Price gouging as a result of Katrina

[Shredder]

some economics for the mba forum

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[Arsenic]

some economics for the mba forum

gouging sucks, its not right to make people pay $20 for a bag of ice. if you do this in the state of florida after a disaster the attorney general goes after you HARD.

 

[SanDiegoSOD]

If you're talking about gasoline prices, then yes, I support price gouging on a short term basis. Price gouging solves supply shortages by lowering overall demand and consumption, allowing more effecient distributions of resources. For example, people in the Southeast swallowed up gas quickly after Katrina because they thought supply lines were going to be disrupted, and people brought their jet boats with 100 gallon tanks and unused vehicles to the station to fill. This sort of overconsumption leads to the very shortages that will hurt the economy, so the rational option is to raise prices significantly to make prices only worthwhile to those that have an immediate need for gas. Lower demand causes lower consumption, leading to lower prices, yada yada yada - short term problem solved.
As for long term price gouging, if done on an industry wide basis, I fully support the governments right to smooth market inequalities and break up cartels by heavily fining price gougers. Monopolies are busted for a good reason - they hurt the economy in the long run.

 

[Shredder]

gouging sucks, its not right to make people pay $20 for a bag of ice. if you do this in the state of florida after a disaster the attorney general goes after you HARD.

it is right when there are shortages. its not right to deny ppl ice who are willing to pay more than $20. to the most desirous go the spoils. my microecon prof was great, he showed deep impact and how morgan freeman was nobly freezing all prices. my prof had a good time ridiculing that

 

[DrBowtie]

Gouge? No. (from what I understand is artificially inflating the price)
Let prices go to their natural supply/demand price? Yes.

Hell much of the cost of gas is attributed to taxes. Taxes = bad.

Shredder on a side note, you ever see a Nolan Chart?
http://www.lairdwilcox.com/news/nolanchart.html

 

[Shredder]

Gouge? No. (from what I understand is artificially inflating the price)
Let prices go to their natural supply/demand price? Yes.

Hell much of the cost of gas is attributed to taxes. Taxes = bad.

Shredder on a side note, you ever see a Nolan Chart?
http://www.lairdwilcox.com/news/nolanchart.html

yeah, gouging is a label the govt has stuck on there to make it seem evil. much of many costs are attributed to taxes--sin taxes, cars. im not so sure about electronics, as we dont offer much domestic competition there. we should be more like hong kong, super free markets and trading. at least for the time being until china overwhelms it, how tragic. although taxes = bad is an awfully blanket statement, but yeah most taxes are.

i have seen those, never knew it was called that though. i definitely lie way on the econ right. personal i dont really know, thats kind of an afterthought after econ, which i think is much more important. yourself?

interesting note, katrina shut down the port at new orleans and caused grain prices in the states to tumble. what a powerful exporter of food we are i guess. and oil prices jumped--what a powerful importer of oil. i wonder what will happen to the middle east when oil runs dry.

 

[DrBowtie]

Yeah I lie on on the economic far right and on the border between GOP and libertarian. If you hunt around and google "Nolan Chart" the libertarian party has made a quick 10 ? quiz. It will show you roughly where you are.

Edit:Also I think a good majority of social issues are based off of economic ones and vice versa so which ever stance you want to take as more important, the other one follows some natural tendency to agree.

 

[Shredder]

Yeah I lie on on the economic far right and on the border between GOP and libertarian. If you hunt around and google "Nolan Chart" the libertarian party has made a quick 10 ? quiz. It will show you roughly where you are.

yes, were quite similar politically. i too am in limbo between gop and libertarian, undecided but its not too big of a deal to me compared to econ. it would be interesting to see libertarians run against gops in elections...thats how every election should be in a capitalistic country, dunno which way americas going though with the socialistic left running around everywhere, particularly sdn im noticing, sigh. shouldnt elections be quadripartisan? wheres perot when you need him, man that guys an incredible businessman

edit: hmm interesting proposition. how so? i could see how drug controls tie into economics with the black markets and tax evasion. gun control? gayness? religion? abortion? stem cells, cloning? you dont think the two axes have a good degree of independence?

 

[DrBowtie]

If elections were different in some way to foster less bipartisanship (I don't have a solution yet) but I think it would definitely be interesting to see where the majority of people would go.

I would see most would consider themselves a "centrist" i.e. a moderate liberal or moderate conservative since it is more socially acceptable than to identify with "radical" views.

I added to my previous post on what I thought was more important econ or personal.
For example, it seems counterintuitive for someone who is high on welfare and social programs to favor economic freedom and lower government funding.

 

[Shredder]

(I don't have a solution yet)

white male--> run! for office, that is. or, finance one's campaign?

I would see most would consider themselves a "centrist" i.e. a moderate liberal or moderate conservative since it is more socially acceptable than to identify with "radical" views.

how ppl are opposed to taking up principles and stances these days, instead preferring the comfy and wishy washy middle ground

For example, it seems counterintuitive for someone who is high on welfare and social programs to favor economic freedom and lower government funding.

i think welfare and social programs fall under the realm of econ, whereas social is like the things i mentioned above. social programs and a welfare state necessitate heavier taxation and govt spending of otherwise private money, meaning leftward on econ axis.

in a book i read, someone who is low on social and econ was termed a populist, and liberal, conservative, and libertarian filled the other 3 quadrants. edit: or maybe its fascist according to the chart, hitler like

 

[DrBowtie]

The thing about all social issues is that at some point there is always an economic arguement.
i.e. Gay marraige wants the equal rights to pensions and SS checks of their loved ones. i.e. Iraq war and war on terror people always complain about how much money is spent.
Many others social issues can be looked at from the econ perspective.

 

[Shredder]

The thing about all social issues is that at some point there is always an economic arguement.
i.e. Gay marraige wants the equal rights to pensions and SS checks of their loved ones. i.e. Iraq war and war on terror people always complain about how much money is spent.
Many others social issues can be looked at from the econ perspective.

yes, you are right, if you look at them in roundabout ways then econ frequently comes into play, thats why i consider it more important. econ is pretty much the basis of every society

 

[mshheaddoc]

it is right when there are shortages. its not right to deny ppl ice who are willing to pay more than $20. to the most desirous go the spoils. my microecon prof was great, he showed deep impact and how morgan freeman was nobly freezing all prices. my prof had a good time ridiculing that

You can't just say "its right because of supply and demand". That isn't how economics works in reference to a disaster. This comes back to the fact that areas that don't have "due to weather related issues" aren't going to have the necessary goods. So the push is on the immediate area. This has to do with the whole compassion thing that sometimes people have a hard time understanding when they only deal with economic concepts.

Inflation of prices during a crisis is morally wrong by taking advantage of those who can not provide for themselves. Throughout the southeast this is what happened in many states. Anyone from a business sense would jump on the opportunity but does it mean that its right? Honestly, I don't believe it is. Capitalism at its finest as the business people think only of the bottom line. Hence the reason for disparities in this nation. It really makes me sick.

 

[Shredder]

You can't just say "its right because of supply and demand". That isn't how economics works in reference to a disaster. This comes back to the fact that areas that don't have "due to weather related issues" aren't going to have the necessary goods. So the push is on the immediate area. This has to do with the whole compassion thing that sometimes people have a hard time understanding when they only deal with economic concepts.

Inflation of prices during a crisis is morally wrong by taking advantage of those who can not provide for themselves. Throughout the southeast this is what happened in many states. Anyone from a business sense would jump on the opportunity but does it mean that its right? Honestly, I don't believe it is. Capitalism at its finest as the business people think only of the bottom line. Hence the reason for disparities in this nation. It really makes me sick.

but its assumed that there is a shortage of goods, and to clear the market requires higher prices. i would be pissed off if i valued a bottle of water at $2, yet didnt get one bc they were being handed out at $1 each to the 10 ppl in front of me in line due to govt price freezing. compassion isnt mutually exclusive with jacking up the prices, its only to make sure goods and services go to those who want them most, the only right course of action. its up to the seller to artificially lower prices so that poor people get water and gas, but then rich people will be stranded. crises are superb business opportunities--maybe if the govt didnt freeze prices, more businessmen would have incentive to cater to devastated areas, clearing up the shortages. there should never be such a thing as a "shortage", youre either willing to pay or youre not. one never hears of shortages in gold and diamonds.

disparities are inevitable in capitalism. even if the rich get richer and the poor get poorer, on an absolute level everyone gets richer, as in rising quality of life. there is only relative disparity. the poor shouldnt be green in the face when their entrepreneurial buddies get richer than them, even when they get hired for a new job with a higher wage by that same buddy. i dont see any problem with disparity, its a natural consequence of people with disparate innate abilities, which has to manifest somehow. the key is to ensure that everyone has the chance to rise up. whether they take that opportunity is up to them, but i think this country does a good job of making that chance available, better than anywhere in the world.

speaking of which, i have an idea. lines are the classic example of prices that are too low, and the grocery store or walmart is where one commonly encounters lines. what do you think about making express lanes that arent based on your number of items, but rather for a small fee, say a few dollars or a percentage of your bill? havent there been times when you have been in a rush and wanted to bribe people in front of you to cut in line? or maybe your time is just more valuable. what do you think--express mart?

 

[mshheaddoc]

but its assumed that there is a shortage of goods, and to clear the market requires higher prices. i would be pissed off if i valued a bottle of water at $2, yet didnt get one bc they were being handed out at $1 each to the 10 ppl in front of me in line due to govt price freezing. compassion isnt mutually exclusive with jacking up the prices, its only to make sure goods and services go to those who want them most, the only right course of action. its up to the seller to artificially lower prices so that poor people get water and gas, but then rich people will be stranded. crises are superb business opportunities--maybe if the govt didnt freeze prices, more businessmen would have incentive to cater to devastated areas, clearing up the shortages. there should never be such a thing as a "shortage", youre either willing to pay or youre not. one never hears of shortages in gold and diamonds.

disparities are inevitable in capitalism. even if the rich get richer and the poor get poorer, on an absolute level everyone gets richer, as in rising quality of life. there is only relative disparity. the poor shouldnt be green in the face when their entrepreneurial buddies get richer than them, even when they get hired for a new job with a higher wage by that same buddy. i dont see any problem with disparity, its a natural consequence of people with disparate innate abilities, which has to manifest somehow. the key is to ensure that everyone has the chance to rise up. whether they take that opportunity is up to them, but i think this country does a good job of making that chance available, better than anywhere in the world.

speaking of which, i have an idea. lines are the classic example of prices that are too low, and the grocery store or walmart is where one commonly encounters lines. what do you think about making express lanes that arent based on your number of items, but rather for a small fee, say a few dollars or a percentage of your bill? havent there been times when you have been in a rush and wanted to bribe people in front of you to cut in line? or maybe your time is just more valuable. what do you think--express mart?

I seriously can't believe that I just took the time to read this ridiculous response. I understand you are looking for ways to make money but you are going about it the wrong way.

Problem with society - trying to make money off of people, taking advantage of people, and always in a rush. Typical Wall Street mentality. And people want to know why wall street is cutthroat ...

 

[Shredder]

I seriously can't believe that I just took the time to read this ridiculous response. I understand you are looking for ways to make money but you are going about it the wrong way.

Problem with society - trying to make money off of people, taking advantage of people, and always in a rush. Typical Wall Street mentality. And people want to know why wall street is cutthroat ...

i dont see anything ridiculous about it at all. it can only be beneficial for victims of disaster if "scheming" or "greedy" businessmen swarm the disaster area to engage in price gouging. whats better, that or the alternative, which is for them to stay away since its not worth their while? then people starve or have no gas. businessmen need incentives--people dont operate under pure altruism. or at least altruism is in short supply and quickly runs into shortages. for example, im not running out to louisiana to help out or open up a bottled water stand. but if the stakes were high enough, i might consider it. i dont know if you or anyone else is running out there either, but again if there were enough reward you might consider it. businessmen create value and make things better for everyone. i dont see how im going about things in wrong ways one bit. its not taking advantage of ppl, maybe taking advantage of situations but thats what entrepreneurs do. capitalizing on opportunities and advantages is a good thing

and wall street largely runs the economy. sure one could nuke it, if he wants the country to fall into shambles. but at least all the cutthroat businessmen would be gone i guess. plus you have to be in a rush, life too is in limited supply, might as well make the most of it.

price freezing is definitely detrimental. govt causes problems rather than solving them when it meddles in economic affairs, whatever happened to laissez faire. im surprised at your capitalistic backlash, i didnt think youd be another one to call me evil. and the wall street mentality will eventually have to improve healthcare, not the mother theresa mentality. people simply do not work under selfless principles, it is not in human nature, it goes against biology and evolution. but if people go about manipulating that truth in the right way with the proper system, things can be better off for all.

 

[mshheaddoc]

i dont see anything ridiculous about it at all. it can only be beneficial for victims of disaster if "scheming" or "greedy" businessmen swarm the disaster area to engage in price gouging. whats better, that or the alternative, which is for them to stay away since its not worth their while? then people starve or have no gas. businessmen need incentives--people dont operate under pure altruism. or at least altruism is in short supply and quickly runs into shortages. for example, im not running out to louisiana to help out or open up a bottled water stand. but if the stakes were high enough, i might consider it. i dont know if you or anyone else is running out there either, but again if there were enough reward you might consider it. businessmen create value and make things better for everyone. i dont see how im going about things in wrong ways one bit. its not taking advantage of ppl, maybe taking advantage of situations but thats what entrepreneurs do. capitalizing on opportunities and advantages is a good thing

and wall street largely runs the economy. sure one could nuke it, if he wants the country to fall into shambles. but at least all the cutthroat businessmen would be gone i guess. plus you have to be in a rush, life too is in limited supply, might as well make the most of it.
people simply do not work under selfless principles, it is not in human nature, it goes against biology and evolution. but if people go about manipulating that truth in the right way with the proper system, things can be better off for all.

First off let me clarify maybe its just emotion speaking here. Captialistic backlash? I find the bold statements you have made extreme in our society. The fact that you are generalizing how business works with minimal work experience with the minor oversight of human response appalls me. Look at the response from businesses all across the nation as well as from individuals. That response right there could disprove your theory that business works on the "taking advantage of a situation". I just find that plain WRONG to think that from a humanistic compassion standpoint.

price freezing is definitely detrimental. govt causes problems rather than solving them when it meddles in economic affairs, whatever happened to laissez faire. im surprised at your capitalistic backlash, i didnt think youd be another one to call me evil. and the wall street mentality will eventually have to improve healthcare, not the mother theresa mentality.

Capitalism has nothing to do with my view other than the fact I know people down there who lost everything they had and are now stranded in places due to shortages. To take advantage of them pisses me off frankly. You are right, wall street will IMPROVE healthcare but not by taking advantage of disasters such as 9/11 or a CAT 4 hurricane. I just think that your view of business in THIS situation is HIGHLY skewed ... to the sense of capitalism to the extreme.

This could be referred back to your volunteer which many questioned your lack of compassion for medicine. This thread would be reflective of the same things in business.

This is one of those things that as a society we must support each other in times of need. You don't kick a man when he's down. You help him up. Those who take advantage are looked down upon in our society (and also fined). Rightly so in my opinion.

 

[housecleaning]

to the most desirous go the spoils. my microecon prof was great, he showed deep impact and how morgan freeman was nobly freezing all prices. my prof had a good time ridiculing that

yer an idiot, and this is the level of economic analysis you deserve for attending a state school.

 

[Shredder]

yer an idiot, and this is the level of economic analysis you deserve for attending a state school.

i dont respond to personal attacks, only points. that prof is a uchicago phd btw

im not seeing how providing incentives for entrepreneurs to do business in disaster areas is kicking victims when theyre down. its offering them much needed goods and services where they would not be otherwise. if anyone wanted to voluntarily freeze his prices, he could do so. but why discourage profiteers from setting up in disaster areas by mandating price freezes? you cannot offer humanitarianism as an incentive and expect help to flood the area. even if there is help, goods are needed to provide the bread and butter of survival. feel free to attack my lack of real world and volunteer experience, but i only pay attention to attacks on logic or theory, the only things i can assert or can/plan to change at present. in fact, its always been my understanding that college is the time to learn theory, not volunteer or work one's time away, so youre not going to make me feel bad about that.

fining people for taking advantage of opportunities is good? one practical point that nobody has brought up is that people may have their forms of money destroyed, making all of this tricky. but again nobody brought that up, just the typical "youre an idiot, youre evil, youre heartless, this is wrong", its kinda stale and leads nowhere

on another note, mshheaddoc, are you a female
and im not blowing hot air here: Price Gouging Saves Lives

 

[mshheaddoc]

1.) my sex has nothing to do with my views.

2.) I'd check your sources and use a "credible" source. Libertarianism? classical liberalism? EXTREME capitalism? I'd read your source and see their background before quoting them. I'm surprised you pulled something up like this. I didn't see you as an extremist. And their points were all opinion and extreme capitalist as well.

The "problem" of "price gouging" will not be cured by imposing rationing along with price controls, either. Rationing of price-controlled ice would still maintain an artificially low price for ice, so the day after the storm hits there would still be no economic incentive for ice vendors to scramble to keep ice available given limited supplies that cannot be immediately replenished. And while it is true that rationing might prevent the person casually purchasing four bags of ice from obtaining all four of those bags (at least from one store with a particularly diligent clerk), the rationing would also prevent the person who desperately needs four bags of ice from getting it.

Rationing is usually what is used in the following of a natural disaster. And in THIS case I most of the stores aren't even OPEN nor do they have anything. Its articles like this that truly sicken me to see how manipulative our society truly is. In trying times like these, compassion hopefully will prevail. That is all I really need to say on this topic.

 

[Leviathanius]

The primary issue that seems to be in question in this thread seems to be what sort of behavior do we expect out of each other as humans. For more depth, I'm talking maybe a weekend read, check out T. Sowell's Conflict of Visions. However, in short, the philosophical difference is that either we can expect humans to offer enduring acts of great compassion in a situation like this and be appalled if/when they don't or we can expect humanity's wholesale (barring outliers) response to be oriented towards their own benefit and try to rely upon certain processes (i.e. free markets, law enforcement) to mitigate such an orientation. On a personal note, I would propose that establishment of law and order is a prerequisite for market-based elevated prices (gouging?) to be bearable. Otherwise, sure we can be disgusted at price-gougers, but we ought not be surprised. Our disappointment should lie with those charged with providing protection for the actors in the market to actually act free from fear of life and limb. My vote for the poll question? Bad question.