Wednesday, September 07, 2005

Price Gouging = Bad, Right?

Here are several columns on proce gouging, the mechanism of price, and general economics as related to the aftermath of any disaster.

John Stossel, from ABC News.
Iain Murray, of Tech Central Station.
William Tucker, with the American Enterprise.
Walter Williams, George Mason University.
Walter Block, Loyola University.

Everybody wants prices to be lower. Many argue that they should be lower. The question that must be asked is: who should correctly set the prices, the seller or the buyer? Those arguing for price controls is saying that the consumer is more important the the producer, and has no legitimate claim of ownership on what he produces. And we wonder why there is a struggle for property rights in this country.

If the Kelo v. New London decision angered you, for the same reasons that it did, you should not be in favor of price controls.

Also, the kook network is busy circulating emails urging a gas-out, or boycott. As usual, urban legend website Snopes sorts of these actions, and shows that they would do more harm than good. Supply and demand, as always.


Anonymous said...

Reference: Price gouging. No matter who argues about who hasthe right to do what there is one thing that is not in dispute.

When it comes to price gouging by accident or on purpose, the results are the same........

everybody pays the price or does without. It raises the cost of everything, food, clothing produced material goods at percentages that far outstrip the annual increase in indivdual wage thus seriously impacting on the quality of life of those who are on fixed incomes. No amount of political posturing changes that ugly truth.


Anonymous said...

"The question that must be asked is: who should correctly set the prices, the seller or the buyer?"

The seller can set the price, the buyer can decide whether to pay it. The seller can then continue his pricing policy or alter it based on the buyer's decision.

I don't believe in price controls - don't think they should be used not matter how high the seller sets his price - let the "market" (by definition, the "market" is the consumer sector) decide whether someone sets their prices too high. The seller has no more legitimate claim to my money than I do to what he produces.

Mike Kole said...

No argument that higher prices have a higher impact on those with lower incomes. It makes their decision-making more critical, to be sure.

It remains another ugly truth that price controls create shortages while people hoard products priced artificially low, and that when people in need look for those products, they often do without. This is especially bad in the case of medicine.

I thought that it was not only rational, but highly moral to see the price of gasoline spike in the immediate aftermath. Some people will very much need gas, and when you really need something, you tend to be very willing to pay a high price for it. Those casual buyers stay away, and supply remains for those truly in need.

How immoral it would be if medicine was kept artificially cheap, causing a run on it, leaving sick people in desperate need unable to get it because those who didn't truly need it hoarded it, just in case.