Because of that, fallacies like the Broken Window and ration lines persist.

          • Meh. The ones that do have degrees in economics don’t always understand either. I just saw one such “economist” call prices during a crises “noise”. Or they’re waxing philosophical about “morality” and “the rich” and whatever.

            Until people experience the full punch of what they think they want, they’re not going to listen. In general, people are far more interested in grinding axes than in learning anything.

          • I’ll tell you:

            I am an environmentalist.
            I believe in equal rights.
            I support gay marriage.
            I support the idea that we, as rich people, should do more to end world poverty.
            I support clean energy.
            I am a Christian.

            That is why I am a free market capitalist. The free market has the best track record for accomplishing all of these goals. It is also the most moral, because it relies on cooperation rather than force to accomplish these goals.

          • Jon,

            Excellent viewpoint. A 100% surefire solution to a problem is not acceptable if say 7 out of 10 people that are affected by it or that you represent do not agree with it. You either have to convince them you are right or change to a less optimal solution (or I suppose, shove it down their throats). I don’t think a lot of the folks on this blog have ever had to negotiate or compromise with and for others, and it is an economics’ blog so an economics’ solution automatically trumps all other solutions.

          • Well, while you and I believe in all that, the dimwits in NJ have already “turned in” to the authorities over 100 gas stations for “gouging”. The audit to follow is going to be mighty expensive for them and I’m sure that’s just the tip of the iceberg. Wanna bet those stations will just stay closed next time and avoid the headache entirely?

            If people aren’t interested to learn enough basic economics to stop begging for this hell, then let them suffer.

          • I don’t think a lot of the folks on this blog have ever had to negotiate or compromise with and for others

            Seriously? So you think that most of the people commenting here don’t live with other people. How reasonable an assumption do your really think that is?

            (or I suppose, shove it down their throats)

            Like Obamacare. So, obviously, the government has no problem with that.

            an economics’ blog so an economics’

            Why are those plural possessives?

          • I’m sorry. I lost my last post higher up and double posted.

            “Seriously? So you think that most of the people commenting here don’t live with other people. How reasonable an assumption do your really think that is?”

            I think most of the regular posters here are more used to telling people how it will be than asking them what they want. I think I would have a difficult time getting you guys through my team training unless you were elected the team leaders.

          • Whatever, Walt. I’m just pleased and relieved that you understand the futility of price controls. Do make sure you share that wisdom with all of your students.

        • Would it also be fair to say economists do not have a basic understanding of the vast majority of people?

          No.

          We tend to forget on this economics’ blog that economics is only 1/3 of what constitutes most public policy decisions: the social aspect, the political aspect, and the economic aspect.

          This implies economics constitutes 100% of public policy. Incentives affect everything.

    • Larry,

      You keep asking, you keep getting answers, you keep ignoring them.

      If “most people” prefer shortages, standing in line and getting so frustrated they’re pulling guns on each other, screw them. They get what they beg for, what they deserve and they’re getting it good and hard.

    • “sharing resources equitably”…

      What’s this “sharing”? Someone other than you or your favorite politician bought the gasoline in the tanks at your neighborhood Exxon station. Until you buy it, it’s not yours or your favorite politician’s to share, except through threat of government violence against the man who currently owns the gasoline.

    • ” “equalizing suffering” is one way to look at it.”

      Price controls don’t equalize suffering. They enhance the suffering of all. Most people would prefer to have a couple of gallons of $10 gasoline than zero gallons of $3.59 gasoline.

      I will admit that most people would also prefer to complain about $10/gallon gas than to understand the important economic concepts about why it might be a good idea…

  6. It’s amazing some people believe exploitation doesn’t exist, even when it’s happening right under their nose.

    And, I guess, they believe only profit motivates people and mobilizes resources in a natural disaster.

    • If there’s exploitation going on under your nose, I suggest you stop what you’re doing. Although, I’m not surprised that a holy roller like you would be a hypocrite.

  7. So lets go to the ultimate expression of the question, should we not have rationed during WWII and instead just let prices rise? That is the limit of the line of thinking. Of course it was a different time and the concept of shared sacrifice was around. Many folks lost members of their family to the war and so rationing for others was a small price to pay.

    • Lyle, prices always rise. The only question is how that increased price will be expressed.

      The rest of your post is just pathetic, emotional blather. Some of which is quite funny. During WWII production was shifted from consumer goods to goods we kill each other will. The “shared sacrifice”, whatever anyone thinks of it, was in order to win the war. These price controls are totally pointless except to placate economic illiterates like you.

      • Why does price have to be expressed in dollars, Methinks? Let’s hold the dollar units constant and use time as price instead. Those who are willing and able to spend time in line get the gasoline, and those aren’t willing and able don’t get the gasoline. So, supply and demand still works, and the governor does not get to be known as the guy whose state had gasoline at $25 per gallon and hanged by economic illiterates.

        • No, you’re right, Walt. Instead Christie gets to be known as the fat fascist whose state had severe shortages of the most basic goods, punctuated by endless lines in which people wasted all day, got into fist-fights, threatened each other with guns and assaulted gas station workers!

          You have managed to pervert the law of supply and demand beyond all recognition – which I previously thought was the exclusive domain of certain graduate economics students in the throes of passionate mental masturbation. Guess I was wrong. The people standing in line are not the willing and able but those who have no choice because the supply is artificially constrained. See, for supply and demand to work, the supply part has to be able to function. Those who are willing and able to wait are those not willing to make the trade-offs to buy petrol at a higher price. But even THEY would be better off because they can wait at home and because the higher price will attract more supply which (as if by MAGIC) drives down the price! Nobody is better off with price controls. Nobody.

          • Methinks,

            All economics aside, people will be inconvenienced for a couple weeks or a month, gasoline supply will return, lines will disappear, Governor Christie will be re-elected for another term as the Governor of New Jersey, and he may eventually run for President of the U.S. People will forgive the lines—they will not forgive $25-per-gallon gas unless they have a degree in economics. :)

          • Walt, I don’t care much about New Jersey politics (nobody likes Christie, but they hated Corzine and that’s why Christie won, btw) and I’ve already told that if people subscribe to all sorts of delusional thinking, then I’m delighted to let them suffer the consequences. So, besides torturing elementary economics, what’s your point?

        • Of course WWII rationing used a different currency the ration coupon to allow the purchasing of various products. So if you want to look at it from that point of view it does work.

          • Lyle

            Prices did rise during WW2. There was a thriving black market in ration cards. Almost everyone was working, and had plenty of money to spend.

    • I think it was Vidyohs over at the Cafe who once pointed out that most of the WWII rationing would have been unnecessary if St Franklin hadn’t spent 8 years destroying the economy.

    • “should we not have rationed during WWII and instead just let prices rise? ”

      Let’s make sure we understand the history. The 1942 General Maximum Price Regulation lead to wartime goods shortages. The rationing only came later to address the shortages. Homeland rationing was never really about “getting goods to soldiers” (despite the propaganda), but about keeping the homeland economy from collapsing due the uncontrollable shortages due to price control.

      The government during WWII has not paying the market rate for war goods. Thus it was an inherent tax on all homeland citizens. This could have been an explicit (and perhaps progressive) tax.

      I would like to see a good economic analysis of wartime price controls and rationing, but basic economics suggests that without the appropriate price signal, wartime producers were not as efficient as they could have been to meet the demand of the military.

  8. No Price Gouging Here
    - We’re Honorable, So We Don’t Have Any Stuff -

    A good effect of “price gouging” is to usefully ration limited supplies. At twice the price, many people will limit their purchases to just cover the emergency, rather than buy up everything they can.

    The worst effect of “no price gouging” is to dissuade companies from planning ahead for emergencies. Existing companies are much more knowledgeable and better positioned to serve the public than emergency teams trying to set up an infrastructure in one or two days.

    Consider a gas station with no emergency electric generator. Why don’t they all have one?

    The generators are expensive to buy, install, and maintain. The station can’t recover these costs in normal times, as they are underbid by stations who don’t incur that expense. The station must rely on much higher prices in emergencies, when they can pump gas and their competitors can’t. But, they can’t charge higher prices in emergencies, so they don’t acquire emergency equipment.

    The same goes for larger gasoline storage at service stations. The station doesn’t need it in normal times. The costs of a larger tank could only be recovered by “price gouging” in emergencies.

    The public attitude toward higher prices in emergencies is shaped by political posturing. The public cannot be protected as long as they are so misled.

    • “The public attitude toward higher prices in emergencies is shaped by political posturing.”

      No, the public attitude is basically shaped by instinct: higher price is bad. People would rather everyone have no gas at $4 a gallon than only the people who can afford it paying for available gas at $10 a gallon. That the higher price alleviates the shortage is not relevant to them because they don’t believe it or they don’t care.

      If you think it is easy to change public opinion on higher gas prices or taxes, you need to answer the phone and emails for a Congressman. There is perception, and there is reality. Perception wins or loses elections.

      • Andrew, don’t you think this political posturing results from some very loud and very stupid people? It’s easier just to give in to them.

        Walt, what BS. If people are offended by higher prices it is almost always (with the exception of true socialists – which are rare in the USA) because they believe that they are being screwed by the supplier and that they can legislate their way to plenty at a lower price. If they understood elementary economics as well as you imply, they would understand that they are worse off.

        Your one-dimensional thinking is astounding. At $10/gallon, you assume that a.)nobody is willing to make trade-offs to obtain gas and b.) that they aren’t willing to 40% of what they normally would even if it means that they’ll spend the same amount on gas in absolute dollars and have just enough to get to work and do what’s absolutely necessary until the crisis is passed. No. In your world, people turn this into a binary decision: either we want to be trapped at home or we want to top off our tanks – there’s nothing in between.

          • Yeah, Walt. Your argument is basically that the majority of Americans are ignorant of the role of price in the efficient allocation of resources – that they’re ignorant of the very basics of supply and demand. And so they have no clue about how higher prices would help them during an emergency, and would follow up with communication to legislators to strengthen price-gouging laws.

            You’re probably correct, Walt. The union-dominated, leftist-dominated American education system has done an extremely poor job of teaching basic economics to most Americans.

            So what are you now arguing? That because your leftist, pro-union buddies have screwed up the world, there is no alternative but to accept the harmful effects of their laws?

          • That’s pretty much how understand Walt’s argument, John. In three words: “eat it, suckers”.

        • John Dewey,

          I’m simply arguing a solution is not a solution if it is unacceptable to the vast majority of people. That has to be dealt with. Economics operates in a vacuum only in a blog.

          • I completely disagree, Walt. Even if the majority of voters believe that sellers should not be able to set the price for the goods they sell, our government should still protect the property rights of the owners of those goods. Price gouging laws are an assault on property rights.

            Just curious, Walt: do you believe in property rights?

          • Yes, John Dewey, I believe in property rights. I also work on a lot of ideas that have a 0% chance of being implemented past the planning stage, so we just shelve it and move on to something we can accomplish. If the culture changes or money becomes available you have “shovel ready” ideas already in place. I spent all last week on an accreditation proposal like that. I understand how processes work.

            Changing current price-gouging laws will take a groundswell of public support I don’t see happening. You guys can take the lead on it and see where it goes if you want. Are any of you contacting your representatives in your state about the removal of current price-gouging laws or are you letting those in favor of the laws decide your fate for you?

          • Yes, Walt. I have contacted all the elected officials who represent me and urged them to remove existing price-gouging laws.

            I’m curious. Do you believe that sellers of gasoline should be able to charge whatever price they wish, even after (actually, especially after) a natural disaster causes a reduction in supply? If not, why do you believe in property rights sometimes and not others?

          • John Dewey,

            I would expect all sellers of gasoline to obey all current laws. I would also expect them to be actively engaged in changing the laws they do not agree with. Whatever the current price of gas is, I will deal with it.

            I am getting ready to leave now, and the expressway I will be driving on has a 70-miles-per-hour speed limit. I will have a choice to obey the limit or disobey the limit with increased financial risk of a fine. If I really feel strongly the limit should be raised or abolished, the process is to contact my representative. My hope or wish the law does not exist is not relevant to the situation at hand.

          • “Yes, Walt. I have contacted all the elected officials who represent me and urged them to remove existing price-gouging laws.”

            If you feel strongly in your position, you need to organize others with your position and present it to your representatives. I can pretty much guarantee the anti-gougers will. I’ve answered emails and phone calls from constituents for representatives in the past.

          • Walt, you haven’t answered John’s important question about your apparently inconsistent view of property rights. I’d be interested in your answer, although I suspect I know what it is.

            Also, you seem to be missing the point about the effect of price controls. It isn’t the seller of gas who is most harmed, as he can merely sell his existing supply and close up shop. It is those who can’t get gas at any price who are hurt.

            Do you really believe that role of elected representatives is only to follow the directions of those who yell the loudest – and of course open their wallets the widest? That’s not much of a recommendation for representative government.

          • Ron H.,

            I believe in both our political representation process and property rights. If that is a conundrum to you, so be it.

            I have no problem with you guys initiating a referendum to overturn the anti-gouging law here in Michigan (it would have taken about 160,000 signatures for many proposals on tomorrow’s ballot). I’m too busy on other things right now to worry about it.

          • Hey, Busy Walt,

            The United States is a representative democracy, and so the majority can convince our elected officials to enact laws which trample on the property rights of the minority. However, our government is more than just “”majority rules”. Our Constitution, through the Judical branch, is also supposed to protect the rights of the minority.

            I suspect you do not give a damn about the rights of the minority. It is clear from your response above that laws enacted by elected representatives can trample all over those rights. Not surprising that a Leftist would believe that – at least, a Leftist would believe it is OK to trample on the rights of the minority whenever the trampling is consistent with his ideology.

          • I believe in both our political representation process and property rights. If that is a conundrum to you, so be it.

            And Teflon Walt sidesteps a direct question once again! Great dancing, Walt.

          • ron h says: “And Teflon Walt sidesteps a direct question once again! Great dancing, Walt“…

            LMAO!

            Very good ron h!

    • Politicians posture that they control the best and fastest solutions to emergencies.

      People see that all merchants post higher prices for goods and services in emergencies, and they fear that “business” is forming a temporary monopoly to take advantage of them, rather than charging a price which reflects supply and demand. Ironically, it is government which imposes its own monopoly.

      Politicians pander to those fears, and may be uninformed themselves. If they would support the role of business and the free market, they could calm the fears of the public, but they inflame them. They have spent many years sending the message that businessmen are out to get the public.

      If politicians were not pandering, they could allow business to operate without the threat of punishment for “price gouging”, and supply their own emergency services as well. It would be easy to broadcast that government help is on the way, and also allow the public to buy what it wants at outrageous prices if it so desires. Let the public decide on the value of emergency services versus higher prices in a free market.

      Politicians do no make things better buy denying the public an option. That is the government monopoly at work.

  9. Is it ethical to take advantage of a natural disaster to exploit the misery of people for additional or maximum financial gain?

    • Well, Peak, it’s certainly more ethical than ensuring that the misery is extended as long as possible by disallowing a price signal to attract a greater supply of needed goods to a stricken area.

      I thought you understood economics, but you keep claiming otherwise.

      • Ron, you’d have to be an ignorant economist to assume price gouging and ethics don’t exist, and everyone is motivated by “a price signal.”

        You keep trying to prove economics is simple.

        • The principle of economics that we’re discussing here is very simple, Peak. But you’re not writing about economics, exactly, but rather about “ethics”.

          As I see it, “ethical” behavior can vary significantly depending on one’s set of values and one’s experiences. What you may believe to be ethical can be completelt different from what I consider to be ethical.

          Where we should have common ground is about the concept of liberty. Price gouging laws are an assault on liberty. A buyer and a seller of a good should have the liberty to exchange that good for whatever price they can agree on. Do you disagree with that very basic concept of liberty?

        • Of course they exist, but you haven’t explained why it is more ethical to limit people’s choices in times of crisis when they could benefit from MORE choices not fewer, nor have you explained how to determine whether a price constitute “gouging” or just higher costs.

          I’d love to hear it. Come on, you can do it, Peak, your an economist, right?

    • Peak, do you understand at all the role of prices in signaling to both consumers and suppliers? Do you understand how higher prices – and the anticipation of higher prices – will motivate both consumers and suppliers to take exactly those actions which will reduce the gap between demand and supply?

      But to your question: there is nothing “unethical” about free markets. If a person owns a good, it is not unethical to sell that good for as high a price as one can obtain. There is something unethical about a large population – through the actions of their government – telling a property owner how much he may receive for that good that he owns if he chooses to sell it. There is something unethical about that large population – through its government – telling a willing buyer what he is allowed to pay for a good or service.

    • Think of all the unemployed people in the country who might be willing to figure out a way to deliver gasoline to the affected areas from other parts of the country if the price rose to $10/gallon.

      For example, a used gasoline truck (let’s say a 2001 Kenworth T300) can be purchased for $38,500 and can hold 2500 gallons of gasoline (http://www.enterpriseequipment.com/truck.htm).

      Current NJ price control level of $3.59-.329 (state tax)-.184(Fed tax)=$3.07 to the retailer. Maryland retail gasoline prices are $3.23, so it would be a loss to purchase any gasoline at retail and try to resell in NJ currently.

      On the other hand, if you could fill up in Maryland, drive the truck up to NJ, and sell for $10/gallon+tax, you cold make $17,000 per trip. At three trips, you are making a profit.

      Shortages only persist due to price controls or regulation. Otherwise, the price signal is allowed to rise to bring in more suppliers.

      • That sounds great, but I missed the part about how an unemployed person was able to purchase a $38k truck.

        There are a few other minor considerations you haven’t addressed, but the most important consideration might be the size of your target market at $10/gal. While I’ve no doubt there are some who would pay that price, there probably aren’t as many as you think.

        Then of course there’s competition. Existing suppliers will likely find it profitable to deliver at some price lower than yours, but your entrepreneural spirit is admirable.

        • ron h says: “but I missed the part about how an unemployed person was able to purchase a $38k truck“…

          You know ron h it could be done without the truck…

          Line up the unemployed and give them a stick with two buckets of gasoline on either end and have them trudge into the effected areas ala the NVA and the Ho Chi Minh trail…

          • You’re right! I forgot there was a precedent for this cleverness. It worked pretty well, too, as I recall.

    • You’re in the thrall of the Aristotelian and Thomian notion of the “fair price” and I’m guessing you don’t even know it.

      There’s no such thing as an objectively determinable fair price.

      What’s a Mickey Mantle rookie card worth to an Indonesian rice farmer? It’s a piece of cardboard, but to a collector, it’s worth a lot.

      What’s a gallon of gas worth to someone who doesn’t ever use any gas? What’s it worth to someone who is trying to get to the side of his dying mother and his tank is just about empty?

      Nobody has a F*&%$#@ right to what you have at a price they want to pay if you think it’s worth more. To demand it at the point of a gun is theft, regardless of whether an individual is doing it or Chris Christie is sending in his goon squad to do the dirty work. Screw him. It isn’t his gas. It isn’t anybody’s gas except the person who owns it. Price gouging laws = legalized confiscation of the good or service in question. The difference between what the person is forced to sell it at and what it’s really worth is the amount stolen.

      Christie is a thief…and a fat ass to boot.

  10. OK…let’s take this “anti-gouging” stuff to its logical conclusion. If we want to help those in need, let’s force them to LOWER their prices…think how popular THAT law would be! Better still, have the “Feds” pay retailers for any loss they incur by GIVING the “stuff” away for free. Price “gouging” (I taught my high school economics classes there was no such thing) doesn’t exist. People will pay what they can afford, and pay more if something gets in short supply. Keeping the price artificially low only induces people that possibly don’t REALLY need an apartment or 20 gallons of gas to stock up…just in case. Common sense….where have you gone?

  11. No one gets that simple truth of ‘competition’. If gas station ‘A’ charges $12/gal., then it’s ALWAYS the case that station ‘B’ down the street will want to pull business away from ‘A’ by charging a lower price than ‘A’. This process simply continues until the actual fair market price, for the situation, is reached.EVERYTHING the gumby gets involved is turns the $h17.

  12. Sometimes people do not understand that the seller in a price gouging situation also may have a long-term investment to protect. If I have to pay storage fees on emergency items for years prior to the items being offered to the public for sale in an emergency situation, whether that storage is in a public storage facility or allocated space in my private home, I deserve a higher price for my goods simply based on the fees I have incurred for storage. Some folks fit into this category, and current laws in many states do not account for this situation. (There are actually some things which do not carry expiration dates that are needed in emergency situations.) I would be cheated by the state and the public in the case I was forced to sell at ordinary prices. Fortunately I live in a state that is still the home of the free and the brave – New Mexico. If I were forced to sell at ordinary prices, I would just distribute my supplies to family and friends for free in such large quantities that efficient allocation of resources would be completely ignored, and the rest of the public would suffer. Price gouging is getting a fair price for my stored goods in an emergency situation, and entrepreneurs like me will be hiding in the woodwork, storing emergency items to fill demand, if they are respected when the emergency demand comes. The states that have price gouging laws limit public response in emergency situations because no one has any incentive to make money by storing emergency items. Since my state is not in that category, I am storing some emergency items, and people who really need the items will have that availability in a disaster.

    • I just don’t understand why that in every shortage, even temporary like this one is, that the price has to automatically go up, especially on gasoline. The shortage is only local in this case, not worldwide, so why gouge the people who already have problems enough?

      • I just don’t understand why that in every shortage, even temporary like this one is, that the price has to automatically go up, especially on gasoline“…

        Price is indicative of market pressure…

      • Joe,

        Let’s say that after the disaster you go to a hotel with your wife and kids and want to rent two rooms. You find out that rooms are 500 a night. You reconsider and rent just one. That just made another room available to another family. Price acted as a allocation control for a scarce resource.

        If gas goes to $6 a gallon there locally, Entrepreneurs from all over will work to get gas to your location as fast as they can to make a profit. If prices are the same in Ohio as in Staten Island let’s say. Why would they go to all the trouble. It’s not worth the trouble.

        If I have a truck load of generators in Ohio why would I drive them to NJ if I can’t make a better profit.

        Hope that helps.

      • Craig’s answer was excellent. In addition to his points, consider how the expectation of a higher price will motivate suppliers to move in extra supplies before the hurricane hits. If suppliers can expect extra profits, there is a much better chance they will order more inventory of gasoline, generators, batteries, bottled water, etc.

        • And, of course the vendors are taking a risk that their goods, that they brought in to be available quickly after the storm, will be damaged by the storm or stolen by looters or otherwise lost.

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