STAFF NEWS & ANALYSIS
Be Thankful for Price Gouging in Houston
By Joe Jarvis - August 29, 2017

Did the hotel crew need the rooms? No. They came to “cover” the storm.

But people fleeing Hurricane Harvey were in desperate need of hotel rooms. And the news crew was complaining about paying a high price.

The news team reported on the terrible incident of gouging. But they actually demonstrate exactly why prices need to go up when demand goes up.

I wonder if they decided to bunk up together and buy fewer rooms because of the high price. After all, that is the whole point of “gouging.”

When demand shoots through the roof, the reason prices need to go up is not simply business greed. Higher prices slow demand.

One family might choose to stay with their annoying inlaws instead of getting a room. Great, one more spot for someone who doesn’t have family in the area.

Another family with three kids might decide to book only one room instead of two. Again, this helps keep rooms available for other people in need. Yes, they will have to spend a bit more, but they will have a place to sleep.

The basic economics of supply and demand is apparently something neither this news crew, nor the Texas Attorney General’s office understand.

Hotels aren’t the only ones guilty of price gouging as Houston grapples with continued rainfall and flooding from Hurricane Harvey, the most powerful storm to hit Texas in more than 50 years. Over the weekend, more than 500 complaints of price gouging were lodged with the Texas attorney general’s office, according to CNBC—including $99 cases of bottled water, gas at $10 a gallon and hotels tripled or quadrupled in price.

“These are things you can’t do in Texas,” Texas Attorney General Ken Paxton told CNBC in an interview Monday. “There are significant penalties if you price gouge in a crisis like this.”

Is this news team willfully ignorant, or actually that clueless? The Attorney General I’m sure just wants to get re-elected.

$100 cases of water means people only buy what they really need, thus leaving a case for the next person in dire need. Otherwise, why not stock up on ten cases of water? You may have six cases leftover at the end of the disaster, while twenty other people dehydrated or desperately drank contaminated water.

Let’s see, $10 per gallon gas? I better only fill up on four gallons to get me out of the area, to another gas station with normal prices. That means four times as many people have gas available to get out of the city, instead of people filling up their tanks like normal.

This is not rocket science. Yes, it can be frustrating and emotional if you are in the situation, but it actually benefits the people in the disaster. What is spending a few hundred extra dollars to avoid drowning, starving, dehydrating, or sleeping in the streets? I bet they spend $600 on a phone without the blink of an eye.

The compassionate thing to do is actually charge higher prices so that supply is spread across more people in need.

If the prices don’t go up, it is first come first serve. That means the lucky ones get all the supplies, and the late comers are left with nothing. Would you rather miss the chance to get a $5 pack of water, or have the opportunity to buy a $100 case of water?

Same goes for generators. When you find out power is going to be out for a week, you want to go out and buy a generator. But to run the air conditioner at the normal temperatures, while keeping the big screen TV on, and every light in the house, you need two generators.

What?! Generators now cost three times what they cost last week! I guess we will conserve electricity, and only cool the house to 75. We can buy the second generator after the situation blows over, and we will be prepared for next time.

But the news team, and the government encourages people to document the gouging and hold businesses legally accountable. Good job guys, you have ensured shortages for the late-comers.

They may be able to keep “honest” businesses in line with the threat of legal action, but haven’t they ever heard of ticket scalpers?

Someone will buy all the cases of water, and then price gouge on the black market instead of the legally accountable government controlled market. Why not buy up all the generators if you know they will be in low supply and high demand? Or are people not allowed to sell their own generators for a high price either?

Stores could limit customers to only buying one. But how do they stop a customer from sending their wife in to get the next one, then their son, brother, or some random guy in exchange for $20?

By the way, shout out to all the preppers who don’t need to buy $100 bottled water, and who already have their generators. They are probably saving the asses of people who were ridiculing them last week for their paranoid nature.

If hotels are gouging, then news crews are vultures. Aren’t they making money on the disaster as well?

We hope everyone in the areas affected by Hurricane Harvey stays safe, and are able to acquire all the supplies they need.

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  • ArmyAviator

    I know of one Motel near Aransas Pass, where the owner (VFW Member) and his wife, provided rooms to people whether they could pay or not! BUT…when a CBS News Crew came in for rooms, he charged the MAXIMUM rate that the State allows. Made my heart feel good, when I heard about this!

    • Yes, good on him. With hotel rooms, the owner could enforce a limit if he is giving them away. As long as no one cons him by selling their “free room” to someone else. But I suppose with something like a room that is tougher to do.

      • ArmyAviator

        Especially with kids! I doubt that too many will “sell” their rooms, IF they can get one…and with kids? I know that many people will do ANYTHING for money, but I would hope that there is a line there somewhere that nobody would cross!

    • Don Duncan

      This practice of a businessperson exercising the right of property with personal discretion that appeals to some (most) will offend some (CBS Corp.). It doesn’t matter how many approve or not, when focusing on the principle of property rights, e.g., the right to offer a good/service AND the right to turn it down. That is all that counts with respect to free commerce. The only option is to abandon the free market and let politics set prices. For example, one result might be a CBS complaint resulting in the prosecution of the owner, with subsequent price freeze on rooms during all demand situations. In high demand, one person buys all the rooms and re-rents at a higher price, resulting in more laws, more punishments, more intervention, more disruption to commerce. In very low demand for rooms the owner could not lower the frozen price, resulting in total vacancy, while some slept in their cars who would have rather bought a cheap room rate, but were prevented by govt.

      The result of the introduction of govt. (force not market choice), creates a lose-lose situation, as the people of the USSR finally realized after 74 years and rebelled against it, partially, resulting in a mixed economy.

      The result of a free market is a win-win economy which the world is yet to fully discover, which is evidenced by a mixed economy.

  • Good article! Right on the mark!

  • I think hotel room prices would go down when everyone was leaving town = less demand. And what about the service? Was it improved with a higher price? How could a hotel offer breakfast, if the kitchen was flooded.
    And does Texas fix hotel room prices? It sounds like communism.

    • I don’t think you understand what communism is.

  • John Pepys

    Another point is that high prices are what will eventually end the shortage. Why would I move my supply of generators from my store in Idaho if I have to pay to ship them (again) down to Texas and sell it for the same price that I would get in Idaho? When prices rise the supply will move to where the price is higher and at some point the supply will be in line with or even exceed demand, thus lowering the price back down.

    • If you charged the customer an extra fee for shipping and handling, that would be okay. Reasonable increases are okay. That’s not really gouging. You’re charging extra for the extra work and overhead, with a reasonable profit.

      • It is so NICE of you to approve of a private transaction between people you don’t even know. Your training for government employment is now complete. (Don’t forget to collect the tax from all parties for your approval.)

      • Don Duncan

        If I buy, I cannot claim the price to be “unreasonable” or a “gouge”. I can claim I am greatly upset at the expense, but the fact remains, I must have decided the option of not buying was worse. Therefore, the “reasonable” choice, my choice, was to pay the price. I didn’t have to pay if I judged the purchase to be unreasonable.

        To file a complaint with govt., asking it to punish a transaction I took part in, is hypocrisy, unreasonable. It is especially irrational to ask a third party to punish one half of the transaction but not the other, not me. I had the power to stop the so-called gouge. I could have refused to participate because I was not forced by the other party.

        Unforced commerce is called “the free market”. Those who gratefully enjoy its benefits are called “capitalists”. Those who enjoy its benefits and complain despite their participation are called “hypocrites”.

    • Ron

      Exactly right. I would add that it’s not merely ‘another’ point, it’s the whole other side of the supply and demand equation. The cure for high prices is higher prices.

    • Great point!

  • Disingenuous

    I’ve seen the scenario play out over and over, but government types always fall on the wrong side. Did anyone notice why all the supplies were hoarded by only a handful of folks during Hurricane Sandy? Nope, didn’t learn a thing…

    BTW, excellent article.

  • uyk7

    Why isn^t it called price gouging when gas stations raise the price of gas on holidays?

    • jackw97224

      Because it isn’t of course. It is as the article explains, just simple market working, price, supply and demand.

    • We were in Park City over the Fourth of July. Two of the kids decided to fly into Denver and drive to Park City. When they went to get their rental car, there was a “mix-up” and even though they had a confirmation number, the agent couldn’t find their reservation. But he would be happy to give them one of the last car’s he had. For $1200 instead of the $200 they expected to pay! Fortunately they were able to use a friend’s account number to get a corporate discount. The guy then found them a car in the same class as the one they reserved, and they even ended up saving $20 off their reservation! When it was time for them to go home, a couple of the kids (young adults😀) who didn’t have rental cars decided to get an Uber to the airport. It had cost $40 for the trip when they came out, so they figured another $40 to get back to the airport. Nope. Uber had jacked up the price to between $250-400 for that trip, depending on what day and what time of day you needed a ride to the airport. They had no choice but to pay the guy, so they did, gave the guy a hefty cash tip, then filed a dispute with their credit card company about the gouging. Then they called the other kids to warn them. We ended up driving everybody else to the airport.

      • You SAY “They had no choice…” and then you describe THREE different actions that they took–looks like choices to me! And of course there are even more choices, the most obvious of which is to say ‘No’ and simply walk away.

    • Jeff Pearce Sr.

      Because the emotional aspect is not present.

  • William Baxter

    Maybe because there are less small businesses that will be able to bring in tax dollars, the local government should raise property taxes for that time period to cover their shortfall because…well….local hotels won’t be collecting tax revenue so lets raise the tax base to 85% for the hotels to pay and when they don’t pay lets take their property and donate it to local charities after the storm is over. Why should the businesses be the only ones to price gouge? Let’s have the utilities price gouge the hotels for electricity. Let’s price gouge the building supply companies that need the plywood to sell to consumers. Let’s supply electricity to the home owners instead of the hotels that need the electricity because electricity is controlled by the public utility Commission. I am sure the public would want their homes restored before the hotels. Price gouging works both ways. People would pay a reasonable price mark up for products within reason. Price gouging is against the law but a reasonable price increases isn’t. Most governments allow a reasonable price mark-up for goods and services. A 20% mark-up for food may be ok but a 400% is not. when you have price gouging you get people that would loot stores and businesses and with most of the police dealing with emergencies, looting is not a top priority. If you have a gas station selling gas at $10 and only accepting cash you get someone that would rather rob the store of the money and all the gas they can rather than selling at a reasonable price increase that the supply and demand would allow.

    • Jeff Pearce Sr.

      Govt is force. If govt were to run schools we would be ranked 39th in the world as far as kids educated in science & math. Oh… wait. This is already the case. If govt were to run deserts as a business we there would be a shortage of sand.

      • Jeff said:

        If govt were to run deserts as a business we there would be a shortage of sand.

        WONDERFUL !!! I missed that one when I wrote my article about government “accomplishments”, musing on some of the artificial scarcities and surpluses created by the multiple governments at all levels (National or Federal, State, County, Parish, City, School District & whatever) and what they have done TO the human race. 

        Government: The Scourge of Mankind–Artificial Scarcities and Surpluses

        Governments have made a surplus of the least desirable things on earth—violence and destruction.

        Governments invent and produce nothing. It was NOT government decrees or regulations that invented the automobiles that burned fuel made from that nasty, black, gooey liquid and freed the cities from the by-products of horses. But it IS government rules and regulations that are blocking the shift from carbon monoxide producing gasoline to water vapor producing hydrogen fuel and electric powered vehicles.

        Links to this article:
        tinyurl(DOT)com/Government-scourge
        tinyurl.com/Government-scourge

        https://uploads.disquscdn.com/images/17ff01f326eced7e93487bf82c67ae10f09f539d625240e6c950f468ab852ce3.jpg

  • autonomous

    I’m shocked…SHOCKED I tell you. News media and government officials display a lack of understanding of economics! What were they doing during economics lectures in college.

    • Jim Dandy

      To a politician, economics is a tool to wield to gain more power.

      • jackw97224

        Fallacious economics it the crap that has been spewed by commie/socialists since around 1848.

      • autonomous

        To a politician, economics is for the sheep they shear. Their only interest in economics is how and how much can be stolen.

    • Rosicrucian32

      Same thing they were doing on the road trip, getting stoned

      • autonomous

        But…but…but, they don’t inhale.

  • Rhonda Pope Maddux

    You should be ashamed of yourself. Price gouging is NEVER ok, unless you’re offering to sell something to Trump.

    • Rosicrucian32

      Bad attitude, simple economics of supply and demand just like they described. The media guy’s on an expense account I’m sure didn’t give a shyte about who needed rooms and didn’t double up thus reducing the number of available accommodations.

    • Jeff Pearce Sr.

      Then looting is morally acceptable. The store owner closes for his own personal survival and his families. A family (or a mob) in need of food & water, should without govt punishment or the store owner protecting his products, should step aside and let the free for all continue? Nope, you must stay consistent. If jacking up prices is bad, in the context of this article, taking it for free is the opposite. Looting must be allowed. It shows compassion & damn it, that just feels good.

      • jackw97224

        Yup, you got it but Rhonda didn’t.

    • pacman

      Make a logical argument against it instead of an emotional, knee jerk response. You can’t

  • jackw97224

    Genesis 41 – prepare for the 7 years of lean. People complain of gouging but they didn’t prepare; they didn’t store a 100 bottles of drinking water just in case. People always seem to blame others for their failures; this is true of commie/socialist, “snowflake,” SJW, DemonKraits. I pity the people in Houston, but there is always a penalty for failure, failure to prepare. And here is the lesson of No Child Left Behind, people are punished for failing, notwithstanding the immoral teaching in government schools to the contrary.

    • What if they DID prepare by stocking up on water and food. But this flood level is unprecedented. They are calling it a 500-year storm. In an area designed to withstand damage from a 10-25yr storm. So, now they’re forced to evacuate, and leave all their food and water and generator at home. How is that a failure.

      You’re pretty warped. You sound like a Trump sycophant, incapable of showing, or even feeling, compassion for others. Everything has to be a political war for you. I’m surprised you didn’t take any swings at Obama or Hillary. Typical cafeteria christian, treating your book of fairy tales like a menu, following this part, ignoring that part. I guess if it ends up there really is a heaven and hell, they’ll have a special place in hell for you and your ilk. Surprise! LOL 😂😂😂😂

      • jackw97224

        @Well, of course if one prepares then he stores his goods where they would be secure from fl;ood or earthquake or tornado or fire. Sounds like you are a DemonKrait hate speaker. Your assertions of sycophant are attempted pejorative and just plain not true. I have mixed opinions. Clearly, you are a disgruntled loser. The wisdom of the Bible is true, whether you are Christian or not. As to picking and choosing, no, again you are in error. Oh, and you don’t seem to know that 1) there is no permanent hell as so many have been propagandized, the Bible doesn’t teach it and besides, a loving Jehovah God would not subject someone to permanent torture and 2) Only 144,000 ascend to Heaven, most just are returned to dust and then resurrected and I have no clue as to how that is accomplished.

        • They could be very well prepared with water, food, a generator, clothing, whatever the f they need. They could even store it on the second floor so they can access it during a flood. Then the water rises to the second floor and they have to go into the attic or on the roof. Suddenly they can’t get to their supplies. Or they are forced to evacuate. So, they get rescued from the roof. What the f good do all those supplies do? Hey, if they were REALLY prepared they could have a boat in the backyard secured with a rope with enough slack that it can rise with the water. The rope goes outruns through a block and tackle on the roof, one end secured to the house at the bottom of the back wall. The other end is on the boat, so they can reel the boat to a window no matter what level they’re on. Now they can save themselves. But, either they’re too high to get to their crap, or not. It doesn’t matter because the crap would put the boat over its weight capacity, or there are too many people and not enough room. There goes your prepped theory. The rest of your religious crap…well, you know what you could do with it. It sounds like you’re a weirdo Jehovah’s Witness. That kind of explains it. Only 144,000 go to heaven? That’s stupid af. What if they already reached the max? Do you know how many people have lived on this earth since man evolved? Crissakes, do you know how many are alive today? Jeebus, there’s 330 MILLION in the US alone! And you believe, out of all the people in the past, present, and future only 144,000 are going to heaven? Well, I guess the rest of you living now are wasting your time being righteous cuz those are seriously bad odds. Of course, it’s all BS anyway, based on a bunch of fairy tales and folklore, but you go on with your bad self and keep preaching. Seems to me trying to convert more people is pretty stupid since the more people you add, the worse your odds get! LOL Thanks for the comic relief!

          • jackw97224

            Well, it is clear you are not a Christian and so you don’t believe the Bible. Fine. That is your choice. Revelation does teach of the 144,000. Throwing pejoratives accomplishes nothing except perhaps allows you to vent your anger and then comes fast the question: Why are angry? Why do you hate?

      • pacman

        “You sound like a Trump sycophant, incapable of showing, or even feeling, compassion for others. Everything has to be a political war for you” And what did you just turn it into?

        • jackw97224

          Sticks and stones will break my bones but words will never

          hurt me. It is a choice. Only you have the choice to feel injured or not. Of course it is bad manners to use verbal
          abuse but one needs to keep his head when some filth spews epithets and condemnations. Compassion is good, of course, but when one lets emotions override reason/logic, then he can expect trouble and harm to himself and others. Witness the emotional outbursts of those who hate Civil War Memorials
          and the harm they have caused. One cannot justify violence because of emotional reactions, for alleged compassion. There is no such thing as a good excuse. You can shrug off verbal rubbish but physical abuse needs to be addressed with
          punishment meted to the aggressor.

        • I didn’t turn it political. I was responding to his post that called me a snowflake LOL, winter is coming; an SJW, of which I am proud because I think Justice and equality are WORTH FIGHTING FOR; and a DemoKrait, whatever the f that means. So, I guess he, the “christian” made it political, tight? Then he tried to subliminally threaten that I wouldn’t get into heaven, which I don’t believe exists, anyway, by talking about only 144,00 people getting in. That sounds an awful lot like the ISIL terrorist bombers’ belief that they will go to “heaven” and be handed 72 virgins. It’s all BS, but yeah, I guess the left won’t make the cut to get in! 😂🤣

      • RED

        Houston is located in a large drainage basin. All of the surrounding watersheds dump water at this location. Houston has a long history of flooding! All of this has been highly predictable. The term “500 year flood” involves the use of “fuzzy statistics” to create “labeling”. Yes there have been some “records” set, but there are sound “meteor-logic” reasons for the occurrence. Preparation for the event is a quite reasonable proposition!

        • I agree. Except one can be well prepared but then, for an unpredictable reason, cannot get to their stores. For instance, if the flood is high enough the storage place is unreachable, or they are required to evacuate. Yes, the flooding in Houston is fairly predictable but from what I’ve read, they have designed the drainage for 10-25 year floods. So you can see why this 500 year flood has so overwhelmed the area. My cousin, in Dickson, had to evacuate. This is the first time, and he’s lived in the neighborhood for over twenty years. There is major flooding in areas that normally see little, if any, flooding. I hope the city will re-evaluate the designs they approve, and stop looking the other way when builders don’t follow code. There is too much impervious surface and too little drainage capacity. Now compound that with the Army Corp of Engineers calling for dams to open the flood gates to prevent damage to the dams, which could be catastrophic. I think what happened is they do prepare for that 10-25 year range and roll the dice, hoping they don’t get hit with anything greater. It’s a numbers game. Unfortunately they calculate cost of live versus cost of preparation, to determine the building codes. Kind of like an auto company comparing the probability of a design or part causing life-threatening issues causing x amount of deaths and how much they’re likely to pay out for those deaths vs how much it costs to avoid those deaths. An example of that is the tire problems with Ford Explorers. How many deaths would come as a result of that mismatch between tire and vehicle and what would their liability be vs how much it would cost to recall every explorer and replace the tires? I happened to be driving an Explorer I bought new and had those original tires, and had them replaced when the govt finally forced the recall. But until that recall came, I was just another potential casualty to Ford, who had decided my life wasn’t worth replacing those tires. The same analogy goes for floods and other natural disasters when the population is at risk but the government determines how much risk they are willing to take when writing building codes. In Houston, they deal with flooding. In California they deal with flooding but also earthquakes and mudslides. The building codes now require each building, commercial and residential, be built with foundations secured to be frock. That addresses earthquakes and mudslides. They now have increased flooding because there is too much hardscape vs landscape. People put in hardscape, stone and drought resistant plants, because of the droughts. Now the rain isn’t absorbed into the ground, so there’s more runoff. There’s also less water reaching the aquifer, but that’s another issue. So this unprecedented flooding could be predicted but building requirements didn’t require that level of drainage. Houston also allowed developments to be built in wetlands. The wetlands provided natural drainage until they were filled in to create more land for development. That adds to the flooding. With proper building code enforcement, flooding for most storms could be prevented. Miami is experiencing flooding because the sea level has risen, overwhelming their drainage systems.and making them useless. Even in good weather their streets can flood because of the design of the present drainage systems. Their outflow pipes are now underwater. They have solved that problem but still they’re inundated with water. I think we’re going to continue to see these floods because the local governments won’t want to pay for costly retroactive fitting or replacement of drainage systems. Again, cost of resolving the problem vs cost of casualties and damage. They will just rebuild. Like with Hurricane Sandy or any other hurricane, or tornado, or mudslide. The people get an insurance payout and just rebuild where they are. And, yeah, climate change is an issue. It’s affecting the intensity of these storms (though part of the problem with Harvey is that he stalled and just sat over Houston, causing continuous torrential rain for days) and affecting precipitation in mountainous areas, so more snow, and melting ice caps. This creates too much snow melt, causing runoff and flooding at lower elevations. Not to mention the incidence, intensity, and spread of wildfires, but, again, an issue for another discussion.

          • dauden

            I often think consolidating populations in metropolis centers makes it more convenient to exterminate us. I also think today’s weather patterns are manipulated by NOAA, HAARP and the National Weather Service, all of which have gag orders on its employees. Go figure!

        • dauden

          Right, like moving the hell out of there! The area near me in central Texas has been flooded by Houstonians for years. I guess they feel fairly satisfied that they “prepared”.

  • monkeyhouse

    Econtalk Podcast w/Russ Roberts has a great episode on this very topic. It’s in their archives.

  • I can see your point, that increased prices would deter people from buying more goods than they actually need, leaving more goods for the next folks in line to get what they need. But with gouging, it’s going to be hard for many people to be able to pay those prices for the necessities, food, water, shelter. I did the math for a family of four staying in one hotel room, stuck eating at the hotel, and having to buy some cheap tee shirts and shorts, maybe a cheap pair of sneakers. For four people, over eight nights, they’d incur about $7G in debt. That’s barely a week. And doesn’t include a car. If it takes them a week to get a car (the dealerships are all having cars brought in from other states) and find a decent, small apartment, at twice the rent the previous tenant paid, it would cost them another, say, $5G to stay at the hotel and continue eating out for that second week. Some of the prices are starting to drop. But now it’s cost $12K in living expenses. Say, $10K for a car worth maybe $6500. In two weeks we’re at, what, $22K? That’s insane! And that’s assuming they were even able to get all those things.

    • real427 man

      Its a free market for looters.

  • Texan and proud

    Are you kidding me? Your mother is ashamed of you for preyng on storm victims, with this ridiculous article, instead of helping and praying for all of us.

    • pacman

      But you can’t refute it with a logical argument so you have to rely on emotion.

      • Flart Blooger

        my logical argument is thus….if you gouge, per this articles argument, you are providing supply and demand in a vaccuum. and it’s all perfectly ok to let the free market do what it will do. really? the free market dictates what human actions will dictate….am i right?
        so if someone is gouging, then they are, in turn, suseptible to human actions….in this case we are speaking of having “the law” go after the gougers…..government bad. i agree.

        if there were no law to govern people actions….as in this vaccuum…

        what’s to keep justice from being served on the gougers? well, for one, in the absence of “the law” going after them for their bad behavior, people’s actions will fill the void. by having their business burnt to the ground, bodily harm or the failure of the business after the flood waters receede by the very people that kept them in business heretofore the flood.

        in short, there is no such thing as a free lunch.

        using purley contrived arguments for bad behavior is a form of trolling.

        • Don Duncan

          “…if you gouge…” = If you sell at a price I don’t like.
          “…you are providing supply and demand in a vacuum.” The seller provides a supply, not demand. A buyer provides the demand. Since this is a voluntary transaction it is not in a moral vacuum, just the opposite. The context must not be ignored, e.g., the disaster. The new context changes the price.

          In a govt. price freeze the “gouger” is the govt. The price does not reflect the context, but only the desire to force, to dictate to a seller, to pander to the majority, the buyers. This is not justice or moral. And all will suffer when the rights of some are violated.

  • Jeff Pearce Sr.

    Outstanding synopsis. So true. When emotions run high, common sense & the understanding of human nature is taken over by irrationality. Already I know the trolls will be calling me callous and such. Did I just step all over your emotions? Understandable. You are all swelled up with highly toxic, unthinking “f-e-e-e-l-i-n-g’s.
    In combat that will kill you & your team.

  • Nailhead

    Many of you are missing the point completely. Those doing
    the gouging didn’t even consider raising their prices to make certain that there
    is sufficient, for example, water for everyone to go around. They’re raising
    the prices of essential commodities, food and water, to make an unreasonable
    income from those that are in a desperate situation. They are no longer profiting, they are profiteering, big difference. You need to start putting yourselves in the position of others and have some compassion for your fellow man. Isn’t that what your “Good Book” teaches you?

    • John Pepys

      Of course the sellers didn’t consider the end result. But having that sufficient supply IS the end result of what they’re doing whether they intended it or not. You’re leaving human nature out of it when human nature is THE major component of economics. If a seller sells a short supply commodity at over supply pricing what will happen? Somebody else will just swoop in and buy the entire supply and make the profit themselves, or worse, keep it for themselves (aka hording). Economics, when left alone, works because it doesn’t care about your feelings and emotions. Just like the law of gravity doesn’t care about your feelings and emotions. It just works.

  • Flart Blooger

    wtf?
    this is the kinda crap that pisses me off about strictly economic libertarians. this article is justifying the worst kind of human behavior….really? gouging is the only way to make sure supply is somehow equitable? are you on drugs?
    when hurricane irene hit our area, the local gas station out here in the boonies had a five gallon limit for gas. they did not raise prices. i had to scold two women next to me that were trying to pretend that, as a passenger with a gas can, and a separate driver, they counted as two separate purchasers……i heard them plotting this…btw….
    i called them out for it and they shrank away like the cheaters they were. gougers are no different and if people burn down their establishments for this kind of behavior, then, as much as i don’t condone aggression towards others’ property, i would not blame anybody one bit. take your heads out of your ass and recognize bad actors for what they are. don’t defend them and make the rest of us libertarian thinkers look bad in the process…….

    I AM NOT RON SWANSON!!!!!!

    • Joey

      Your example proves the writer’s point. If the prices are higher then they wouldn’t be as tempted to skirt the rationing. And you wouldn’t have to resort to rationing.

      • Flart Blooger

        i think not.

        justifying bad behavior using the free market is just stupid.

        using common sense is so much better to make a point.

        everyone knows when they are gouged. the gouger knows when they are gouging. this is not a case of what the market can bear. if we can take the time to think about what is free market and what is not, then we can also take the time to think about what is right and what is wrong.

        it reminds me of the propaganda about how many fortune 500 ceo’s have read atlas shrugged and how it helped their outlook toward business. great book. but really, about the worst advertisement for reading a book that i have ever heard of.

        i never comment on articles in the daily bell. this one has incensed me to no end.

        are there no un emotional arguments for how wrong gouging is?

        really?

        • Joey

          Free market is just reality. There is no time when something ceased to be a free market. It’s always a free market. Just because it feels bad to you doesn’t mean it’s wrong.
          Appealing to universal emotion that “everyone” should know or feel doesn’t make it so. What CEOs do and this situation is totally different. They use regulations, government, and non free market tactics to their unfair advantage.
          A disaster or an unfortunate situation that creates shortages is no different than other situations that create shortages. Just because it offends your sensibilities that someone has something that other people really needs doesn’t negate their power to charge what they feel is right. It’s not really up to the “government” to write this “wrong”. There is no wrong being committed here. They are not robbing something by pricing power. Now we can debate the high prices of certain drugs, I might buy into that more because the drug companies have the ability to create as much drugs as they want. I would see that as much more morally wrong as the company themselves create the pricing power through patents and gouge the patients and customers.

        • “Bad behaviour” is what a politician in DC or Austin, Texas does when s/he has the hubris, the arrogance and the conceit to pretend to dictate how two people must conduct an exchange transaction in the middle or aftermath of a hurricane!

    • Flart said: “I AM NOT RON SWANSON!!!!!!”

      I don’t think you are “libertarian”, either. You don’t appear to have much regard for nor commitment to the Non Aggression Principle.

      “A libertarian is a person who believes that no one has the right, under any circumstances, to initiate force against another human being, or to advocate or delegate its initiation. Those who act consistently with this principle are libertarians, whether they realize it or not. Those who fail to act consistently with it are not libertarians, regardless of what they may claim.”

          ~ L. Neil Smith
      http://www.ncc-1776.org/whoislib.html

      ( The Non Aggression Principle is highlighted in bold )

      If you are seeking a political label for yourself, I recommend a quick 10 question quiz at
      theadvocates(DOT)org/quiz/quiz.php
      theadvocates.org/quiz/quiz.php

  • Philip Bourdon

    It is neither logical nor reasonable to argue that this debate can only have integrity if emotion is left out; just keep to supply and demand. Who says so? Simply because the writer and a few decide so? We are dealing with people and not a computer game. Therefore, emotions are involved as they always are. When we sell and buy, emotions are almost always involved. We give value to things and people. We may trust one seller or another because of trust. How emotional! Of course, afterwards, there may be a price for these sellers (I won’t call them gougers, does the writer approve?). It doesn’t have to be an emotional response, but in this world of instant communication, word can get around and their business may suffer. Yes, that’s not my original point.

    • Don Duncan

      Emotion or no emotion, integrity starts with respect for rights. My property right is exercised in the market only if unrestricted by the initiation of violence, threat thereof, or fraud. Emotion does not change that fact. Your right to buy or not buy, unrestricted by govt., is the other half of the equation. Both parties need the freedom to choose. Violate my freedom today, and yours may be violated tomorrow.

      Majority opinion forced on a minority creates social chaos. Rights are principles that guide us out of chaos.

      Emotion may explain immoral or bad decisions. It does not justify them.

  • Philip Bourdon

    A seller can also limit how much they sell to an individual so that others can buy. That limits the first come or buy most argument. But, that involves some creative thinking and the writer only wants to win an argument

  • Flart Blooger

    hey,
    why not write an article about how it serves the free market that george soros only followed supply and demand when he sold out his fellow jews to the nazis. seems like a great opportunity to educate the masses.
    he, himself, called it one of the best times of his life.

    kind of anoying when you have to read a sentence like the one above, isn’t it?

    i really see no difference in that or the article above.

    • You cannot see the difference between a free market and a concentration camp? Government schools and government controlled media have succeeded in their re-education of Amerika!

  • Jentak

    Don’t prices need to be based on replacement cost? In a disaster like this the market price (aka gouging) may actually be lower than the replacement cost in the short term while shipments are not arriving and getting replacement items is nigh impossible.

    I could be wrong about that. I are not so smart with the economomics.

    • No, prices do NOT need to be based on replacement cost. Prices are what a buyer and seller agree upon for exchange. If a buyer is desperate, he might be willing to pay more than a “normal” market price and if a seller is desperate, he might be willing to sell for less than his cost or less than replacement cost.

      Billions of these exchange decisions are made daily by billions of people. It is the pinnacle of arrogance and conceit when politicians claim that their ignorant pronouncements are better than the spontaneous order of the free, unregulated market.

  • Joey

    Do a thought experiment, is there’s price control, what’s to prevent a customer from buying all the supplies and then turn around and resell them at “current market” price which would undoubtedly be much higher. It’s either price control or rationing. Both aren’t perfect. It’s either one or the other. Pick your poison.

    • Your false alternatives ignore the free market solution offered by the article.

      • Joey

        Actually I was making a point that government intervention leads to either price control or rationing. I purposely left out the solution offered by the article as it is distasteful to so many commenting here.
        Apparently you are one of the few that does not find the so called “gouging” offensive. I feel like the term gouging itself is a misleading word for this activity. After all, who of us liked to be “price gouged”. (The article uses it in a purposefully tongue in cheek way, offending all the people who think in knee jerk emotions and not much logic). If we use a different term, no doubt many here would be more amenable to the practice of setting price according to the supply and demand.

        • Your point about “government intervention” was not clear in the original. Thank you for the clarification.

        • Don Duncan

          How about “disaster pricing” or “scarcity pricing”?
          We should use a term that reflects what is happening, i.e., the new situation (disaster) requiring new pricing that better allocates resources.

          • Joey

            Exactly. What about “market price” or “reality price” or “nonfantasy price” 🙂

  • News from my friend in Houston: Sunshine, blue sky and a few white clouds! The weather is changing, but not the command-and-control government. Grocery stores cannot stay open 24 hours because of the government imposed curfew and they cannot readily restock their shelves because employees are not available after curfew. Government meddling in the economy by the Elite Few* have unintended (?) consequences on the other 4 million people living in Harris County.

    *Elite Few: the same government geniuses who designed the underwater highways which prevent vital supplies from reaching customers in Houston.

  • Would it be OK if I cross-posted this article to WriterBeat.com? There is no fee, I’m simply trying to add more content diversity for our community and I liked what you wrote. I’lrl be sure to give you complete credit as the author. If “OK” please let me know via email.

    Autumn
    AutumnCote@WriterBeat.com

  • Shannon O’Hara

    If you live in a flood zone or hurricane prone area it isn’t rocket science that you need to be prepared BEFORE the need arises. I live in an earthquake zone. I have supplies I can run out the door with or hole up for a few days if nessecary.

  • Don Duncan

    Help! I was gouged. Somebody do something. Next time I desperately need something that’s priced higher than I usually pay, I want someone to punish the seller for giving me a choice I wouldn’t have had. It’s all that greedy seller’s fault that I was trapped into a “no-win” choice. If I didn’t pay too much, I would suffer greatly. If I did pay, I would suffer less, but still feel bad. So, I want the choice taken away from me, even if I suffer more, overall.

    Oh, wait, I meant I want the seller to charge a price based on my estimate of what’s fair, regardless of the seller’s situation. If he suffers, that’s his problem not mine and I don’t want to think about it. I just want my way, my feelings to be put before economic realities, and govt. should do that for me, but not for the seller. If a business gets “special” treatment, e.g., a monopoly, that’s wrong, unfair. Why should businesspersons get an advantage when they are in the minority? In our democracy the majority is king and the king gets his way, even at the expense of property rights or commerce. That’s what “worked” in the USSR for 74 years, until it didn’t.

  • Falcon Hawke

    There are so many economic and behavioral fallacies in this fantasist article that I shudder to think that anyone with even some rudimentary knowledge of economics would believe almost any part of it, let alone think that the framework for human interaction and societal governance in the 21st century that it suggests is acceptable to advanced mammalian civilizations.

    There are no truly free markets in advanced economies, so begin there.

    And because this kind of stupidity bores me, let me end here: why not just steal whatever all of those gouging sellers are selling, as it suits me, because laws that should prevent anyone from doing that are just as silly and counter-productive as are price gouging laws? Lets all just take what we want, that is where this article leads us.

    The dead-enders of capitalist purity are simply ridiculous these days, but they resist the graves they belong in, because we let them sell their destructively silly chum propped up by a civilization that fortunately values reasonable and moral and even altruistic human interactions, rather than one that operates only on selfishness and unbridled greed.

    • esqualido

      That may be true, but all it takes is a handful of competitors to keep prices from skyrocketing: the presence of a variety of supermarkets, automakers,
      clothesmakers, etc. being examples. It is where monopoly or accelerating oligopoly has taken place, especially in Big Banking and Big Pharma, that the public is left at the mercy of the wolves. Congress has done as little as it could get away with enforcing the Clayton Anti Trust Act and other basic protection, and it us up to us to keep their feet to the fire.

  • More news from Houston: The EMBARGO as been lifted!

    “EMBARGO”?!? YES, EMBARGO !!!

    Unbeknownst to nearly everyone except shippers, Houston has been under a government (FEMA?) declared, one-size-fits-all, EMBARGO !!

    Stores that ARE open for business (and there are MANY) can NOW start receiving goods to replace those that have been sold out.

    • Ahhh. Amazon/Whole Foods has (some? all?) fully stocked stores. That begs the question: Can political connections defeat (get around) an Embargo?

      But wait! The posted prices are 3 to 4 times higher than normal. Maybe the shelves are stocked because few people will buy at the high prices. But THAT begs the question: Can political connections defeat (get around) the “gouging” laws?

  • TechTate

    Many emotional responses and criticisms. Let’s take a look at them. I’ll try to avoid mistakes by insulting or mis-characterizing the people I am rebutting.

    argument1: “you have to make an emotional argument not a logical
    one”

    rebuttal: Then you are seeking the best short term emotional result? Not the best economic result nor the best result for recovery on a whole? The argument is an economic one so if we are to have meaningful debate it has to stay logical and not emotional.

    argument2:”There are so many economic and behavioral fallacies…. There are no truly free markets…

    rebuttal: logical fallacy, there is no true socialism, true democracy, perfect vacuum, zero gravity, etc. You have to move beyond such an obstructionist argument for discussing just about any system.

    Argument3: “A seller can also limit how much they sell to an individual
    so that others can buy. That limits the first come or buy most argument.”

    rebuttal: As a piece of the entire puzzle, Yes, that is a way to reduce
    hoarding if a seller doesn’t want to raise prices, but it fails to achieve several
    desirable results, and has some unintended consequences. We are looking to find the best economic
    option, not a stopgap.

    1. It doesn’t incentivize increasing the supply. If a vendor sells all of their water they
    need to restock, however they will not be able to restock at the normal price
    because the normal supply chain has broken down. By selling it at a higher price, they will
    then be able to offer a higher price to a new or existing distributor to
    restock.

    2. It also fails to allocate resources to their most valuable uses. Distributing supply doesn’t mean the water will go to the most important uses. If a
    nurse from a retirement home goes to buy water for herself and 20 elderly she
    can’t simply pay more and get the supplies she needs for all 21 people. And it doesn’t prevent people who don’t need the water from buying it. As price goes
    up the least important uses for water are the first to be voluntarily curtailed.

    3. It creates artificial buying habits- the nurse in the above example could come into the store 21 times to get 21 units of water, or all the elderly could make
    the trip to the store with her. This results in wasted energy and resources.

    Argument4: “But with gouging, it’s going to be hard for many people to be able
    to pay those prices for the necessities, food, water, shelter.”

    rebuttal: when there isn’t enough supply to go around at current demand if the price doesn’t change, you will run out of supply. So what’s better, a hotel room
    at $500 a night, or no hotel. A bottle of water at $4 or no water? At higher
    prices, a family of 7 may get one hotel room instead of two, another family may
    drive further if they are able to find an area with less demand and more supply. At higher prices homeowners may open up part of their home through AirBnB
    and choose to deal with having another family stay with them for a few days. If you keep the prices fixed, you run out of supply based on first come first serve rather than priority. Yes some people won’t be able to get everything they need at a price they can afford, but they will prioritize as will everyone else, as a result, peoples priorities will have a much higher chance of being satisfied with higher prices than with price controls. Paying $5000 for a weeks worth of basic necessities is better than having a 1 in 3 or 2 in 3 chance of not having basic necessities at all, but at normal prices.

    Argument5: “price gouging is morally equivalent to looting”

    rebuttal: I would submit to you that “price gouging” describes a voluntary transaction in which both parties are better off after the transaction than before.
    Looting is an involuntary transaction in which one party is better off
    and one party is worse off than before. So I conclude that the logic or moral compass of the asserting poster of the argument is in error.

    Conclusion: Will the “price gouging is wrong” side of the debate actually debate or provide a more point to point rebuttal of the original article?

  • Baba Jacob

    Maybe I am an idiot and probably shouldn’t run a retail business. But if I was a store owner in Houston under these circumstances my feeling is that I would suspend my for profit business activity and simply give my stuff away to people that were in need of it but in a rationed way to help the most people. Libertarianism is about having the liberty to make a choice. My choice would be to give love and voluntary service to my fellow humans by assisting them when they are in desperate need and worry about the personal economic consequences later. I would rather save people in desperate need and be possibly ruined financially than to allow intellectual supply and demand thinking overrule my heart. We are all one, we are really aspects of the divine. It is my opinion that what is special about libertarianism is the opportunity it provides me to remember to freely volunteer my service and property for the benefit of others in desperate need. These are my neighbors, these are my fellow brothers and sisters. And the knock on effect is that hopefully my charity with be contagious and people will pay it forward and thus my actions would spread outward as a wave that would help even more people.

    • If you have the talent to run a successful business, you should consider how many MORE people you could help if you did not bankrupt yourself.

      • Baba Jacob

        Hey, if Trump’s company can go bankrupt four times and he can still become president…I don’t think going bankrupt is a game ender. 😛

        • LOL !!! I yield! You certainly know how to win with convincing examples!!

          (I love it.)

        • Don Duncan

          Bankruptcy law is the antithesis of capitalism and responsibility. So is Trump’s business record. He is a product of our fascist economy. Others, those who create wealth, were robbed (taxed) to pay for Trump’s mistakes. There is nothing honorable or noble or charitable about socialism. It is robbing the productive to benefit the parasites.

          We cannot base our lives or our economy on exceptional circumstances, “lifeboat” examples. But even in disasters the profit motive benefits all, as “price gougers” prove when they fill in the gaps left by govt. aid and charity. Sometimes they are the ONLY relief, and the rescued don’t give a damn about the motivation.

          • dauden

            Exceptional remarks. Thanks for expounding for my understanding.

    • AR

      The key word being “ration,” what we are hoping to avoid.

  • Slava Kalashnikov

    It’s great. It turns out that in besieged Leningrad there was a simple opportunity to avoid hunger – to introduce free food prices! Yes, the price would rise, and people would stop buying excess, so that everyone would have enough. As everything is simple and natural in a free market.

    • Don Duncan

      I doubt the communists “introduced” market pricing. They had their hands full fighting the Nazis and couldn’t regulate (dictate) prices. The default (logical life saving solution) was to free up the market. Since freedom works in general, a free market works, but not because it is simple or natural. How the market functions is complex and evolves daily with the actions of 7+billion people. It is made more complex than is “natural” because an elite parasite class have been given authority by the masses to prey on all, using a system of institutionalized violence, threat thereof, and fraud. This disease is govt., masquerading as a cure for itself.

  • Robert Sussman

    Price gouging is good.

  • esqualido

    Shrkeli’s 5000% hike in Rx prices and other gang-rapes by Big Pharma raise no official eyebrows, but the authorities are in high dudgeon over anyone charging more than 10% above pre-hurricane prices for bottled water.

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