Economy
See other Economy Articles
Title: How Price Gouging Helped My Family during a Storm
Source:
Foundation for Economic Education
URL Source: https://fee.org/articles/how-price- ... lped-my-family-during-a-storm/
Published: Sep 7, 2017
Author: Mark Steckbeck
Post Date: 2017-09-07 10:24:54 by Hondo68
Keywords: None
Views: 2024
Comments: 8
Two years ago, Raleigh, North Carolina, was expecting a severe ice storm and some minor accumulation of snow. For those living in the Northeast that is just a typical Tuesday. But for those of us living in North Carolina, it is a reason to go into full panic. The Price of Milk So I decided to leave work a few hours early in order to beat the storm. Before leaving, however, my wife texted me and asked if I could stop on my way home and pick up some milk. By raising the price of milk, Walmart gave people proper incentive to ration their consumption. I stopped at the first three grocery stores along the way, only to find all three completely sold out of milk. Despite the impending panic, neither store increased its prices for things like milk and bread. Walmart, just down the street from the third grocery store I visited, was my last hope. I figured that if Walmart was sold out of milk, I would go home empty-handed and the family would have to make do with what we had left in the refrigerator. Well, at least until the ice and snow melted, which, fortunately, in North Carolina would be in about two days. I walked into Walmart and made a beeline for the dairy case only to find it empty. Walmart, too, had sold out of milk. It, too, didn’t increase the price of its milk, selling it for its normal price of $2.79 per gallon. But wait! Next to this empty dairy case, I saw another dairy case with a sign taped to the door. Behind the door with the sign taped to it were dozens of gallons of milk. What did the sign say? “The price of Maola Milk is temporarily $6.50/gallon.” That was more than double what Walmart normally charged. I happily grabbed a gallon from the case, paid for it, and made my way home. The Morality of Price Gouging For most people, the higher price Walmart charged for this milk was an obvious affront to decency; a blatant example of a greedy corporation “gouging” its customers in a time of crisis and need. Why are you waiting for others to act on what you apparently regard as morally superior behavior? I see it differently. I was grateful for Walmart because by raising its price for the Maola brand milk it thwarted the greedy customers who, without consideration for others, snatch up two and three gallons. This is what happened with the Walmart brand milk and the milk sold in the other three stores I visited. By raising its price for Maola brand milk, Walmart gave people proper incentive to ration their consumption of it. They left plenty of the Maola brand milk for people like me who couldn’t make it to the store earlier. They didn’t do so out of concern for my welfare, but out of concern for their own welfare. As an economist, I teach students about the benefits of what is derisively referred to as price gouging and why allowing prices to increase before and after a natural or man-made disaster is beneficial to those most in need. I am often asked something to the effect of, “How would you feel if it happened to you?” Well, it has happened to me and this is just one example of that. Sadly, most of the time I experience the opposite: wasting time waiting in line to get some good, or not getting any at all because the price wasn’t permitted to rise. Consider the water shortage currently plaguing residents of Texas and the overtly hostile backlash against those who raised the price of things like bottled water. Does this action hurt Texans, dumping on people who literally and figuratively are struggling to get their heads above water? Or do these higher prices benefit them, especially those most in need, by relieving them of having to deal with greedy hoarders, thus lessening the harsh realities of an immediate shortage of fresh water at their disposal? Allowing prices to increase before and after a disaster is beneficial to those most in need. Not only does the higher price of water deter greedy people from indiscriminately hoarding what limited supply of water is currently available in that immediate area, it creates the incentive for people in places like Austin, Dallas, Norman, Oklahoma, and Little Rock, Arkansas to shift supplies of water from those areas where it is plentiful, to the Gulf coast areas of Texas where it is desperately needed. Without the reward from charging higher prices, most won’t do it. For those who argue that people in areas not affected by the flooding should, out of kindness, voluntarily transport supplies like water to the devastated areas for free, or for at most the price they paid for it, why haven’t you done so? Why are you waiting for others to act on what you apparently regard as morally superior behavior? Oh, and for the record. When I scanned the gallon of milk at Walmart, the price I was charged was $3.18, the normal price. Did this Walmart simply forget to change the price in its computer system? Or was the manager aware that a simple sign stating the price had doubled was sufficient to deter hoarding by customers?
I was grateful for Walmart because by raising its price for milk it thwarted the greedy customers who, without consideration for others, snatch up two and three gallons.
Post Comment Private Reply Ignore Thread
Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: hondo68 (#0)
Hammer them and take the excess profit back through fines. If Wal-Mart wants to make sure everybody gets milk, then do it directly: Milk - $3.18 - limit two per customer - and refuse to sell more than that to any customer. Everybody will understand that, and there is no price-gouging profit. The people who gouge other people for profit because of a disaster should have their profit extracted from them by superior regulatory power, directed by the democratic will of the people who were gouged. Fuck them.
Fuck them. That doesn't work. People will go through the line 2-3 times, if the line is short, or a mom with 3 kids will give 2 to each of her kids and grab 2 herself. And people who don't need the milk right now go ahead because they know it's a good deal, or think their neighbors might want some.
So what? The author did not starve in North Carolina. The excess profit to the gouger is more offensive than people who dramatically inconvenience themselves to get around a purchase limit. SOME people will try to get around the limit - and can be booted by the cashier or a supervisor, or not. But the gouger ALWAYS gets rich from his ill-gotten gains. The latter is much more offensive, and needs to be beaten to a bloody pulp with a club. Or just have the excess profits ripped away by fines. Either way is fine. The latter is more civilized.
To die. Really? And how many people DIED in that North Carolina storm because they couldn't get milk? NOBODY EVER DIED IN AMERICA because some American price gouger was punished.
Many were blocked by FEMA and other gov officials, from rendering aid during Katrina. People died as a result of that government meddling with the free market. You want to make disasters worse, through government micro-management meddling, right down to price controls at the checkout counter. Statist creep! I hope you get looted by starving flood victims, of government overreach. Yeah, this line of argument is going nowhere in America. When natural disasters happen, the overwhelming bulk of the American people want to provide disaster relief, and hate price gouging. You want to be some sort of ideological purist and ignore the needs and suffering of real people. You can take that stance if you want to, but the great steamroller of American democracy is never, ever going to listen to you (never has, never will) because it's mean-spirited, un-Christian, and foolish. Rage against the storm if you'd like - that sort of ultra-libertarian no- assistance to disaster victims, petty shopowners can gouge at will is never going to be the law of this land.
People buy from "price gougers" because that's the only place they can get it. If gov or charities etc were handing it out for free, they wouldn't be buying it from the so called gougers. Gov failed to deliver, so the gougers are saving lives by meeting the need. Government incompetence has stimulated delivery of the essential supplies by the private sector. Another win for big stupid government?
#2. To: Vicomte13 (#1)
(Edited)
Hammer them and take the excess profit back through fines.
You just want people to die, due to government meddling with free market delivery of essential supplies and services!
#3. To: Vicomte13 (#1)
If Wal-Mart wants to make sure everybody gets milk, then do it directly: Milk - $3.18 - limit two per customer - and refuse to sell more than that to any customer.
#4. To: Pinguinite (#3)
That doesn't work. People will go through the line 2-3 times, if the line is short, or a mom with 3 kids will give 2 to each of her kids and grab 2 herself. And people who don't need the milk right now go ahead because they know it's a good deal, or think their neighbors might want some.
#5. To: hondo68 (#2)
You just want people to die, due to government meddling with free market delivery of essential supplies and services!
#6. To: Vicomte13 (#5)
NOBODY EVER DIED IN AMERICA because some American price gouger was punished.
#7. To: hondo68 (#6)
#8. To: Vicomte13 (#7)
Top • Page Up • Full Thread • Page Down • Bottom/Latest
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]