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As often happens in disaster areas, the government in Texas has made it illegal to raise prices above a reasonable amount (such as $50 for water or $5000 for a generator), citing that this is victimizing already battered residents.
The problem with price controls (just like in Venezuela) is everyone hoards and cleans out the shelves even if they don't need the supplies. When you let the market work, people will pay the actual value of goods and there will be enough supply and incentive for outsiders to get down there and bring in more materials.
Disasters cause demand spikes, and in a properly functioning free market demand spikes will result in higher prices.
Consider the bottle of water example. Let us say bottled water costs $2 per bottle normally. OK, natural disaster hits and there is a local run on bottled water that causes an immediate shortage. Absent price controls, the responsive entrepreneur who is 200 miles away thinks "hey, I'll buy up all the water around here for $2 and go to disaster zone where the shortage is happening and charge $5 per bottle, and make a tidy sum for myself." With price controls that make this ABSOLUTELY PROPER economic thinking illegal, this person figures why bother, because there's no profit, thus no incentive. They stay home and so does the water they were going to go gouge on.
Now from some lofty, theoretical view of social justice, that person being denied the chance to make a profit on a demand spike caused by disaster and human suffering is a victory, but in real world, on the ground reality terms, all the water that person was going to move there according to the profit motive is now no longer going there. The shortage continues, but we upheld lofty social ideals. Yes, you are thirsty, but you are not being "gouged", right?
Prices, to paraphrase half the economists who ever wrote on the subject, are not arbitrary things. They are a response to supply and demand. When supply remains static or goes down while simultaneously demand is going up faster than normal, prices will, and should, spike. By allowing that spike, capital flows in the direction it will satisfy the most people according to their self-interests. Keep government coercion and control out of the equation, and no disaster would ever have a shortage. The first few in would make the most profit, then the local market would get saturated with goods and services all trying to cash in. Instead of shortage, there would be a glut of bottled water, gasoline, generators, canned food, etc.
Profit is not evil. It is the driving force behind virtually every good thing mankind has ever accomplished where they weren't forced at gunpoint.
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Quote:
Originally Posted by Volobjectitarian
No.
Disasters cause demand spikes, and in a properly functioning free market demand spikes will result in higher prices.
Consider the bottle of water example. Let us say bottled water costs $2 per bottle normally. OK, natural disaster hits and there is a local run on bottled water that causes an immediate shortage. Absent price controls, the responsive entrepreneur who is 200 miles away thinks "hey, I'll buy up all the water around here for $2 and go to disaster zone where the shortage is happening and charge $5 per bottle, and make a tidy sum for myself." With price controls that make this ABSOLUTELY PROPER economic thinking illegal, this person figures why bother, because there's no profit, thus no incentive. They stay home and so does the water they were going to go gouge on.
Now from some lofty, theoretical view of social justice, that person being denied the chance to make a profit on a demand spike caused by disaster and human suffering is a victory, but in real world, on the ground reality terms, all the water that person was going to move there according to the profit motive is now no longer going there. The shortage continues, but we upheld lofty social ideals. Yes, you are thirsty, but you are not being "gouged", right?
Prices, to paraphrase half the economists who ever wrote on the subject, are not arbitrary things. They are a response to supply and demand. When supply remains static or goes down while simultaneously demand is going up faster than normal, prices will, and should, spike. By allowing that spike, capital flows in the direction it will satisfy the most people according to their self-interests. Keep government coercion and control out of the equation, and no disaster would ever have a shortage. The first few in would make the most profit, then the local market would get saturated with goods and services all trying to cash in. Instead of shortage, there would be a glut of bottled water, gasoline, generators, canned food, etc.
Profit is not evil.
And kicking people when they're down?
Quote:
Originally Posted by Volobjectitarian
It is the driving force behind virtually every good thing mankind has ever accomplished where they weren't forced at gunpoint.
Oh? What was our profit from say the Berlin Air Lift? Humanitarian aid to disaster victims? Or were they just not good things?
Here's the thing the OP and first poster missed. Price controls are simply put on existing businesses within the disaster area. They are also generally accompanied by purchase quantity controls as well. Meaning, an existing gas station can't jack up the price of gas by ten fold, but people are also limited to only being able to get 10 or 20 gallons at a time. Similarly, a case of bottled water in Walmart cannot have the price raised ten fold, but people may be limited to only purchasing two.
The intent is to ensure that equal access is provided to the available resources on the ground since it may be difficult in the immediate aftermath to ensure that adequate supplies can get through. This really only applies to existing businesses in the disaster area, not outside people.
So, someone could load their truck with bottled water and drive to the disaster zone and sell it for $50 a pop, nothing illegal about it, assuming they could even get into the disaster area. Price and quantity controls do not impact people from taking advantage in classic capitalist fashion, they just ensure that the normal economy in the form of regular businesses continues to function and does not exclude people from having access to the limited resources available in the immediate area.
NO water for Andrew or Wilma etc - selling for $5 a bottle normally get for $1- $ 70 a case the ham was $15 a lb. They have these gas trucks go around $10 a gal for generators - real patriots-
most drive down from out of state to bless us with making them rich-
and for the GASOLINE prices- not like they go broke-- or can't claim their losses
Supply and demand do not care about emotions. Capital, like all other forms of energy in the known universe, follows the path of least resistance. A person with money and no water will happily trade more money than normal for water because of thirst and immediate local shortages. A person willing to profit on that will bring lots and lots of water to that immediate local area because ell, cashing in and all. More people thinking the same way and within in days, sometimes hours, there is no more shortage and the market is flooded with goods that yesterday were scarce. All because we got out of the way of profit. If you don't like it, instead of enacting laws that exacerbate and elongate shortages, just buy up all the humanitarian goods around you and flood the market with giveaways? You accomplish two things - you deal a blow to wicked entrepreneurs with your selfless act while also getting goods where they are needed. Go ahead, buy it all up and go flood the market. If you can't or won't, explain why. Dimes t donuts you'll mention either real and/or opportunity cost being prohibitive to doing so.
Quote:
Originally Posted by burdell
Oh? What was our profit from say the Berlin Air Lift? Humanitarian aid to disaster victims? Or were they just not good things?
Humanitarian aid and volunteerism are wonderful things, but the ships/planes/vehicles delivering the aid are built by the profit motive. The fuel that allows them to move is harvested and refined according to the profit motive, and every single bottle of water, blanket, and ready-to-eat meal the deliver was distilled/woven/cooked/packaged according to the profit motive.
Water does not distill and bottle itself. Blankets do not weave and package themselves. Food does not grow, harvest, package and transport itself. Human labor driven by the profit motive does these things. Welcome to the real world.
Here's the thing the OP and first poster missed. Price controls are simply put on existing businesses within the disaster area. They are also generally accompanied by purchase quantity controls as well. Meaning, an existing gas station can't jack up the price of gas by ten fold, but people are also limited to only being able to get 10 or 20 gallons at a time. Similarly, a case of bottled water in Walmart cannot have the price raised ten fold, but people may be limited to only purchasing two.
The intent is to ensure that equal access is provided to the available resources on the ground since it may be difficult in the immediate aftermath to ensure that adequate supplies can get through. This really only applies to existing businesses in the disaster area, not outside people.
Which is what causes runs on goods first and then shortages when disasters strike. By enacting laws preventing the proper ad responsive flow of capital in order to preserve an existing supply, there is no incentive for the local business to stock more supply than JIT inventory, which ends up all but guaranteeing shortages.
Quote:
Originally Posted by NJGOAT
So, someone could load their truck with bottled water and drive to the disaster zone and sell it for $50 a pop, nothing illegal about it, assuming they could even get into the disaster area. Price and quantity controls do not impact people from taking advantage in classic capitalist fashion, they just ensure that the normal economy in the form of regular businesses continues to function and does not exclude people from having access to the limited resources available in the immediate area.
Again, makes no sense. Let both the local business and the distant supplier both be freed from the nonsense of price controls, and the local business will both stock more of what would be more lucrative in emergency situations, as well as being on he phone to every supplier within 1,000 miles trying to get as much stock as they can because they are hitting a cool profit spike right now, so let's cash in. What all the naysaying forgets is that if this happens, all the emergency supplies that were rationed yesterday are now available in abundance, assuming you can pay. Highest bidders get first dibs, then price starts dropping and eventually plummets due to saturation. Point being...GOODS AND SERVICES WERE AVAILABLE, but based on profit and not vague altruistic nonsense.
NO water for Andrew or Wilma etc - selling for $5 a bottle normally get for $1- $ 70 a case the ham was $15 a lb. They have these gas trucks go around $10 a gal for generators - real patriots-
most drive down from out of state to bless us with making them rich-
and for the GASOLINE prices- not like they go broke-- or can't claim their losses
By doing so, that water and gasoline was available where once there was shortage. If water was available at the store for $1 a bottle, you wouldn't buy it for $5. You buy it at $5 because it's the ONLY WATER AVAILABLE. If you are buying gasoline for $10 a gallon it;s because there is no gasoline available anywhere around for less, and also because you failed to buy enough reserve when it was $2 per gallon. So you pay $10 a gallon, or you don't purchase. Point is, the $10 stuff is there, for sale, if you are that in need and hae the funds.
Responsible companies are already working on trucking in vast quantities of bottled water, generators etc. at regular prices. The Tide loads of hope truck is already on its way.
Some see poking people in their backsides when they are down as okay. To some, Shkreli is a great guy.
Hope someone is taking names and photos of the profiteers for later doxxing.
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