4 ms·

When reading up on of the latter hurricane, i was positively surprised that quite a few US states have laws against price gouging while there is a "state of eme

by Faark 8y ago

When reading up on of the latter hurricane, i was positively surprised that quite a few US states have laws against price gouging while there is a "state of emergency". Seems like even the US prefers society working together to save lives in cases of emergencies instead of companies using those opportunities to maximize profits. You'd use the same line of argument here, if we are talking about an actual emergency and not just ordinary operations (can see that from the article). I do understand intentional actions like price gouging are worse than keeping the usual automats running. But still, with "state of emergency" in effect, I'd hope for communication companies making all installed (idle) capacity available, even when not payed for.

sokoloff 8y ago
My problem with anti-gouging laws as typically implemented is that the threshold for gouging is set too tightly, resulting in hoarding behavior being an entirely rational thing to do. Texas AG warned businesses in a post-hurricane area that if they “raised prices more than 10%, we’re going to look into that.” In such an environment, if I couldn’t be sure when the next supplies were going to be available, it would be entirely rational to buy as many supplies as my family needed for the worst reasonable case. So, right up until the gas, food, and water runs out, I’m buying at a normal price. Now, companies that might be able to truck supplies in from nearby areas (using additional trucks, fuel, and overtime labor) also don’t have a profit motive available to them, because they can only sell at normal+10% prices, which may not cover the genuine increased costs. So in an attempt to protect consumers, we move from a state where supplies are available to those with need (albeit at higher prices) to a state where the quickest, sharpest, and best capitalized get all the food, water, and fuel and none is available at any price. I think the latter state is a less desirable one.
- Faark 8y ago
  Cmon, your "Atlas Shrugged" level hypothetical is way off of the IMO quite reasonable US implementation summarized on wikipedia[1]. Yes, hoarding can be very bad and thus laws will reflect that. Capitalism & markets are great, but have failure modes we have to be aware of. Emergency situations exhibit many of those and thus it can be beneficial to temporarily suspend usual markets and capitalism on some levels. You cant make an informed purchase decision with no time, information, nothing to trade or a combination of all of those factors. [1] https://en.wikipedia.org/wiki/Price_gouging#Laws_against_price_gouging https://en.wikipedia.org/wiki/Price_gouging#Laws_against_pri...
  - sokoloff 8y ago
    Wasn’t a hypothetical, but based on actual event. See the quote from the Texas AG in the article here: https://abcnews.go.com/US/texas-attorney-general-warns-price-gouging-aftermath-harvey/story?id=49503480 https://abcnews.go.com/US/texas-attorney-general-warns-price... If you were a shop owner faced simultaneously with increased inbound costs, constrained supply, utility interruptions, your own family and home to be concerned with, and that threat from the AG, would you sell anything to anyone? To anyone over 65? Why not just close up shop until the situation passes and hunker down at home protecting your own family? I’d probably do the latter rather than risk the fines. Does that make people better off? In a survival situation, suppressing the price signal suppresses the clearest signal for consumers not to over-buy, especially for goods that can be traded for other needed supplies. $99/case for water the day after a hurricane might very well be the “optimal” price until the soda/beer companies can switch over to bottling (canning) water to the affected area. Keep it at $18-20/case and the first 5 customers will rationally buy it all, because that checks that concern off their list. It doesn’t even require them to be misanthropes, just providing for and protecting their families. Worst case, water becomes available quicker than they thought and no harm to them other than they bought $100 worth of water for $100.

by Faark 8y ago

sokoloff 8y ago

My problem with anti-gouging laws as typically implemented is that the threshold for gouging is set too tightly, resulting in hoarding behavior being an entirely rational thing to do. Texas AG warned businesses in a post-hurricane area that if they “raised prices more than 10%, we’re going to look into that.” In such an environment, if I couldn’t be sure when the next supplies were going to be available, it would be entirely rational to buy as many supplies as my family needed for the worst reasonable case. So, right up until the gas, food, and water runs out, I’m buying at a normal price. Now, companies that might be able to truck supplies in from nearby areas (using additional trucks, fuel, and overtime labor) also don’t have a profit motive available to them, because they can only sell at normal+10% prices, which may not cover the genuine increased costs. So in an attempt to protect consumers, we move from a state where supplies are available to those with need (albeit at higher prices) to a state where the quickest, sharpest, and best capitalized get all the food, water, and fuel and none is available at any price. I think the latter state is a less desirable one.

Faark 8y ago
Cmon, your "Atlas Shrugged" level hypothetical is way off of the IMO quite reasonable US implementation summarized on wikipedia[1]. Yes, hoarding can be very bad and thus laws will reflect that. Capitalism & markets are great, but have failure modes we have to be aware of. Emergency situations exhibit many of those and thus it can be beneficial to temporarily suspend usual markets and capitalism on some levels. You cant make an informed purchase decision with no time, information, nothing to trade or a combination of all of those factors. [1] https://en.wikipedia.org/wiki/Price_gouging#Laws_against_price_gouging https://en.wikipedia.org/wiki/Price_gouging#Laws_against_pri...
- sokoloff 8y ago
  Wasn’t a hypothetical, but based on actual event. See the quote from the Texas AG in the article here: https://abcnews.go.com/US/texas-attorney-general-warns-price-gouging-aftermath-harvey/story?id=49503480 https://abcnews.go.com/US/texas-attorney-general-warns-price... If you were a shop owner faced simultaneously with increased inbound costs, constrained supply, utility interruptions, your own family and home to be concerned with, and that threat from the AG, would you sell anything to anyone? To anyone over 65? Why not just close up shop until the situation passes and hunker down at home protecting your own family? I’d probably do the latter rather than risk the fines. Does that make people better off? In a survival situation, suppressing the price signal suppresses the clearest signal for consumers not to over-buy, especially for goods that can be traded for other needed supplies. $99/case for water the day after a hurricane might very well be the “optimal” price until the soda/beer companies can switch over to bottling (canning) water to the affected area. Keep it at $18-20/case and the first 5 customers will rationally buy it all, because that checks that concern off their list. It doesn’t even require them to be misanthropes, just providing for and protecting their families. Worst case, water becomes available quicker than they thought and no harm to them other than they bought $100 worth of water for $100.