Praise for Price-Gouging | Hacker News Reader

Praise for Price-Gouging

grumpy-economist.com

7 pointsjger157 comments

It's wonderfully idealistic to believe that the people who would pay $10 a gallon for gas are the people that needed it the most and not just the people with the most disposable income. I've known people who would happily pay $10 a gallon for gas they could have easily avoided using because it's pocket change to them, and similarly people who wouldn't buy it for essentially any reason.

Additionally so to believe that the government will hand out money so responsively in reaction to natural disasters that there's no reason to limit price gouging as a way of more effectively making sure poor people can buy food immediately after a hurricane. The government can't be trusted to set prices, but can be trusted to give everyone cash immediately after a hurricane knocks out the major road?

There are no good ways to allocate limited resources in the aftermath of natural disasters or similar acute supply shocks. Setting per-party quotas on buying toilet paper isn't perfectly fair, as the article points out, but to me it seems an awful lot more fair than "the rich get everything." As a limited, temporary amelioration of the kind of naked greed that the article admits most people find repugnant, in situations that are rare and have limited impact on the functioning of normal markets, it seems like common sense.

$10 gas encourages people to economize, for example by having the family evacuate in the smaller rather than the larger car. Prices send valuable signals, and price controls destroy that information.

I think the crux of their argument is "“Windfall” profits belong in the pantheon of saints along with price-gouging. In competitive industries, that’s what encourages people to enter and offer new supply.".

Which just isn't true. If you can only profit on toilet paper once every 100 years due to a pandemic who is going to build a new supply chain for it?

How many new oil refineries got built during the oil shocks?

How many new bottle water plants got build during Hurricane Katrina?

How many new [mh]otels got built after Woodstock II?

A short term shock (price gouging) doesn't cause new entrants.

You don’t need new water bottle factories, you just need more companies willing to truck in their supply from farther out.

Indeed. Excess profits will encourage extra sources of supply that otherwise would not materialize.

Price gouging enables faster resolution of the situation that caused price gouging in the first place!

It decreases overall misery; it doesn't increase it. To see that you have to be able to see the big picture and look beyond more than the immediate price; unfortunately most people can't think that systemically.

Pretty sure the systemic solution is either decrease the local population (evacuate) ahead of the well forecasted disaster or to increase the supply of the item (i.e. [mh]otel) ahead of the well forecasted Woodstock II instead of having the poor suffer.

Price “gouging” always ceases, virtually immediately, in an open market.

Only with government interference stopping new suppliers from entering the market (eg. making it illegal to protect your store from looters) can “gouging” persist.

Let the leftist silent downvoting begin!

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