The Generalist

Why “Price Gouging” is Good

It’s 1979 all over again.

Well, in more ways than one.

But here in the northeast, after Hurricane Sandy, there is a major shortage of gas. People wait in lines for hours only to find out that the gas ran out before they made it a few feet. Fights break out over people stressed that they will run out of gas in the street. Police are called. And last night, I heard the final blast from the past. Odd and even license plates. Remember that? Today it starts with odd.

If you’ve been around long enough, you’ve been through this more than once. I was 11 years old in 1979 and I remember it well enough. So why is it that people are hell bent on doing it all over again?

Governor Christie warns against “price gouging”, 65 subpoenas have been issued so far in New Jersey against businesses supposedly doing it. Time magazine calls it “economically sound, ethically dubious”.

They are all idiots. Sorry, I have to be frank.

If you are new to this, “price gouging” is what ignorant Americans call it when prices are bid up during a local shortage, usually an emergency situation. They think this is the result of greedy people trying to make a buck off the misfortune of their neighbors. Never mind that most of the people accused of doing this are also experiencing the same misfortune, especially if they live and run businesses in the local area affected. Yeah, never mind that.

In truth, economic goods are economic goods precisely because they are scarce. The more scarce they are, the higher the price. Period.

That’s the real price. Not a phony one set by some politician. A real price is not SET by anybody. It is what it is because buyers and sellers are agreeing on it. Once a price gets to where the majority of traders agree on it, the shortage ceases. All buyers get what they came for because sellers don’t run out too soon.

Hence, if prices were allowed to rise there would be no gas lines. No odd/even rationing. And no fights. No cops called. Peace.

So, Governor Christie.  I recommend learning something from the past. Learn from the mistakes of the dopes before you. Learn a little bit about economics. And stop stepping on the rights of citizens. That’s right, rights. This state of emergency isn’t so bad that civilization has to cease. A person has a right to his property and a right to dispose of it as he sees fit. If he isn’t willing to part with his gas until the price reaches $10 a gallon, then you are stepping on his rights when you force him to sell cheaper. But, you don’t just step on the rights of the seller when you “warn against price gouging”. You also step on the rights of the buyer who wants to the buy the product and is willing to bid up the price.

In times of crises, people are generally very good to one another. They offer charity when they can. I’ve heard stories of people during this latest crisis volunteering at churches they don’t even belong to, just to be in a position to help out their fellow man. People in America are very charitable. They are very charitable here in NJ, too.

But nobody can supply more of what isn’t there.

I wonder if you realize this, too. If the price were bid up locally here in NJ even for a short time, how many tanker trucks do you think would suddenly appear here to cover the shortage? Why would they be here? You might say greed. But it should be obvious to you that there is a cost involved in rerouting tankers here where there is a lot of damage, traffic, and a state of emergency. That cost would be covered by the higher prices.

Basic economics. Basic ethics.

Get some.

I'm a blogger.


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