Cabbage Patch dolls going for 100+ dollars just before christmas when they are sold out of stores.
A man takes a truckload of generators down to the Katrina area and sells them to the highest bidders--and gets arrested.
Big concert--the Gotta Go event of the year. World Series, Super Bowl etc. Tickets are 1000% higher than original.
Gas prices RISING! C'mon how many threads on AD alone?

but I got it all,
you want what I got

but someone else has my asking price, as exhorbitant as it may seem to you.
Sorry Bub

Its the Free Market neighbor. The free exchange of goods for an agreed upon rate.
Should I be held responsible because you live in a disaster area known to have regularly occurring events -- hurricanes, tornados,ice storms -- and you are still not smart enough to prepare for such events by getting extra storable food, water and perhaps a power source, to survive such an event?
Why am I being restrained because you are an idiot with a criminal disregard for your own well being and that of your family's?

I bought whatever the merchandise is. It is now MY property--why should I not sell it to who i wish if they can meet my asking price -- after all if I ask too much no one will buy it and I will have to lower my prices, right?

Call me a meany or whatever 4letter mixture you prefer, take me off you christmas/jesus day card list. Whatever fits your desire.

You live in a world where it is known gas prices are extremely volatile. You bought the truck, SUV. You bought the home in the suburbs 50 miles from work. You haven't prepared for events you KNOW can and even more importantly WILL happen.

I planned ahead.
I have a valuable commodity in gas that can easily be paid for by many people, so if there is a shortage and the demand skyrockets--why should I not raise the price?

Why am I penalized for your shortsightedness?

I bought fifty tickets for the agreed upon price and now am trying to sell them to others who want them bad enough to pay 10X what they are worth originally.

Scalping? Gouging?

I think not.


Should Scalping or the popular Gouging be considered illegal or even unfair, after all you could invest in products you know will someday be in demand and sell them yourself?

Is it not a free exchange between those who have and those who can afford what they want?

Should government be allowed to penalize people for selling their products/property for whatever they wish even in situations like gas crunches or disasters?

In such situations, you are aware of the possibilities and the dangers, so why should others be penalized for your mistake in failing to plan ahead?

Good topic Christopher!

Should Scalping or the popular Gouging be considered illegal or even unfair, after all you could invest in products you know will someday be in demand and sell them yourself?

It should most certainly not be illegal. A contract between two private entities should be upheld by the state as long as there is no fraud occurring. The state should NOT be interfering in such a transaction.

Is it not a free exchange between those who have and those who can afford what they want?

It is a free exchange. When you purchase a product, you purchase it at a cost that the producer deems sufficient. Once the transaction is made, it is now the property of the person who has purchased it. Nobody else should have a say with what should be done with their property.

Should government be allowed to penalize people for selling their products/property for whatever they wish even in situations like gas crunches or disasters?

Never, never, never...times infinity. For the reasons stated above.

In such situations, you are aware of the possibilities and the dangers, so why should others be penalized for your mistake in failing to plan ahead?

The transference of property in a fair manner is something that should be protected by the government, not prevented.

And if you want to sell me your 12 year old daughter to me for a night, who is the gov't to interfer? It's a transaction between two people.

It's called having a society with ethics.

I don't think selling tickets or dolls is equivalent to selling drinkable water for $50/gallon.

If you have no regard for decency, then maybe you won't mind if the gov't looks the other way when I put a bullet in your head and walk away with YOUR PROPERTY for absolutely free.

RedCedar, it's not like you are comparing apples and oranges, its apples and a t-bone steak. There is a stark difference between selling an individual who is deserved of rights and inanimate objects that are someone's property.

Society with ethics huh? Well whose ethics? Who decides what ethics are acceptable and what isn't? Should you decide? How about me? The truth is that the government has absolutely zero right to interfere in any transaction where a transfer of personal property is taking place. The onlystipulation is that no fraud is taking place such as selling fake tickets.

Your final sentence is equally as ludicrous as the first. Nobody is being hurt when someone sells a piece of property that is in demand. Shooting me in the head and taking my property is a crime because it affects me. In a contract between two consenting people, the government does not have the right to interfere.

Yes, it's called Representative Democracy. We decide indirectly. So if people think it is reprehensible to sell bottled water at $20/bottle when water supplies are wiped out, then they decide and the law takes over.



Is that YOU deciding? I can't sell my land to become a toxic dump, do you think that's unreasonable?



It's not ludicrous, I'm just taking your Laissez Faire beliefs to an extension that apparently you're not comfortable with. You want the gov't there when it protects YOUR interests, but you want it to stay out of your business when it MAY hurt other people.

Well then lets take your beliefs to an extreme. Do you believe that through representative democracy we should be able to reinstitute slavery? Why not? How about stripping all minorities of voting rights? Why not? If it is voted through democratic channels as you propose then why would it be wrong?

Its simple why its wrong. Because it violates the US Constitution which protects the rights of the individual from the government. Our business is to limit the power of government so that they cannot do such a thing. And as dumb as it may sound, by limiting the individual's power to make a consenual contract with another adult, the government is taking away liberty. The state should not have the power to dictate what you can do with your property as long as it follows the law. A contract should be upheld.



No RedCedar you are misrepresenting my point. I am saying that it should be between the two individuals who decides what the terms of the contract should be. I am saying that nio government should be involved. If i buy a case of water for a certain amount of money, and decide due to the low supply to sell the water at much higher price than it bought it for...its my prerogative to do so. Its my property, i own it. If i want to sell it for $20 and someone is willing to pay $20 for it...whats the problem?

Furthermore, selling my land so it can become a tocix waste dump does not apply. A toxic waste dump would have negative affects on my neighbors which would violate the Mill rule that my right to swing my fist ends where your nose begins. If the decision of two consenting parties affects no third party, than the contract should be upheld.



I am perfectly comfortable with these examples because they are off the wall and easily debunked. My interest is the government doing as little as possible when it comes to the economic transactions of private citizens. You have shown zero evidence of the proposed transaction hurting anyone...you only said that you felt it was unethical. Well you shouldn't be able to dictate what is ethical and neither should I. If the action does NOT hurt a third party, than the two parties involved are responsible and should be able to make a fair contract.

I agree to some extent. But your cold logic seems to be missing my point. That some people may DIE if they don't get water and may not have the $20/bottle to fork over. That some people may suffer extreme HARDSHIPS if they are forced to pay outlandish costs simply because the company/person AT THAT TIME has an upper hand.

If you have a compassionate and ethical society then you don't sit aside and watch people get mistreated simply because of their current situation.

There's a reason we don't allow monopolies and it follows the same line of thinking. Things are not always "fair" and most people feel that during extraordinary circumstances it's HIGHLY UNETHICAL to bilk people for things THEY NEED to survive.

RedCedar, i hear you loud can clear. The argument you are making falls lock and step with that of a socialist government. But while the logic may be cold, as ill freely admit, it is the cost of freedom. No government should be able to coerce or force anyone to do anything with private property. That person who purchases water for a low price and sells it for a higher price is well within their rights to do so. If nobody is going to buy his product (in this case water) than logic dictates he will have to either lower his price or go somewhere else.

Is it highly unethical to charge people $20 for a bottle of water to people who are thirsty? You're damn right it is. But does that mean the seller should in any way be forced to lower their price for the people who need the water? The answer is no. That is a denial of liberty because the government is forcing you to do something with your property.

You're right when you say things aren't always "fair". Should the government make things fair? At what cost? You may claim that we're talking about just a bottle of water here but we're not. Its a slippery slope that is slick with the millions of people who have died to socialist regimes. I understand that your intention is only to do good and as noble as it is, we cannot allow it to happen. Because know this: If you give government the power to do good, you give them the power to do evil. Our only choice is to limit the government's power as much as possible.

Socialist? Huh? I realize you want to turn this into a dogma diatribe, but you're saying a Free Market economy can't be compassionate?

Regardless, sometimes SOCIETY takes precedent.

Are you an anarchist? It sure sounds like it. But wait, you still want the protection by gov't. Hmmm. You want the gov't to step in and protect your wealth but you don't want them to step in and protect people in a bad situation?



Life isn't always a consumer and a producer. When went to WW2, the gov't horded precious metals. Life isn't an economics book.




I think you're suffering from the domino logic fallacy. Just because the gov't makes sure people aren't gouged doesn't mean they'll start putting up cameras in your bedroom....like Bush wants to do.

I agree in limited gov't, but I also believe in a civil and ethical society. I think the gov't should protect the less fortunate from being abused just as much as it should protect you and your pile of gold.

Unless you uncovered some secret code in my post (ala the Davinci Code), i honestly do not remember saying that. I don't want to turn this into a war of ideologies any more than you do, but the question at hand asks whether scalping is consistent with a free market and I contend that it is and that government should have no business regulating it. Your disagreement stems from an opposing ideology. It is essentially what we are arguing. Whether the private citizens should have the right to make consenual contracts free of government interference or whether the government should interfere in an otherwise simple transaction because someone "thinks" the transaction is "unethical."

By no means am I an anarchist. Makes me laugh just thinking about it. I am stating consistently that I believe the government has a strict set of jobs that it should have and deciding the ethical nature of an otherwise harmless transaction is not one of them. The only thing the government should protect people from in this regard is if fraud is taking place i.e. the water is bad or selling fake tickets. If something is mine and i legally own it...than it is the job of government to protect that. If government tampers with my property than they are tampering with my liberty.

My question to you is. Say i have a bottle of water and want to sell it for $20. There is one individual who wants to pay the $20 for that bottle of water. Two individuals coming to an agreement on a piece of property. You are telling me that I should not be able to sell the bottle of water when my offer was accepted through no form of coercion? If thats not a denial of liberty, i don't know what is.


We're talking about more than economics. We are talking about individual liberty. The right to buy and sell goods. The right to make a contract between two individuals. The right to do so without interference of government.


If you give someone an inch, they'll take a yard. If government is supposed to oversee the "ethical" nature of an economic transaction what else should the government "protect" us from? You are making a clear statement that individuals are unable to come to a consenual agreement without government oversight. What else can individuals not do without some form of protection?



I am not so sure if you do. I believe in a civil and ethical society too. Which is why if I had a bottle of water and someone who was thirsty needed it, i would give it to them. Probably due to my charitable nature. But should i be compelled to give the water to that person? What if i refuse to give it that person? Should the government take my water and give it to the other person? You call it justice and equality...i call it totalitarianism.

Should Scalping or the popular Gouging be considered illegal or even unfair, after all you could invest in products you know will someday be in demand and sell them yourself?

Is it not a free exchange between those who have and those who can afford what they want?

Should government be allowed to penalize people for selling their products/property for whatever they wish even in situations like gas crunches or disasters?

In such situations, you are aware of the possibilities and the dangers, so why should others be penalized for your mistake in failing to plan ahead?

This is rationalization. Gouging is gouging, period. People know when they do this, and no amount of rationalization changes the facts. It's too bad that guilt comes along with it, and perhaps eternal damnation (I think demotion), but that's life.

Good people help out their neighbors. Rotten people gouge their neighbors. That's just the way it is, and some of our laws reflect this social value.

Scalping Super Bowl tickets is different. Not much, but it is. The action shows no business integrity, so it can't be sustained. You won't have repeat customers. If you feel dirty, it's because you are.

Well, not exactly, leder.

I work in the hotel industry. Every year we are required to submit our maximum rates to the state. For example, we send in a form that says that the highest rate we'll charge this year for one person is $175, and for two persons, $200. Of course, the rates we charge ordinarily are quite a bit less than this, except for certain "special events" in the area, widely advertised in advance. But we do this to maximize our revenue for those special events, and as I said, since they are well advertised in advance, our customers can make an informed decision on whether our rates are reasonable, given our quality, location (near the University and Airport), and the nature of the event. No problem so far, right?

On September 11th, 2001, when the order came to ground all aircraft immediately, our little "commuter" airport suddenly had to accommodate 5 jetliners full of passengers. The passengers and crew had little to no choice for where they were going. We took in a lot of passengers that day, who had no idea how long they were going to be there, if it was going to be safe do drive to their ultimate destination, or when they'd be able to do so. The crews of course had no choice at all. They had to stay in the same city as their planes.

We could have asked for, and gotten $300 a night for a single, and $350 or more for a double. I know this because a hotel across the street was getting it from some people, and their maximum rates were much lower than ours were. Even if I wanted to stay "legal" I could have bumped our rates up to our quoted maximum with the state, and actually been ok.

I didn't. I left the rates at our regular rates for that day, for as long as the guests needed them. Why? It was the right thing to do.

By the way, I got a commendation letter from our state regulatory agency, for showing compassion and true hospitality in the face of a national crisis. The hotel across the street, who charged higher than their maximum quoted rates? They got fined so heavily that they actually lost money for that time period.

I know you see something inherently wrong in the government sticking their nose in, leder, but sometimes it really isn't a free and fair exchange, freely arrived at, as you would claim. Sometimes it's just plain dumbass extortion.

How about this. There's only one natural gas supplier in your neighborhood and your home is heated by gas. You're too poor to afford electric heat or replace your gas furnace, so you're stuck with natural gas.

Now let's say that the natural gas company decides their CEO wants a new yacht, one bigger than the CEO of Oracle's. So they increase your rates by 500%.

Now this winter it drops to 10 below zero.

It's just two people interchanging property, right?

Do you find this unethical? Would you expect the gov't to stay out of their business?

First, I'd say that scalping is similar to creating your own little monopoly. Do you have a problem with the gov't breaking up monopolies Leder?

Second, scalpers undermine the buisness model and long term marketing goals of ticket sellers, theater, and stadium owners. Ticket sales are normally sold under prices that would normally limit supply and demand. One possible reason for this is because they want to ensure sold out performances. Second is that it is a good long term marketing strategy to allow access to popular events for all people at moderate prices. Scalpers undermine this marketing strategy by limiting the tickets to only those who can or are willing to pay exorbitant prices. This exposure to a diverse group of people with various purchasing power also benefits those performing as they get more exposure.

According to this article scalping may be going away if Ticketmaster has their way.

There is no right that is not to a degree situational. Yes, if two people agree on a price for a peice of personal property in theory the government has no business interfering.But there are practical limits which should cause the government to step in.

In your example, there is water shortage and Bob has water, so he sells it for $20 a bottle... to black people. White customers he sells it for 10$ a bottle.

Just a basic transaction right, private goods changing hands... Obviously in specific situations the government must step in and make sure that the principle of law is being maintained, and not just the letter of the law.


Now football tickets do not constitute the same as water, so this topic has gone a bit far afield. In the luxury market, as far as I know, something is worth what people are willing to pay for it.

Excellent example NiteGuy, but I will tell you why i still disagree with you. You could have asked for $300 a night for a single and $350 or more for a double...but you didn't. Why? Probably because you're charitable nature and your feelings towards the recent attacks. You lowered your price with no government intervention...you are a private citizen making a private decision. If you kept your prices at the maximum would that be "unethical" IMO? The answer is yes. I would most certainly want you to lower your price for the people who need to be there. However, lets say you chose to set it at the maximum price (an idea which stinks to me)...do i believe the government has a right to make you lower it? Absolutely not. It's your business you can do what you want. If your price is too high than your customers will go somewhere else and you will gain no revenue. This then forces you to bring down the price...thats how the market works and thats why i don't believe in government intervention.


You can spin as many webs as you like but my answer will remain the same. Would it be unethical? Yes. But should the government force the company to lower its price? Absolutely not. NO government should have the power to tell private entities what to do with their property.



A monopoly only occurs through the sanction of government. A scalper or a Wal-Mart going into a small town and wiping out small businesses is NOT a monopoly...its beating your competition. A monopoly would be the government legally preventing other competitors into the market...such as when we had only 3 television channels and not allowed to have more.


Scalping is the transfer of one piece of property to another same as any other economic transaction. Once a ticket seller sells a concert ticket to an individual, the ticket is now the property of the consumer. He/she can do whatever she wants with the ticket. Can go to a concert, can not go at all, can give it to a friend, and can sell it on ebay for a higher price than it was bought for. And this makes sense. When the consumer bought it, the demand was hgher than supply for they probably purchased it for a high price. But once they scalp it, the demand is A LOT larger than supply and the value goes even higher.



Wow we have quite an array of hypotheticals in this thread. What practical limits Vermillion? Who decides what exactly is practical? Shouldn't it be between the two individuals who are selling and buying the piece of property? I think so. The only time government should step in is if fraud is taking place...thats it. Bob can sell his product at whatever price he deems necessary. If people don't like the price, they go somewhere else. If they can't go somewhere else, than they are faced with a decision. Fair decision? No. Tough decision? Yes. But still a choice.

That which should be maintained is the right to individual liberty and the right to buy and sell goods freely...and thats maintained by no government interference.

Should Scalping or the popular Gouging be considered illegal or even unfair, after all you could invest in products you know will someday be in demand and sell them yourself?
Scalping and price gouging are not definable in economic terms, so can't reasonably be made illegal. "Investing in products you know will someday be in demand" is called ... well, it's called investing. Go ahead. Wal-Mart invested in some toilet paper last week and I'm demanding it from them this week. I don't think we're in a place to figure out where to draw the line from 'shopping' to 'scalping' here on this board.


I'm glad you brought this example up (and a big for what you did!)

I'm sure you remember a certain hurricane, where George Bush and Karl Rove conspired to kill the black voters they once disenfranchised. There were complaints of hotels 'price gouging' afterwards. But what did that mean? Demand goes up, supply stays the same, therefore price has to go up. This is literally the first day of high school economics. The law of supply and demand is not repealed after a hurricane.

Let's say you banned "price gouging" after a hurricane. Workers are coming from all over the country to work overtime for good money in tree removal. Where do they stay? Well, they stay nowhere, because unemployed busboys and casino workers get artificially low room rates, and therefore have no incentive to move into cheaper temporary or long-term housing, farther from the coast. How many deadlines did the government have to postpone to get those people out of hotels in the Houston suburbs? That was caused by government paying the bill, removing economics from the equation. People just stayed until they were forced to leave, because the price was artificially low (in that case, free).

As far as other commodities like gas or water, those are perfect illustrations of why we should keep the government out of price regulation. Price controls always create shortages. 100% of the time - no exceptions. Take the western United States. People don't have any real reason to ration water as much as they should, so it's still economic to build a golf course in the desert or for desparate housewives to water their lawn everyday. So towns have to create artificial reasons to conserve like 'no watering' laws. If water is scarce, it should cost more.

As for gas, every time the price goes up, more people conserve gas. And now, we see the price coming down to reflect the supply coming into line with demand. If it were super-cheap, we would use lots more.

I have a different take on this, even though I agree with some of your analysis. Scalpers don't limit tickets to 'only those who can or are willing to pay exorbitant prices.' They only limit the good tickets to those people. And before you tell me 'that's not fair' think about this - If it's a good strategy to have 'real fans' in the good seats, the acts should use their marketing budgets and give them away via radio stations. Which is what they do.

As much as I hate them, Ticketmaster getting into the scalping game just makes sense. I never understood why they would sell tickets at such low prices in the first place. We see acts like the Rolling Stones charging huge price for great seats and they get it. Good for them. Eventually, once the yuppies start paying $1000 for the front five rows, maybe the cost for cheap seats and all of the ridiculous handling fees will go back down. Scalping on the aftermarket creates an artificial incentive to buy tickets that you don't need (I can always sell for a profit on ebay) so people demand more tickets, driving everyone's price up because tickets are mostly priced level. The current model doesn't make sense.

You have elsewhere argued that "The government and society as a whole should try their very best to promote good things and help people." You also argued that "The only way to discourage something is to make it so no one is allowed to do it" and "A country with no morals is anarchy" and that "Limits have to be set up somewhere". May I assume that you have now reversed your position (so to speak) on prostitution? After all, my body is my property. And the government should have - what was it? - zero right to interfere in any such transaction.

Would you apply the "truth" that the government has absolutely zero right to interfere to, say, the cannabis I grow in my backyard or the poteen I make in my basement? Or are there cases where you decide what's acceptable and what isn't?

One could argue that the government has already decided that some of those things are illegal in some places, but by whose ethical standards? Yours? Mine? The same ones that you rail about in relation to the government determining that overcharging refugees for the only available accommodation is punishable by a fine??

I guess what you're saying is that ethics shouldn't apply - except when you say they should - and only if they're your ethics. Sadly, I am all too familiar with this sort of position. I believe it is generally referred to as "rank hypocrisy".

Further, your economic argument can only possibly work in a vacuum - somewhere outside the real world. There is a big difference between scalping concert tickets and price gouging. Your quaint notions about "market forces" in relation to the latter simply don't apply here on planet earth. It's all very well to argue that if one's price is too high, one's customers will go somewhere else. This assumes, of course, that there is a somewhere else. This assumes that the sin of greed is not the overriding factor in most business transactions and that such things as monopolies, cartels, price-fixing, and exploitation don't exist. This assumes that the traveler whose plane was grounded can find another hotel elsewhere or that the Katrina survivor can find clean water elsewhere or that there is some oil company or drug manufacturer or insurance firm somewhere that is not artificially inflating their prices in accord with the rest of the industry. In these cases, one's customer can't "go somewhere else". I believe the economic term used by the providers of goods and services in these cases is "win-win". Nothing in these cases is going to force the prices down. Absent competition, the market doesn't work. The consumer is only left with the option of paying the extortionate prices set by the pharmaceutical industry or doing without medication.

I would suggest that anyone who doesn't feel that exploitative profiteering from the pain, suffering, or desperation of those in vital need is not unethical, has no ethics at all. And probably voted for George W Bush.

Generally I believe in the allowing the free market to run things, supply and demand style. I buy 100 shares of some stock, expecting to be able to sell it later, for a better price. If the price goes down and I believe in the company, I might buy more and more, selling it later (hopefully) to someone who agrees to a higher price than the one I paid for it. Or, it might go down and I lose money.

Likewise, if I bought 50 cabbage patch dolls because I felt that I could sell them for more later, I was taking a risk in buying but might profit if the demand is such that the stuff goes up during Christmas time. I know a lot of people do this...every toy that was Star Wars related seemed to be sold out last Christmas, but I could have bought it on e bay for 10 to 20 times more. My solution? "Sorry, kids, Santa must not have been able to make enough Republic gunships for everyone this year".

As Vermillion mentioned, there is a vast difference between luxury items (tickets, toys, x-boxes) and necessities. During a civil crisis, like 911, "natural market forces" do not influence the prices, they don't work that quickly... desparation and panic are the influencing factors. Price gouging in a case like Katrina, or 911, undermines public order, strains emergency services, and leads to crime. The government should step in in those cases. Need I say OBVIOUSLY? This is the reason they have rationing systems during wartime. "Want to feed your baby? Lucky for you I have formula....600 dollars a can."

But regarding ticket pricing, if companies which sell tickets feel that this practice interferes with their business model, they should take measures to undermine it (only sell a certain number of tickets per person, require identification, ect). The government shouldn't step in and perform the service for them.

Nope, been pretty firm in my dislike of GWB, and Republicans, as well as Democrats.
Why force businesses to house people for free or low low rates? Plenty of people with homes.Since it is a crisis they should be forced to accept people into their homes until everyone agrees things are back to normal. After all it is for the greater good is it not.
We have whole phone books to choose from do we not?
Or we could even make it voluntary and create a national database of open homes to disaster victims.

Sounds reasonable to me, how about you?
Then business would be free to offer their services as they see fit--either free because they care or to the highest bidder if they care.
The only disaster victims I would say get off being unprepared are IMO tornado and earthquakes since you cannot see them coming.
Hurricanes......you hear they are coming almost 24 hours straight till they hit.
They most likely are in a region where they are a regular occurence.

If they are NOT prepared ahead of time for such events that is their problem. In the case of those with families I find the negligence criminal.

Their failure to prepare puts everyone else at risk and endangers people who will often feel obligated to aid them, THIS
They are the ones placing others at rick for their stupidity. Other might die to save them.

I do think some things such as water should be off limits for sale in such a case--yet if the free supply is adequate why shouldn't I be allowed to sell a better quality to those who can afford it. the government is going to be there with their free aid as well as charity groups and the multitudes of volunteers.
So quite simply if I drive there after its all over with a truckload of generators for the highest bidder -- I see no reason i should be interfered with.

Where is the outrage at the idiots who left themselves unprepared and now expect everyone else to cover for them?

As for my ethics I am quite happy with mine. No lack of friends and generally well liked. Thank you for the concern.

Things change in two years Wertz.



I have no problem with it.



Overcharging? How is the price of a product determined Wertz? Is it not dictated by upply and demand? I am sure that it has already been adequately explained earlier in this thread.




And you can believe whatever your heart desires. All i am saying is that when it comes to the actions of individuals that as long as it does not hurt a third party, that the government has no right to interfere. Take that as you will.


The markets do not work in a vaccuum. They have been working throughout the world for decades. There is no void of competition ever. You are saying that all companies would conspire to artificially fix their prices which is ridiculous. The only thing you got right was greed. Greed is what will keep competition and ensure that prices go down because the best way of gaining the largest share of the market is to have more customers than your competitors.

If I Johnny over there is selling $20 a bottle for water, and I choose to sell my water for $5 a bottle....who is going to get the market share? Does that not give incentive for Johnny to bring down his price? Yes.




Its too bad there isnt a nomination for "Worst Quote " of 2005-2006.

Christopher, though I agree with you on the overall principle that people should prepare, the government cannot arbitrarily decide to change the laws because of lack of preparation on the victims' part. Do we withhold medical treatment to patients because their egregious habits or stupidity ultimately caused their ailments (likely 90 percent of the cases)?

The bottom line is, it doesn't matter whether lack of foresight got them that way, gouging people on necessities during an emergency is illegal, and should be. This isn't to say that all personal responsibility is suddenly relinquished, it just means we don't goug people in need of necessities in life and death situations. I don't have much of a problem with your electric generator selling, I'm not sure of the legalities there. I once paid almost a hundred dollars for a small fan in Italy during the summer.....

It's really easy to see why this is the case. Suppose, for example, there was an unforeseen catastrophic emergency and you were selling baby formula. You'd probably do very good business for a reasonable markup, but if you were the only one, or one of the few, with baby formula in town, and were requiring payments of 500 dollars a can, people might kill for it...they would certainly try to steal it. This is true even of people who would otherwise never act criminally. Now, suppose they WERE willing and/or able to pay your fee. Every criminal in the state would be standing in line to steal formula at the point of a gun to sell it themselves. Cornering the market and exploiting the sale on such items during an emergency is dangerous for everyone. That is the real reason such things are illegal, and incidentally, does happen with all of the corresponding violence, in places like Somalia.

Edited to add (just noticed Lederuv's post above):

But, don't you see, the laissez faire freemarket argument you are trying for does not work in an emergency situation. If you are price gouging for water at a time when people are otherwise going to die of thirst, or become ill, or pay your price, that qualifies as extortion.

Mrs P In all honesty I am coming to beleive that in some cases maybe it would be a good ideas--addicts and the like.
Here in AZ it is Summer. Needless to say it is HOT.
Summer in AZ means dead kids. lots of them. They drown in pools and die in locked cars.
Everytime it is the same.
They dont keep an eye on the kids and their pool is unprotected. ie no gate.
They leave them in cars that are not on with no AC.

and they all think we should feel bad for them.

Comercials for this are on every Media format here almost relentlessly.
Over and Over and Over again and again and again.
and every year we break the previous record.

If they are lucky the child either survives or, sadly, dies. The downside and worst case scneario is they don't die and are empty lumps of flesh until sooner or later the parent has to pull the plug. Brain Dead.

I hate these people. They were warned repeatedly this would happen and they failed to take the necessary steps to prevent it.
True it is maybe an over the top example but every year we break the previous record. This just leads me to believe people are getting less supportive as we go along. they are cared for far too easily at the expense of others.
people "surprised" by the flooding when they live under sea level or in a flood plain. People in Florida surprised by hurricanes.

too many people do not prepare EVER for anything.
and everything else must then stop to go to their rescue.

In extreme example I can see regulating supplies

But only if those supplies are critically low. Which in America is almost never. Maybe a delay of a few days or so. But our emergency response from volunteer services is incredibly fast. I was monitoring the hurricanes last year before Katrina and watched the trucking companies response to the area--within 12 hours for the shelter building efforts from home depot and companies similiar. food and water was in motion from as far away as Cali in under 8 hours of hearing how bad it was.
The company i worked for then dedicated 20 trucks to the effort and routed literally hundreds more during the rebuild.

In the case of a truly massive unforseen devastation --and i am talking 9/11 katrina kind of problems.
I can see controls--for a limited time. once basic levels are restored and resources are available I see no reason why people cannot begin to sell if they are so disposed.

I hate ticketmaster. Talk about a monopoly.

I agree with companies limiting tickets per person, but I really have no problem with scalpers. For one, most sports are on TV. Two, if I really, really, really want to go to an event then it's nice to know that if I have enough money I can go, regardless of its popularity.

Tickets are not the same as food, gas or water.

If there is little demand for tickets, tickets will be cheap, if not it's nice to know you can get tickets even if it's sold out.

Less than 1 year ago, I experienced my first "Hurricane experience". You see, I live in Houston, TX and a category 5 hurricane named Rita (actually stronger at the time than Katrina) was bearing down on the Galveston/Houston area just several weeks after Katrina devastated New Orleans. Although there was ample warning a hurricane was approaching, it was not truly known whether we were in danger until about 24 hours before it hit. This idea that people "know its coming" is ridiculous. Yes we knew it was out there...no we didn't know for sure where it would hit.

Nevertheless, 24 hours before landfall, the track for the hurricane was supposed to take the eye about 5 miles to the east of where my current apartment is. The entire Houston metro area would be effected somewhat, but right up until that moment, serious evacuations had not yet taken place. So....what felt like the entire city of 4 million got packed and headed out that day (including me) to stay in the longest traffic jam in the history of traffic trying to escape that hurricane.

A little over 17 hours later, I arrived at my destination in Dallas. This is normally about a 3 hour drive. While I felt I had taken precautions to make the trip, I was not prepared for that kind of traffic jam. After 12 hours, I had only gone 25 miles. My phone had died. I was running out of gas....so were the stations along the way. I had taken cash out for the trip, but if some profiteer wanted to charge $50 per gallon, I wouldn't have been able to afford that. Neither (i'm assuming) would the literally 10's of thousands of other evacuees trying to escape. Imagine for a second the disaster that could have ensued had we followed the "no gouging" idea set forth in this thread. Stations charging $50 per gallon. An approaching hurricane. Panic. Violence from those unable to afford it. All for the sake of....what again?

A little bit off course from Scalping.....which I don't actually have a problem with. But profiteering during an emergency?....uh unh no way.

Sounds like someone just finished the theory of neoclassical micro & macroeconomics 202. I'm not going to get in to the pitfalls of the neoclassical theory here but you either don't fully understand the principles or you've just decided to simplify it down to the simplests terms, which of course leaves out all the important stuff. In theory, on a long enough time scale, the markets "work" and are self correcting. However, our market economy depends upon the rights and duties that are codified in our constitutional laws. No market exsists independent of the law. Supply and demand do not alone determine the price of a good and to think that companies wouldn't conspire to artificially fix prices is nieve. Memory chips, CDs, Concrete, oil and gas prices all have had court cases dealing with price fixing and that's just a short list. In a crisis situation like Katrina or 9-11, the markets don't have time to react or self correct, consumers are not working under the basis of full and relevent information. You might want to read up on oligopsonys and oligopolys. Neoclassical theory is a good theory but it's just that, a theory and it can't be boiled down into such simple terms.

Should Scalping or the popular Gouging be considered illegal or even unfair, after all you could invest in products you know will someday be in demand and sell them yourself?

From a governmental perspective, I see this as a non-issue for non-essential (ie: non-emergency) activities. However, I do see where it might be in the seller's best interest to avoid doing so, or attempting to control the activity. Take professional sports. The league benefits when the most people are able to participate. If certain segments are excluded due to scalping, then the league suffers. Therefore, the league might attempt to control scalping--most likely by putting pressure on the local government.

Is it not a free exchange between those who have and those who can afford what they want? Sure, but....in emergency situations the scenario changes.

Should government be allowed to penalize people for selling their products/property for whatever they wish even in situations like gas crunches or disasters? In emergency situations, the government should do what it is there for...to promote the common good. In non-emergency situations, I think the common good is to allow the free market to work. As Ringwraith points out, in emergency situations, this changes...it is then by far better for the common good to ration items and prices. You shouldn't have to die because you didn't have, say, $400 for a tank of gas.

In such situations, you are aware of the possibilities and the dangers, so why should others be penalized for your mistake in failing to plan ahead? Is it really a crime to steal gas that someone is charging excess prices for so that you can escape grave danger? In such situations, many people will take whatever steps are necessary to take care of their immediate needs, so anyone charging excess prices is quite likely to suffer the (perhaps dire) consequences themselves. Isn't that also their problem, because, well, they clearly failed to realize the dangers and plan ahead?

The real question here is whether you should be able to recoup windfall profits while many, many others suffer grievously because of it. I'm one of the bigger free market supporters you will find, and I fail to find justification for that stance in emergency situations. I would only point out that the market does tend to equalize even these things out, and those charging excess prices at such a time will almost certainly suffer long-term economic consequences. Customers tend to have long memories of such things.

Should Scalping or the popular Gouging be considered illegal or even unfair, after all you could invest in products you know will someday be in demand and sell them yourself?
I think the free market is a myth. I think scalping and gouging are two different things. Scalping tickets within the law is fine by me. I don;t even care if the companies that sell the tickets use a lottery system in selling the tickets.

If I buy twenty tickets to a baseball game in May, that baseball team has some guaranteed revenue and can plan by that revenue. The game, played in September might be between two teams that are eliminated from the playoffs. No one will come bail me out if I can only retrieve 1/3 of the face value if I decide to sell them. The same game might decide who goes to the playoffs and have a player approaching a major milestone. If I don't violate any of the terms I agreed to when i bought the ticket, what is the harm if someone pays me ten times face value?


Is it not a free exchange between those who have and those who can afford what they want?

There is a fine line. Enron's manipulation of the energy market nearly put California in bankruptcy. Profiteering in a time of war by padding expenses are raising prices well above value is another no-no. And then there is just being a good member of a community.

But generally I agree with your exception

Should government be allowed to penalize people for selling their products/property for whatever they wish even in situations like gas crunches or disasters?
Yes, in areas with runaway inflation, disaster situations, etc. the government has a responsibility to restore order. When people are buying out of panic, there is a high probability that panicking will lead to violence and looting and even violent looting!

This should not extend down to raising the price of umbrellas when it rains. I'm good with that, if that's how you want to do business.

Jacking up gas prices during an ordered evacuation on the other hand, let the government bring the smack down.



In such situations, you are aware of the possibilities and the dangers, so why should others be penalized for your mistake in failing to plan ahead?

What if I planned ahead, but got sick. Or if I planned ahead but got robbed during a time when adequate law enforcement was not available.

Exploiting people's suffering is not in the public interest. Increasing the production of generators to sell retail to the Katrina zone, that seems like good business.


In all its a judgement call. And I'd rather a legislative branch help make those judgements than an appointive or executive body. I think the burden is on the government to prove the public benefit of interfering in the free exchange of goods and it should be reserved for emergency situations.

One of the questions that could be asked is "Is it all right to raise prices at all in an emergency?"

If I had a gas station in the N.O. area when the evacuation is ordered is it okay if I raise gas prices $20.00/gallon? No. Is it okay to raise it $2.00/gallon? Maybe.

Ignoring the profiting from others misfortunes bad karma, are you helping people if you drain your tanks for the first 1,000 cars out of the city when there are another 10,000 behind them?

I have a limited supply of something necessary. By raising my price a little I make it less attractive without putting it out of reach of those who need it. If the people know that there is gas available down the line they are more likely to only take what they need if the price is higher than normal. That means that rather than filling their tank at $3.00/gallon and not leaving enough for everyone who needs they only take a few gallons at $5.00/gallon.

Same with water. If you know that there is water going to be available in a couple of days you would only buy what you needed to make it that long at $3.00/bottle. If I were required to sell it at the normal $1.00/bottle how many people are going to only take what they need? Scared people are more likely to think only of themselves.

I can think of problems with this type of issue as well but how do you determine what is gouging in a case like this?

I don't think that the government should have stepped in on the generators though. I could be wrong but in most cases I don't think a generator is something that is neccessary for life.

As for scalping tickets, puleez. One of the great things about eBay is that the seller gets a fair market price. I know that some people are upset because they can't find things as cheap as they used to be able to but so what? The seller is getting a fair price because someone is willing to pay more than me. How is that wrong in those cases?

I was curious about this, too, so I looked this up and found an article here. Apparently it varies by state, but for most any essentials over 10 to 25 percent above the normal price prior to the emergency is considered gouging. Others don't have a set price...

See, I hate to stereotype... but it seems only a conservative will try to make capitalizing on people's misfortune a good thing. You are trying to rationalize why gouging can serve a greater good.... which sounded pretty good, except for one oversight....

You can actually leave the gas at 2.00/gallon or the water at 1.00/bottle and simply limit the amount people can take. Since there are thousands of others that need gas or water, you have plenty of customers to make your profits and making sure everyone or most people get what they need with out going to hell.

Ya, that was my thought too...rationing would be the solution in these situations. In fact, it should be the norm, and part of normal emergency procedures. No one should be allowed to horde emergency supplies in an emergency and thereby prevent others from having them. Price won't control this...in an emergency, people really don't see cost as a limiting factor unless it is simply outrageous. How much would you pay for gas to evacuate if you felt your life was in danger? An extra few cents a gallon doesn't even enter into the equation.

That being said, the market will also adjust for these things. If you gouge customers during their time of need, they are almost certain not to come back. However, I still don't see that as reason to avoid rationing in emergency situations.

Woo Hoo! I'm a conservative! You may want to revise that as I am more middle of the road than conservative. Especially if you are trying to tar me with the "Conservative's Are Rotten Hypocrites" brush. Not saying you are just that you probably shouldn't assume that I was trying to rationalize gouging.

Who says I was trying to capitalize on people's misfortune. There are a lot of people who could profit off of something but don't. Take the Jay Leno Harley auction on eBay. He probably could have sold the celebrity signed bike for some pretty big bucks to pocket. He didn't. He donated the money.

I actually thought of both Hobbes and arguments a bit before I proposed what I did but didn't address them previously because my posts tend to be long anyway.

I think that there is a big weakness in rationing in this case. It might work with the gas because people probably aren't going to spend time driving around the block to get in line to make sure they have a full tank. Once they get their 3/5/10 gallons of gas they are going to continue to get out of town.

However that doesn't work with water.

What's to stop a whole family from coming through the line several times just to stock up on water? Rationing doesn't resolve the issue on a one store level. A government might be able to ration something by issuing a certificate/ticket/whatever to everyone at once. No ticket, no resource. But what is to stop a person from simply running through your line 15 times to buy 30 bottles of water which they can then turn around and sell for $5 down the street to people who couldn't get the water from you because now you're out.

Raising the price a $1 or $2 makes it much less attractive without gouging the people you are trying to help.

If you wanted to you could probably try a combination of both rationing and raising price a bit.

If you don't think its right to keep the money you can then turn around and donate it to a charity, or use it to buy more water later to give away, but by raising the price you are helping limit demand for an item. No gouging there just quick and dirty market controls. Maybe it won't work. Maybe it will. I was putting it out as a suggestion expecting someone to come up with a reason why it wouldn't work. Thats fine. But if you "hate to stereotype" then don't. All you are doing is making yourself look bad.

Should Scalping or the popular Gouging be considered illegal or even unfair, after all you could invest in products you know will someday be in demand and sell them yourself?

It depends on the context. Taking advantage of some one is very poor form, but laws should allow for leeway. I think once an emergency has been declared then the law should protect the weak. After all, the guy with the generators was hardly going to starve to death if he didn't sell his generators.


Is it not a free exchange between those who have and those who can afford what they want?

Well this is a laugh and no mistake

...and how much ammunition, how many guns, cannon and other weapons do you think the western world, lead by the United States, unloads onto the poverty stricken third world under just this argument?

Scalping and the like are not right, but neither should they be targeted against by such a bias that frowns upon selling generators to poor Americans hit by a hurricane whilst ignoring poor Africans mowed down by 5.56mm ammunition.

I find I agree with Eeyore's statement that the 'free market' is a myth. Such a mirage is a means by which the rich screw the poor. Whether they are poor Americans drowning in New Orleans or poor Africans burning in Darfur.


Should government be allowed to penalize people for selling their products/property for whatever they wish even in situations like gas crunches or disasters?

Yes.


In such situations, you are aware of the possibilities and the dangers, so why should others be penalized for your mistake in failing to plan ahead?

Because stupid people need to be protected from evil people.

Hmmmm...the Police?



I don't like this as a rationing mechanism for emergency supplies for two reasons. First, how much is too much? Once you start down that path, it's difficult to stop. Now, I believe someone earlier mentioned about 15-25% was the current guideline. This brings up my second issue...if you're in an emergency, and need something just to survive, is a 15-25% price increase going to limit your quantities at all? Not really..that's why gouging occurs if not controlled. Because the supply/demand curve gets very skewed when your life is at stake if you don't have something.



I don't think that's a bad idea! Rationing to control quantities, and limited price increases to both do the same and to provide the supplier incentive to have more supply available (which is what you would want in an emergency...large supplies of emergency goods).

It seems that what we are really wanting here is simply for people to look out for each other and help each other during times of crisis rather than to take advantage of them. It just seems wrong to us for one person to exploit the desperate condition of another for personal gain.

So, when we think about the man who "takes a truckload of generators down to the Katrina area and sells them to the highest bidders--and gets arrested", we naturally think that he got what he deserved. How dare he sell generators at exorbitant prices to people in such a desperate situation! Most of us would agree that he doesn't really have a moral obligation to give his generators away free of charge, but he should at least be charging a "fair" price for them, right?

Let's look at this scenario a little closer. The man's actions are condemned as unethical and heartless because of the high prices he is charging to needy people, but what would the man need to do in order for us to label his behavior as ethical? Well, first of all he could have escaped criticism (and legal action) by selling his generators at a "fair" price. This is the action we would wish him to take and the action that we expect to encourage by making laws against price-gouging. However, we must keep in mind that we have no legal power to force him to sell his goods at a fair price. The man always has another option of which the legal system cannot deprive him. He could stay home. If the man had simply stayed at home and watched the catastrophe unfold on television rather than getting personally involved by toting a truckload of generators to the disaster area, he could have escaped all criticism, sitting comfortably in his chair, smugly critiquing the government mismanagement of the situation just like the rest of us.

Notice that in this second scenario, in which the man stays at home, no one gets gouged or exploited. Notice, also, that all those people in the disaster area who would have enjoyed the man's power generators have to go without one, but at least they didn't get exploited, and that's what's important, right?

So, is it more unethical for the man to stay at home and deny the use of his generators to suffering hurricane victims, or to sell his generators to willing buyers at exorbitant but mutually agreed upon prices? The question could be reworded as: is it more unethical to sell a $300 generator for $3000 or infinity, meaning that the generator is not for sell at any price because the seller stays home?

If we answer that it is just as unethical for the man to stay home as it is for him to venture out and price gouge, then we convict ourselves. How many of us had generators or water and food supplies that we could have driven down to the disaster area in our own vehicles to aid the suffering of the hurricane victims? Of course, for many of us that would have been impractical. Many of us couldn’t afford to leave work for a day or two to make a trek down to Mississippi. Many of us couldn’t really afford the gas to make to trip, either. And that is absolutely the point. Perhaps, if we had thought that we could have sold our generators or our Y2K bottled water stashes for enough money to make it worth the trip, maybe we would have made the trip, selling our goods to willing buyers who would have been more than willing to pay us very high prices in such desperate circumstances.

Now, I know it sounds immoral charge high prices to these people in need, but let’s think about it some more before we make a judgment. What if all of us had done this at the same time? What if not only individuals but convenience store owners and restaurant owners had all decided that the high market prices of necessities in the disaster area made it worth their while close down their shops for a couple of days, load up all of their goods, and carry them down to the Gulf coast where they were in greater demand and could fetch higher prices? It is obvious what would happen. The incredible shortage of basic necessities in the disaster area would quickly be remedied by the army of individuals and retailers heading south to sell their goods at higher prices than they could get for them at home. Of course, all the competition created by this horde would quickly lower prices as all the out-of-town retailers attempted to undercut each other’s prices in order to sell more of their own goods. But as long as the retailers had to put up with such inconveniences as the lack of reliable power, unsanitary conditions, and long transport distances, they would all still need to charge prices that were somewhat higher than the prices throughout the rest of the nation in order to make the endeavor worth their while. And this is exactly what we should expect. Why would anyone set up shop in a hurricane disaster area if they could sell their goods for the same prices in the comfort of Memphis, Tennesee? So, even though the people living in the disaster area would necessarily be paying higher prices, shortages would be unheard-of, as there would be a continual stream of suppliers anxious to sell to the residents.

The scenario I described above is exactly what should occur after a major disaster, but it doesn’t. There should be no shortages of necessities a reasonable time after a major disaster because all the retailers in the area should be racing each other to the disaster zone in order to beat the competition and sell their goods while the situation is most desperate and the prices are highest, but we all know this doesn’t happen. It should be fairly common for people and retailers to keep large stashes of generators and water and other necessities stockpiled in big trailers, ready to roll at a moment’s notice when a major disaster strikes, secure in the knowledge that this large investment will be rewarded by the high prices they will be able to get when the goods reach their destination amidst the destruction.

So why don’t any of things happen? Why are so many people forced to ride out major disasters without generators and basic necessities? Why does the free-market system, that usually manages to so efficiently move goods to the places they are needed, fail so miserably when a disaster strikes? Why must people endure shortages and suffer hardship when there are so many people within a relatively short distance who would be more than willing to sell them what they need?

It’s because all of these people I described above who might bring much needed goods to the disaster area would be immediately arrested for price gouging. It’s because we think that selling at a high price is more unethical than not selling at all. It’s because we really don’t mind people going thirsty as long as they are not getting ripped off, we don’t mind people going without power as long they are not getting gouged, and we don’t mind babies going without formula as long as they are not being exploited.

Of course, we all recognize that the best solution is for all of us to take care of the disaster victims out of the kindness of our hearts. And if this were being done well, there would be no occasion to price gouge because the army of good-hearted retailers descending upon the disaster area and selling at “reasonable” prices would drive the price-gougers home. Although the outpouring of aid in response to Katrina was enormous, surely we recognize that the charitable aid reaching the disaster victims was insufficient to meet the needs of all the affected people. And when charity is insufficient, all that remains to motivate sellers to meet the needs of the remaining people is self-interest. We can either recognize this as a reality and utilize people’s greedy, self-interest to supply goods to those who need them (just as the market works in non-disaster areas), or we can punish the sellers for being greedy, price-gougers and let their potential customers go without.

Which of the solutions is more ethical?

Not a bad analogy, but it breaks down in a couple of places. First, you have chosen an item that is expensive and in which a single unit provides benefit to many. Second, this is not an item that generally really involves life and death. Finally, you haven't mentioned what happens in your scenario to those who couldn't afford the item, but were probably the ones most in need of its use for their lives?

So, to draw a fair comparison, let's take a look at much simpler commodity items such as gasoline or water. Is it truly in society's benefit to allow the free market to reign supreme in these situations, allowing the supplier to charge exorbitant fees and thereby leaving those who simply can't afford it to perish? Is it in society's interest to have some people buy up all the water at a store, just so they can open up their own 'Survival Fluid' stand down the street, making themselves a pile of dough but leaving the poor to die of thirst? Should gas stations be allowed to charge $20 or $50/gal, just because they're the only ones with any gas left, and everybody needs to evacuate or die, and therefore somebody will still pay...just not those without the means? As I said earlier, the supply-demand curve gets very skewed when the item in question is limited in supply, and needed for survival. Essentially any price becomes worth it, leaving those with limited means left out in the cold. Allowing this sort of price gouging isn't going to increase supply...gas stations can only hold so much gas, and stores can only stock so many items. It is a question of how to equitably distribute what is available. The free market will indeed distribute the goods...but is the manner in which it would do so truly equitable? I don't think so.

If people cannot afford the goods necessary for life such as food, water, and health care, they have three options:

1) They die
2) They steal
3) Others provide for them charitably

These are always the only options, and disaster scenarios do not change that. People all over the world are dying every day of starvation and for a lack of clean water. If they cannot afford to purchase food and water from those who are willing to sell to them, then the only options remaining are to either purchase from those who are unwilling to sell to them (theft), or to rely upon the generosity of others, or to die. We, in first-world countries, are quite fortunate that we usually don't face such difficult choices on a daily basis. So, when the supply and demand curves in a particular area suddenly and dramatically shift due to a natural disaster, we tend to think of this as an exception to the normal operation of the market. Suddenly, everyone in the affected area lives quite a bit closer to death than they are accustomed. This does not negate basic economic truths, though. All people, everywhere, even in non-disaster areas must face the three possibilities I listed if they are unable to afford necessities. A disaster scenario does not qualitatively change anything except to greatly increase the number of people who are placed in this dire situation.

The only way to morally remedy the situation is for there to be an outpouring of charity to those who suddenly cannot afford the necessities, just as in all other cases of great need throughout the world. The laws of supply and demand still hold, even in a disaster area, and the greatly increased market prices for necessities reflect the workings of those laws. If a person is able to find a willing buyer for a bottle of water at $50, then the market price of water in that situation is $50 a bottle. If the person then voluntarily decides to sell the bottle of water to a thirsty person for $2 instead of $50, that is a $48 charity. If we had enough people willing to charitably sell water for so much less than they could get for it at market prices, there would be no occasion for price-gouging because the thirsty people would go buy all the water they needed from the $2 seller. If there are people who are selling their water to willing and desperate buyers for the actual $50 market price, that means that there were not enough charitable people to fully meet the demand.

The price system does not work any differently in a disaster area than in a non-disaster area. The market price for water in a disaster area may be $50 a bottle because the selfish, greedy sellers are trying to milk the buyers for all they are worth by charging as much as they can possibly get for this life-giving substance. In the same way, the market price for water in a non-disaster area may be $2 a bottle because the selfish, greedy sellers are trying to milk the buyers for all they are worth by charging as much as they can possibly get for this life-giving substance. The only difference is that the supply of bottled water in the non-disaster area is higher, so the price the sellers are able to charge is going to be much lower. But there is no qualitative difference in the functioning of the market. Grocery stores in non-disaster areas do not sell their goods out of charity any more than “price-gougers” in disaster areas do. In fact there are quite a few people in non-disaster areas who are not able to afford the prices of food and water at the grocery store and must turn to the local food bank for charitable aid.



You can certainly try to intervene in the free market and prevent the supplier from charging exorbitant fees, and you might have some success at this. But simply preventing price-gouging does not help the would-be buyers in any way unless you can also figure out a way to force the suppliers to stay in the disaster area and sell their goods at less than market prices instead of returning to their homes. Price caps always cause shortages, and this is no less true in disaster areas than anywhere else. You can prevent price-gouging by using the force of government to cap prices at some arbitrary level as long as you realize ahead of time that this is going to cause shortages in the disaster area. Ideally we would rely on charity or government handouts to alleviate the shortages caused by these price caps, but we must be prepared for the difficulties of this solution. Notice that if we disable the price system and rely entirely upon charitable handouts of necessities, the rich as well as the poor both end up receiving the charity. So, even those people who could afford to pay the market price of $50 for a bottle of water don’t have to pay it. Under a free market system, charity would only have to provide for the poorest people. With the price system disabled, though, charity must provide for absolutely everyone.



Yes. This is absolutely in society’s interest. If the market is allowed to function without any price-gouging restrictions, then the market price for water at the store “down the street” would be very close to the price at the ‘Survival Fluid’ stand. In order for someone to find water at a significantly lower price so as to make it worth the effort to set up his stand, he would have to travel a significant distance from the disaster area where the market price of water was lower. He could then transport the water back to the disaster area where it is much more badly needed than the place he bought it from and sell it at his ‘Survival Fluid’ stand. This is exactly how free markets are supposed to work, providing incentives to move goods from low price areas to high price areas where the demand is higher. Now all we need are a few hundred more ‘Survival Fluid’ stands set up by people who are willing and able to make the journey outside the disaster area to find cheaper water and back again, and the price of water will return to more normal levels. Hurray for the ‘Survival Fluid’ guy, saving hundreds of people from dehydration who were unable to make the journey to the land of plenty. We should give him a medal, or at least let him keep his profits, but most likely we’ll just throw him in jail.



Once again, you can prevent people from charging $20 for gasoline, but you cannot force them to charge $3. If you could get $20 per gallon for gasoline, you just might be willing to hold down the fort at your gasoline station and rake in some dough before the hurricane hit. But if you can make no more money than you could on a normal day, you’ll probably just fill your own tank, board up the store, and get out of danger. If you were to hang around, selflessly facing danger for the good of others, that would be considered charity. Good for you. The world would be a better place with more people like you. But price-gouging laws only prevent people from charging exorbitant prices; they don’t create charitable people.

Also, your hypothetical example imposes the condition that “they’re the only ones with any gas left”. If the market price of gasoline is really $20, people will find a way to get gasoline there to sell, facing danger if they must. People can be very ingenious when large profits are available. This is what makes free markets work.



All necessities are always limited in supply and, by definition, always needed for survival. Disaster situations certainly shift the supply and demand curves, but the same free market forces that establish prices the other 99% of the time are still capable of correcting the supply and demand imbalances that occur in disasters. Efforts to impede the operation of market forces by imposing price caps will only ex