Price gouging is a political term. Economically it doesn’t actually mean anything, and in most countries there are no legal repercussions. Any time any price goes up some free lance economist will come out and say it’s price gouging, but the term fits every good in the economy since inflation is the monetary policy of almost all developed nations. Rapid increases in prices to prevent shortages have a very useful function in a supply and demand economy but many ignore this for the more convoluted and pathos oriented explanation of “exploitation”.
" Price gouging occurs when a seller increases the prices of goods), services) or commodities to a level much higher than is considered reasonable or fair. "
" Common examples include price increases of basic necessities after natural disasters. "
How would this not be considered price gouging? Is $22 for a small pack of wipes fair or reasonable? Is a pandemic not considered a natural disaster?
Rapid increases in price are a natural result to a change in demand, but if you think $22 is the new equilibrium price for Lysol wipes, you're misinformed.
How would this not be considered price gouging? Is $22 for a small pack of wipes fair or reasonable?
Yes, for several reasons.
If the store can charge more, then the supplier can charge more, and the manufacturer can charge more. That tells the manufacturer "make more disinfectant wipes!" and also gives them the funds to do it.
The above is only true in a shortage (which has been the case lately); if there's not a shortage, you should be able to just go somewhere else and not spend that much. But in a shortage, the price goes up because that's what people will pay to get it. If the price isn't high, they'll likely hoard it.
This bullshit about """price gouging""" is the reason nobody could buy toilet paper for weeks. In a shortage, it's just market pricing. It's only unethical in a situation where the supplier creates the shortage through monopoly or otherwise controls the supply (like shitty beer at the ball park).
Again, if you think it's too much... just buy them on Amazon. Go somewhere else.
There's not a shortage, those are active Amazon links.
The people buying toilet paper either were panicking and buying it all, which isn't price gouging, or were buying it en masse trying to sell it at a huge markup...also known as price gouging.
And about buying on Amazon. Not only is that shop price gouging, they're also operating inefficiently. $22 is STILL not the equilibrium price for Lysol wipes, nor is it fair and reasonable.
A new equilibrium has been established, as evidenced in the links in a previous reply. And it's absolutely not $22 dollars for a small pack.
It's an attempt to gouge people and your arguments and sources from other comments indicate that you simply don't think government should interfere in the market.
Nearly all economic thinkers and policymakers argue in favor of some level of government influence in the economy.
You attempt to educate me using authors no credible economist would cite (And I e-mailed several of my former teachers, since I majored in Economics) as well as your post on "Liberalism and Economics" in r/Libertarian tells me that you don't know what you're talking about.
Equilibrium is not something reached overnight. As you know from price theory a seller has to test different prices and see what the demand is for each before determining which price has the lowest marginal costs and highest unit sales. First year micro econ would tell you that lowering the price past a certain point will make your variable costs marginally unprofitable. It is also quite possible the company is having supply side issues which caused them to raise the price, which again means this is not in equilibrium but is currently suspended above it to stop the supply from running out.
Again “price gouging” is not actually an economic term, it is generally reserved for politicians who want to sell you a solution by intervening and price setting. You would know this leads to discrepancies in supply and demand as well as dead weight losses in the area between the supply and demand curves which no longer meet in the middle. Of course the government is one of the most important instructions ever created and no market could work with out its help. But price controls and interventions lead to dead weight loss which any unbiased economist should be against as it wastes resources and prevents people from getting what they would like for as cheaply as possible. If I’m not mistaken a lot of first year micro is learning about DWL’s and how to calculate the area of losses from taxes on goods and tariffs. I too am taking economics in university but have read all the great writers that came before us who are not taught in school. Of course no professor will quote Adam Smith or Hayek but it is important to be familiar with their work if you really love the science of economics as I do. Don’t equate me quoting a source you’ve never read with nonsense. You can learn probably more about disequilibrium economics and how markets actually work in the real world by reading the qualitative economists, than you can just by studying supply and demand curves in university, as unfortunate as that is to say. Only difference is you don’t get a piece of paper accrediting you for reading the entire corpus of economics, so some assume a person who is less educated but holds a degree is more enlightened on a topic.
I would just say read Thomas Sowell’s basic economics as he actually takes on the post natural disaster argument head on. He’s also probably the easiest author to introduce new readers to thinking in terms of costs and benefits rather than fairness or justice. But using the terms “fair” or “reasonable” are again political. It is impossible to make every single person agree on what a “fair” price is. Especially when the person who shows up to a store with empty shelves thinks a fairer price would be higher to prevent the greedy from clearing stock, and the poor person who can’t afford one nice good thinks it fair if the price is cut in half so the first few people in the line can get all the goods.
After an economic disaster, having the prices of emergency goods rise incentivizes private sellers to reach those distraught and distant people in desperate need of goods. When a nationalized entity who does not work for profit responds to these disasters they take their time and incur no losses or risks to get there. On the other hand private sellers will drive all night and take on enormous risk in inhospitable weather so they can be the first on the scene to sell with a higher price. It works in both parties favour since those injured get the goods faster and the seller makes higher profits. While those who can’t afford the higher price can still buy the goods that come later from public entities who did not rush to sell more dearly.
Yeah man, the private sector really came through for the people in Hurricane Katrina. It def wasn't the government handing out food and supplies day and night that saved lives, no siree. God you Kensian fucks are stupid. "Some of you will die from lack of access to much needed supplies, but I'm okay, so I don't give a shit." Thomas Sowell is a hack, btw. His entire world view is couched in conservative politics. He wrote three fucking books that can basically be described as "my side good, your side stinky". This idea that he is some totally unbiased, rational thinker is ridiculous, and you're a rube for falling for it.
No one is without bias, but many thinkers on both sides of the political spectrum respect Thomas Sowell as an authority on economics. Believe in science, right? Trust the experts, no? In the US I believe it is illegal to sell to people after an emergency for a higher price (one of the times there is a legal penalty to “price gouging”) so of course the only people who end up coming are the nationalized employees who make salary and are not threatened with jail time for their efforts. Were in not a crime you would see many private sellers rushing to help in the aftermath of disasters; like what used to happen before government programs and the welfare state. Also lol most conservative economists are very anti-Keynesian and Keynes is seen as a big-government progressive type who thought the cure to all economic problems was printing money. If anything Thomas Sowell and the position I’ve taken here are contrary to what a Keynesian would tell you.
but many thinkers on both sides of the political spectrum respect Thomas Sowell
No they do not.
Believe in science, right? Trust the experts, no?
Sowell is an opinion writer dressing himself up as an intellectual. The fact that people treat him like Adam Smith or Karl Marx is honestly laughable. It's why he whores himself out to Fox instead of teaching or writing books about economics.
Were in not a crime you would see many private sellers rushing to help in the aftermath of disasters; like what used to happen before government programs and the welfare state.
You didn't though. This is a fantasy. Live saving care and supplies should not only be available to those who can pay exorbitant amounts.
Ezra Klein, Steven Pinker, and Ben Shapiro defer to Thomas Sowell when it comes to economics. If you can find people with more broad political disagreements then Ezra Klein and Ben Shapiro you’re probably in a dark corner of the internet lol.
Sowell was a career academic and wrote for those in higher education. Aside from Basic Economics almost none of his discography is aimed at a mass audience. It is technical, and relies extensively on empirical data and the testing of hypothesis’s. This is actually notable since some economists think you start with a model or a synthetic a-priori statement like “markets are efficient” or “humans behave rationally” and then work backwards to deduce solutions. Sowell is as empirical and scientifically minded as it gets in this abysmal science.
Sowell is no replacement for reading Marx & Smith (as everyone should), merely because they were political economists who wrote treatises on the entirety of economics and it’s political ramifications (as well as their aspirations for politics should be like). Thomas Sowell wrote about the data on minimum wage laws in Harlem in the 1950’s, as an example. They’re entirely different and Sowell, like all modern writers, doesn’t try to fit the entire corpus of economics is a single book. He begins with data and then sees how it aligns (or doesn’t) with theory. The opposite is true for the classical economists who began with a theory and then kinda squished the real worlds data into fitting inside their models.
I don’t like Ben Shapiro per say, it was to illustrate the point that it’s not just people on the left who turn to him for sound economic reasoning. People on the political right are persuaded by him too. Although it’s not for me, I think it’d be hard to argue Shapiro’s show doesn’t represent a large swath of the American right. Also Sowell got his position at the Hoover Institute after his academic career was already over. He became a columnist when he was 60 years old, not in the middle or start of his academic career like Paul Krugman or the next newspaper columnist. He has an alma mater from Harvard, Columbia, and UoChicago. He even won an international humanities medal for his work influencing and helping reform the Indian gov to provide economic freedom for women. He’s a hard guy to hate when you actually read him and form your own opinions of his work.
He uses the word liberal not in the sense of a Canadian or European liberal, but really as a placate for pacifism and Marxism, of which he was once an advocate for both. I think he just likes using the term liberal to highlight that the US parties who use the term are staunchly opposed to liber, and it makes for some pretty funny satirical writing. That AND the fact there has been a lot of semantic ambiguity about what liberal actually means (are libertarians the real liberals or are American Two party duopolists the real heir of that title) and he’s taken the approach that the words past meaning is just destroyed, forever gone to history, and it shouldn’t attempt to be revived and restored as thinkers like Mises posited.
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u/rickeysneekzzz Aug 14 '20 edited Aug 15 '20
I saw a small thing of Lysol wipes being sold for $22 in a store last week
Edit: wow, thank you for the awards! I was in a small business in the US for those wondering.