Price Gouging Saves Lives

Discussion in 'Economy' started by Hobbit, Jun 5, 2006.

  1. Hobbit
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    Hobbit Senior Member

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    Yeah, you heard that right. For all the animosity it causees, price gouging actually helps people. Don't hit reply yet. Just hear me out.

    Ok, so a disaster strikes...suddenly enough that you really didn't have time to get out. Your power is out and your house is barely still usable as a shelter, so you dig your way out and make your way to the store to buy some batteries, which you'll need to power some key survival devices in order to ensure that you survive long enough for rescue efforts to get there. Well, this store owner, being an upstanding citizen, decides not to take advantage of the situation. He kept the price of a $5 pack of batteries at $5. Well, somebody beat you to him. They were able to drive or something. Whatever happened, they decided one pack wasn't enough. I mean, we're talking doomsday disaster, so they bought enough batteries for them and all their relatives to power a dozen flashlights each for weeks. Well, now the guy's got no more batteries. Crap. Well, you go up to the store. The guy there wants to make a buck. His $5 pack of batteries is $30. Yeah, that sucks, but $30 batteries are better than no batteries. No, you don't have to thank him. The $30 should be enough.

    Now, let's move on to construction. You've gotten out, but now you need your house rebuilt. The local contractors could just keep their prices steady, but then they'd have 2+ year waiting lists. On the other hand, they could charge triple, knowing that some people can and will pay that much. Before long, word spreads that construction work is paying triple in your area, and more workers move down. Now, with the supply up, the price goes back down. Heck, it may even be cheaper than it was before, since there'd be a huge supply of contractors and they'd make up the price difference in volume.

    You see, price gouging is a function of the free economy and offers two important functions. First, it acts as an economic triage, making sure that people only buy the supplies they truly need. The second is to attract further business with the prospect of enormous profits. So, the next time you get up in arms about price gouging and want the government to stop it, think. Any government regulation that prevents an independant, non-monopolistic business from setting its own prices as it wishes will ultimately hurt the consumer. Those old enough may remember the strict rationing brought about by the price cap on gas in the 70s. Let the market function.
     
  2. MtnBiker
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    MtnBiker Senior Member

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    Well said, Dr Williams would be proud.
     

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