Price Gouging during Disasters. Should it be legal? - General

[QUOTE]Price gouging is a pejorative term referring to a situation in which a seller prices goods or commodities at a level much higher than is considered reasonable or fair. This rapid increase in prices occurs after a demand or supply shock: examples include price increases after hurricanes or other natural disasters. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies. -Wikipedia [/QUOTE] After the recent disaster that hit my city alot of people have been complaining about the price gauging that's been happening. Its strange since this city is always behind less regulation and more freedom for business. Price Gouging is simply when businesses raise their prices during a disaster. The question is whether or not this should be allowed. I think it should be allowed since it discourages people from buying more than they need. If the prices are not set to match the high demand the people that arrive at the store first will buy far more than they need leaving nothing for everybody else. If the prices increase to match the demand, people will have to consider what they need and don't need, it will encourage people to use their resources sparingly. The next reason is that it leads to people trying to profit off of the situation. At first this might seem like unethical profiteering but people trying to make a profit will actively try to bring resources into the disaster area. They have an incentive and that's not really evil at all. Regulating it doesn't seem out of the question though.

I always hated the term "price gouging" since it attaches a moral value to adjusting your prices. Fixing them will just create shortage and a black market. I agree with you OP, but regulation serves no purpose here since people bringing extra resources is exactly what you want.

If the power goes out during a hurricane, who should be able to get an emergency generator? If sellers knew the motives of each buyer, they could sell a generator to the customer who needs it to keep life-saving medication from spoiling instead of the customer who wants to watch TV. But sellers aren't mind readers. One way generators can be allocated efficiently is by allowing the sellers to increase prices in an emergency situation. If the generators that are available cost more than they normally would, the people who would be willing to pay a premium to get one may do so because their need is greater. Many people would say increasing prices on certain goods during such an emergency is "price gouging." I believe that price gouging is far from being immoral, price gouging may be the best way to allocate scarce resources in an emergency.

^ not a bad defense for it actually, the point is most disasters won't last more than a few days without relief, so its not like we're in fallout-apocolypsy territory here, normally after a disaster relief efforts swarm into the area and you see price gouging go away because the supply becomes tightly regulated

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Have we all forgotten about the people who can't even afford simple things like food and drink? If we go and raise prices during disasters, times which are equivalent to hell for people like that, what are they going to do? Just let them die because they can't afford the essentials?

[QUOTE=Squerl101;42721578]Have we all forgotten about the people who can't even afford simple things like food and drink? If we go and raise prices during disasters, times which are equivalent to hell for people like that, what are they going to do? Just let them die because they can't afford the essentials?[/QUOTE] We're talking about situations where there's not enough to go around. That means someone is going to go without. Remember that the other benefit of high prices is that people will go WAY out of their way to bring in more supply because profit potential is so high. Also, the destitute should be taken care of by the government and local charities that always spring up during disasters. There's no reason to destroy the entire model (that works well, btw) for a small minority of people. I don't remember the name of the city, but there was an example of a besieged city in the Middle Ages that was able to hold out longer than the sieging army simply because people were going out of their way to sneak food in because of how high prices were.

Are businesses raising prices due to shortages? If so, I don't think there is anything wrong with raising prices based on supply and demand. Private businesses are interested in the continuation of business. Federal organizations should be the ones that pick up the slack allocating emergency supplies.

[QUOTE=Squerl101;42721578]Have we all forgotten about the people who can't even afford simple things like food and drink? If we go and raise prices during disasters, times which are equivalent to hell for people like that, what are they going to do? Just let them die because they can't afford the essentials?[/QUOTE] Thats the responsibility of the federal government. Having the first rich/middle class people in the store buying everything doesn't help the poor either.

I say the current system supports and even encourages it. I voted yes, not because I approve or advocate it, but because an alternative is not feasible in the current economy. Having the government monitor prices circumstantially leads to issues. What is a distaster, what is the threshold where they take control? Would a sudden burst in oil prices trigger their intervention as oil companies hike their prices to exploit panic buying/generally screw over their customers. Would the government want to intervene with oil companies? Some politicians have interests lying with certain industries, would these be less monitored during disaster. Once way you could do it would be to limit price increase over a period. So say 10% over a year, but this may leave smaller companies out in the open since a large company could absorb the damage from an unexpected cost increase whereas a small company tied to only increasing a certain amount would perish.

Certain goods have inelastic demand, the best example is food. People always need about a certain amount of food to survive and if they try to eat too much more it will come up. When supply is low and prices are through the roof people still need to have access to food. Prices of consumer goods have been controlled before, even in the USA (during wartime to control inflation when well paid workers scrambled for a limited amount of goods). It didn't ruin anything and was actually beneficial. Edit: The key is moderate control, in a model free market the high prices would instantly cause more supply and stabilise the prices again, but in real life due to logistical and other unforeseen reasons this may not happen quickly enough or reach everyone potentially resulting in catastrophy.

It is legal. But it is an absolute douch move and in the end it will likely cost you more because people don't go to your store anymore.

It should be legal. Free market economy is how things should go. If you have something that people want, you should be able to charge people what you want. If you sell something that hurts people or people dont want, then you deserve to be bankrupt and close down. You should be rewarded for your prepareness. If you hoard supplies prior to a disaster to sell, while someone else is not prepared or didn't give a crap, then you have the right to do what you want with your supplies... own use, sell fairly, sell overpriced.

Yes. Free market is best market. The hardest hit and poorest in a nation should be supported by a government though, and essentials/provisions should fall into that category.

[QUOTE=SCopE5000;42860760]Yes. Free market is best market. The hardest hit and poorest in a nation should be supported by a government though, and essentials/provisions should fall into that category.[/QUOTE] Government should provide aid to affected areas, although I wish there were more oversight on how it is being spent. It just seems that only a portion of the money is actually doing what its supposed to be doing and the rest is diverted. More oversight, less beauracracy. People should also be better prepared and not rely on other people to help or rely on people's kind heartedness. It is like squirrels. The squirrel that stores enough nuts and in a safe spot will survive through winter... and the squirrel that does not will starve to death. UNLESS, that unprepared squirrel kills the prepared squirrel and takes its supplies. lol.

[QUOTE=Valiantttt;42799143]It is legal. But it is an absolute douch move and in the end it will likely cost you more because people don't go to your store anymore.[/QUOTE] Not really. When a disaster happens demand goes through the roof and therefore prices need to be higher to compensate for supply or otherwise it's first come first serve.