Just in Time for Halloween!

[paft.livejournal.com]

I suppose it’s appropriate that we get this truly scary, fanged, and drooling glimpse of the face of modern capitalism on October 31st. CNBC Senior Editor John Carney has decided to weigh in on the subject of price gouging during a disaster.

What’s striking is the bland cluelessness, a level of naivete that, feigned or not, borders on the murderous. After pointing out that, once a few of these layabouts experience having to pay, say, $100 for a case of bottled water, they’ll have received a salutary lesson in being prepared for disaster, Carney observes:

One objection is that a system of free-floating, legal gouging would allow the wealthy to buy everything and leave the poor out altogether. But this concern is overrated. For the most part, price hikes during disasters do not actually put necessary goods and services out of reach of even the poorest people. They just put the budgets of the poor under additional strain.

Right. The poor never have to do without “necessary goods and services” in normal times, so they certainly won’t have to do without them during disasters like floods and hurricanes! For the most part, anyway. And if a few poor people are unlucky enough not to be part of that “most,” seeing a few bodies of neighbors who’ve died from hypothermia or thirst will teach the rest of those lazy beggars a lesson about the dangers of overconsumption!

Carney apparently believes the plight of many people during a disaster is about dickering over prices rather than access to resources that could save lives. “This is a problem better resolved,” he declares, “through transfer payments to alleviate the household budgetary effects of the prices after the fact, rather than trying to control the price in the first place.”

Of course, this is only going to help those people who managed to survive in a "marketplace" where the prices of goods are jacked up to the point where they end up having to choose what live-saving goods to purchase. Potable water? Uncontaminated food? Dry warm blankets? Hey, if you can't afford all of them that's just now how the marketplace works, buddy, and if you or a member of your family ends up not making it because you chose wrong, those are the Randian breaks.

Surely the transfer payment you get later will compensate for having to watch them die.

But wait! There's more! Carney has followed this post up with another mentioning merchants giving away perishable goods, in which he asks:

Clearly, people could pay market prices for the perishing goods. Does the fact that they aren't mean consumers are gouging merchants? Should this be illegal?

Is this man from another planet?

*

Comments

[underlankers.livejournal.com]

Well, given how so many Republicans are fans of Randianism, which to its logical extent would lead to a bunch of Omnicidal Maniacs, this is hardly a surprise. If the poor are useless mouths, so much the better to be rid of them, then.

[papasha-mueller.livejournal.com]

Pardonne mois, but isn't it the essence of capitalism in its naked thruth?
The seller of canned water raises the price for it's his power: the demand grows, the competition is low, the supply is limited (see M. Porter for more).
Some people, who cannot afford water die, thus balancing the demand.
Some other are motivated to do something to get the money: go for a part-time job or robber the bank, invent new iphone, etc. Or locate another source of water and set up a competitive business of their own?
Isn't it what helps the Merry-go-round actually keep spinning?

[paft.livejournal.com]

Do people dying from hypothermia, dehydration, or drinking contaminated water also help that Merry-go-round spin?

If so, we need to try out another merry-go-round.

[rimpala.livejournal.com]

something something great chain something something invisible hand something something John Galt.

[underlankers.livejournal.com]

Not exactly, it's an element of the kind of problems that hpapen where capitalism exists in a Laissez-Faire fashion right out of the 19th Century. Price-Gouging is only possible where the system is already unbalanced and where people are in a position to well, gouge. In a well-regulated system it is not feasible as a means to bilk the system, corruption would take other forms like the Bernie Madoff variety. It does not keep the Merry-go-round spinning, it simply is a criminal activity that bolsters the profits of criminals.

[rimpala.livejournal.com]

Ah yes, price gouging. A helpful reminder for anyone visiting Orlando, FL: do NOT by any means pump your gas at the stations just down the street from the airport. Those stations are run by crooks.

[dexeron.livejournal.com]

What the "price gouging SAVES LIVES!" crowd fail to understand is that their model prices out some people who would have only bought that one bag of ice at the cheaper price... and cannot afford ANY bags of ice at the inflated one. As always, they neglect the human cost, preferring to perform insane mental gymnastics to convince themselves that their "Fuck you, I've got mine" mentality is somehow not only NOT misanthropic and harmfully selfish, but somehow actually BENEVOLENT.

Anything to dull the cognative dissonance driven guilt, I guess.

[badlydrawnjeff.livejournal.com]

I'm truly disappointed to see this. I know you've moved leftward over the last few years, and I appreciate your thoughtfulness while doing so, but that you're falling into this specific one is a little baffling to me. "Price gouging" is not about making sure no one gets ice, but that as much ice can get out as possible without causing ice riots. It's the only recourse we, as a society, have in order to consider orderly control of product and to ensure that only those who truly need something are the ones getting it. It's not only the most benevolent option, but also the fairest and most equitable.

Instead, we've collectively demonized it. And who does that help once the price is kept artificially low and we can't get any more water?

[vitsli.livejournal.com]

People who wish to treat "poor" as a nearly-extinct rare furry, purring species, and who think that the main purpose of "public transport" is to serve "poor" are definitely from another planet - where "poor" are the scare sort of, I dunno, pets of some kind.

[paft.livejournal.com]

Good thing I don't wish to treat "poor" as a near-extinct rare species (I know too many humans who qualify) and don't think the sole purpose of public transport is to serve the poor.

So exactly who are you talking about here? Maybe it would be simpler if you just constructed a sock-puppet you could argue with.

[kayjayuu.livejournal.com]

Just an observation: no hyperbole here, no sir.

/end

[paft.livejournal.com]

???

[underlankers.livejournal.com]

Likewise with the people accusing those who note the reality that price-gouging does exist and is wrong of advocating the Soviet system complete with concentration camps and death tolls in the millions. No hyperbole there, and no moral equivocation of the most mealy-mouthed, vile, disgusting, and barbarian sort, no sir.

[zebra24.livejournal.com]

"Fixed prices will work just fine" is very ignorant view.

Price is not just tag with number on it, as Obama-minded people might think.
Price is a clear message - what needs to be produced more, what needs to be saved and cherished and what is actual people needs.

Imagine you got a store with 10 bottles of water, 10 breads, and 10 blankets.
Community got 30 people to survive, 10 from each of 3 different locations.

A. They do have an access to convenient shop with per-disaster prices.
What happens? Money is worthless, prices are usual.
First people to come will buy everything and bring it into his location. That's it, 20 other people will die.
Low prices killed them.

B. Imagine they do have an access to a convenient shop with realistic after-disaster prices
New cost of goods for retailer, new cost of transportation, new cost of securing goods and store.
Cost and prices increased dramatically.

First to come will have to think about what to buy for his money:
he will choose a solution BASED on actual needs of 10 people he represents.
Then next will come and make a purchase, again based on real needs.
Even last one will still have an opportunity to survive, since goods deficit will be partially negated by soaring prices.
This way goods will be distributed as effective as they can be, to save lives.

Now let's think more about it.
Unfortunately disaster damage was more then you expected and recovery took longer.
Shop owner got a profit in case B and in case A that was a clear loss.

What do you think will happen to 10 people in case A? They will also die.
Because shop owner won't be able to deliver goods for them on next day.
In case B, he will be able to replenish store with new goods and help community to survive.

You seems to care for poor people.
But in case A poor people also vulnerably, they won't be able to buy things, since everything is bought by representative from one location.
Even if that location doesn't need everything they bought, poor guy will have hard time buying necessary things.

In case B poor people will still have to ask for help, and since resources AREN'T wasted and distributed evenly on per-need basis, they got more chances to get helped.

So remember - regulated prices in emergency will kill people one way or another!

[underlankers.livejournal.com]

There's a huge number of leaps of logic here that I'm not following. How does limiting prices in an emergency lead to everything else you're referring to, and where did the idea that preventing people from engaging in extortion, a criminal act, during an emergency equals Gosplan come from?

[paft.livejournal.com]

And is this what has happened in disaster struck areas with rules against price gouging? I ask because I've been in such areas during disasters and didn't see these things happen, probably because they are frequently combined with anti-hoarding measures and supplemented with government assistance to disaster victims.

[allhatnocattle.livejournal.com]

Last week Hurricane Sandy hit Cuba rather hard. And will likely still be recovering long after New York/Jersy gets their act together (http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/cuba-scrambles-to-limit-hurricane-sugar-damage/article4768749/). In a collective society hoarding is simply not an issue.

[rimpala.livejournal.com]

I think a big problem with natural disasters is that it causes a break in the supply and demand situation that nobody has any control over. Basic necessities suddenly become much more important to a much wider group of people all at once, and after words even once-wealthy families may loose everything through no fault of their own. To me, to hold the ideal of capitalism above human life when it needs help the most is almost like trying to justify the more ridiculous, cartoonish aspects of social Darwinism. I'm sorry but humans are a social species, our survival depends on us helping each other out.

[politikitty.livejournal.com]

Capitalism is about allocation. Allocation systems outside price mechanisms are extraordinarily difficult and inefficient. Inefficiency in a scarce economy causes real suffering and costs lives.

The idea that price controls and anti-hoarding laws will fix everything shows a deep naïveté. Command economies have always led to more suffering than capitalist systems.

Augment them, use tax proceeds for a safety net, sure. But the ant-capitalist sentiment that comes out in disasters as people confuse capitalism with scarcity is ridiculous and an idea that legitimately costs lives.

[rimpala.livejournal.com]

And besides, we are not so scarce that we cannot afford to give clean water, food, clothes and other basic necessities to the people impacted by the storm. And yes even some gas.

[sophia-sadek.livejournal.com]

The definition of free market is a condition where rich folks compete with one another to own the entire planet. They don't call it a rat race for nothing.

BTW, when I lived in Hoboken, NJ (which is still under water), I read an interesting article about a sting operation conducted by NYC authorities on taxi fare gouging. They had people pretend to be from out of town in order to investigate the practice of taking extraordinary routes to the airport. Some of the detours were impressive. The worst would be like taking a passenger through Marin and Alameda counties across the Richmond and San Mateo bridges in order to get from Downtown SF to SFO.

[gunslnger.livejournal.com]

That's just fraud, not price gouging.

[paft.livejournal.com]

One of the things I've noticed here is the premise that pointing out how high the stakes are during a natural disaster -- being able to afford to pay for potable water, or food, or batteries can be a matter of life and death -- means I'm saying "oh, you AWFUL people want everyone to die."

Now, I think it's quite possible that yes, there are a few Ayn Rand libertarians around who don't care whether the poor live or die during a disaster. I think it's also possible that there are free market defenders here who want to discuss this as if it were an abstract matter, as though it were an issue of people dickering over the price rather than being denied access to important resources during a life or death situation. This is not because they are baaaad people who want poor people to die. It's because they want to "win" an argument and the only way they see to "winning" this one is to keep the discussion as abstract as possible, and not bring up all those icky details about WHY the government tends to step in and take control during a natural disaster.

And there are free market defenders who really do believe that the free market is the best way to save lives. I disagree. My saying I disagree, and my pointing out what's at stake in the course of disagreeing, does not qualify as a personal attack.

And does not excuse personal attacks.

[underlankers.livejournal.com]

I'm not so sure this a free market issue, it's more law enforcement and preventing people from fleecing others. That's not economics, that's criminal justice.

[gunslnger.livejournal.com]

Price Gouging Saves Lives in a Hurricane (http://mises.org/daily/1593/Price-Gouging-Saves-Lives-in-a-Hurricane)

I'm sure some exception can be made for certain actual necessities and poor people, but in general, what this article says is correct and logical. You on the other hand are relying on emotion and illogic to support your conclusion.

[zebra24.livejournal.com]

Suppose you with a humanitarian mission in Africa.

How would you feed 1000 people with just 100 breads from donations you collected?

Actually there is a way in real world - don't just give those 100 breads, but sell it with price little bit above the cost of product and delivery.
This way you will have enough money to supply those people with another 100 breads tomorrow and so on.
But if buy-deliver-sell operation takes a day, you never wont be able to feed all of them.

So you have to raise your prices to make more money to deliver more breads next day.
This is major part of help - restoration of trade, trade is a heart of economy.
Also this will help to increase production and finally to reduce the prices.
This will save lives thousand of lives.

Speculators will do this role for you and will do it very effectively, unless you don't have an effectively enforced price cap law.
Natural price cap will work better speculator limited by competition.

After you've (they've) done with that you can address your 100 breads help specifically to poor and helpless people.
One thing is clear - no charity will be able to feed all people, you have to choose whom to help, others must pay.