The Instigator
commonsensepls
Pro (for)
The Contender
levi_smiles
Con (against)

Price Gouging

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Voting Style: Open Point System: 7 Point
Started: 9/7/2017 Category: Economics
Updated: 10 months ago Status: Debating Period
Viewed: 951 times Debate No: 103840
Debate Rounds (5)
Comments (9)
Votes (0)

 

commonsensepls

Pro

I believe that price gouging is not only the correct thing to do in a disaster, such as Hurricanes Harvey and Irma, but the moral thing to do as well. When prices remain low, while demand is extremely high, supply becomes suppressed and as a result, crucially needed supplies and services are not available. If prices would be allowed to rise in disasters, those most affected will have goods and services available at a high price, as opposed to no goods or services at a low price. This is moral because it entices those unaffected to help those in need.
levi_smiles

Con

I'll accept that debate & thank Pro for presenting a topic of significant relevance to present emergencies in the Americas.

I note Pro's proposition is very much in vogue these days amongst the free market pontifices
in the temples of Wall St. Or at least was in vogue until Harvey hit Houston 2 weeks ago. Forbes magazine published one of its usual paeans to laissez faire disaster response before the flooding peaked on Aug 27th, [1] but axed the article on Mon when the body count began. Forbes ran another one this morning, [3] we can watch whether this article endures Irma over Miami this weekend.

The free market is a perfect circle: a useful abstract with no analog in nature. We can use the notion as a tool, a theory in balance against the inefficiencies & oppressions of over-regulation but when the real world makes landfall, the free market must always defer to nature's demands, human or otherwise.

Price gouging is a legal term used in the context of an emergency to seperate the ordinary price increases from the criminal or extortionate:

"The practice of raising prices on certain types of goods and services to an unfair level, especially during a state of emergency...

In most states with price gouging laws, the act is defined by the presence of three criteria:

Emergency or Crisis Situation- applies to abrupt price increases during a time of disaster or other emergency

Essential Items or Services- applies exclusively to items or services that are essential to survival

Price Limit- sets a limit on the price that can be charged for essential goods or services" [4]

The terms of price gouging vary from state. Connecticut may have the most severe restriction: forbidding any price increase in the precinct of a Federal or State disaster area. California prevents a greater than 10% increase on consumer goods & services. [4] Florida's statute states "that during a state of emergency, it is unlawful to sell, lease, offer to sell, or offer for lease essential commodities, dwelling units, or self-storage facilities for an amount that grossly exceeds the average price for that commodity during the 30 days before the declaration of the state of emergency, unless the seller can justify the price by showing increases in its prices or market trends. Examples of necessary commodities are food, ice, gas, and lumber." [5]

For the purposes of lending this debate a quantified value for fair price increase vs. unfair, let's agree that US citizens generally accept a 10% markup on essentials above any and all increases in overhead. So if a bottle of water sold for a dollar last week and the retailer's emergency related expenditures added another dollar per bottle, legal norms seem define fair price at around $2.20. Let's call essentials food, water, energy, transportation, shelter, and access to emergency services. I doubt the public sense of fairness is much perturbed if the price of liquor and video games skyrockets.

Pro's argument is that our collective sense of fairness ought to be irrelevant to the laws of supply and demand. If that vendor can charge $5 or $10 for a bottle of water based on the scarcity of that essential and the desperation of the afflicted, so be it. A suppressed price point has the disadvantage of encouraging overbuying, increasing shortages. A latecomer might find an essential commodity unavailable at any price.

Pro's argument is essentially that having some bottled water available for the latecomer is the more ethical outcome, even at a price that latecomer might resent. Pro (so far) sets no ceiling on the ethics of this outcome: a vendor might charge $1000 for a bottle of water to a mother desperate to save her dying child without moral concern, the price is appropriate to demand.

Indeed, economists argue that such an outcome is advantageous. Such a transaction generates valuable information for suppliers and responsible authorities: places where mothers are paying $1000 to save their child can be prioritized over regions where mothers are only paying $100 to save their child because the higher price must indicate more desperate straights. Logical enough, as far as it goes. But we ought to agree the theory doesn't go very far.

Applied in the real world of a hurricane emergency, common sense tells us that the free market fails to consider a host of factors.

In a free market, vendors everywhere would be wise to stock up on essential commodities in anticipation of increased prices. If the hurricane doesn't strike their region they might still resale to the victims at substantial markups. We can see that such a dynamic is likely to strain the capacity for production and delivery generally at a time when focused production and delivery might save lives.

The free market assumes that production & delivery are virtually limitless given the right price point but if the means of production are destroyed by a hurricane, if the avenues of delivery are blocked by flood & fallen trees, the free market consistently defers to the state for salvation.

Consider too, that evacuation is often the most appropriate response to an impending hurricane or in response to subsequent damage that makes regions unviable & extra population a burden to emergency response. The potential for extraordinary profiteering increases a vendor's motivation to continue business in an evacuation zone, requiring additional labor to remain, even creating new vendors who bet their safety against opportunity for substantial gain.

Taken to extremes, unrestrained price gouging actually has the potential to increase the impact of emergencies, even create new emergencies. Mass evacuations by themselves represent large scale opportunities for profiteering. An unscrupulous mayor might be bribed by bottled water lobbies, for example, to increase an evacuation order beyond the emergency's demand. Or a poor county might be tempted to forego a timely evacuation, hoping that fleeing neighbors will fill their hotels & buy that county's bottled water. An unlimited price point can tempt the greedy to extraordinary results. Naomi Klein, in her 2007 book "The Shock Doctrine: the Rise of Disaster Capitalism," argues that neoliberal establishments have already learned to deploy unpopular legislation in response to crisis (Trump"s unprecedented pardon of Sheriff Arpaio being one recent example) and to consciously encourage crisis (Klein cites the fabricated casus belli resulting in the Iraq War but the overhyping of the Zika outbreak to weaken Brazil's leftist Rousseff administration is a more recent possible example).

The free market lacks the capacity to quantify certain fundamental human values. Communities in extreme circumstances have the potential to fall apart (New Orleans after Katrina) or come together (New York after 9/11), but the free market has no stake in the preservation of communities ( or humans that matter: coffins are just another commodity in demand).

Consider how price gouging can damage the Samaritan spirit that defines and coheres a community in extremis. A neighbor handing out bottled water to the unfortunate for free might be more tempted to charge learning that $10/bottle was the going rate. A mother who cannot afford the higher rate might feel justified in stealing water or looting wrecked stores in search of water. A vendor whose rates were considered exploitative might suffer long-term ill will in the community.

I look forward to Pro's reply.

[1] https://www.google.com...
[2] http://www.latimes.com...
[3] https://www.google.com...
[4] https://legaldictionary.net...
[5] http://myfloridalegal.com...
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Debate Round No. 5
9 comments have been posted on this debate. Showing 1 through 9 records.
Posted by levi_smiles 10 months ago
levi_smiles
*sigh*
Posted by FanboyMctroll 10 months ago
FanboyMctroll
I totally agree with TheUnexaminedLife, the average Joe who is getting his product from corporations and then he will swindle people down in Florida, praying on the vulnerable. Hey next time a tornado rips through your home, I will make sure to arrive in time to sell you $30/rolls of toilet paper and $15.00 bottles of water when you are down and out. You know I'm just trying to help you out

By the way I'm not interested in debating this topic either
Posted by TheUnexaminedLife 10 months ago
TheUnexaminedLife
The average Joe who loads up his pickup trucks with a few cases of water, generators, and a few gasoline cans, which he bought from a corporation.

I'm not officially debating because the topic doesn't interest me enough: as simple as that.
Posted by commonsensepls 10 months ago
commonsensepls
You people are idiots. I'm not talking about the CEO of a multinational. How about an average Joe who loads up his pickup trucks with a few cases of water, generators, and a few full gasoline cans, drives to Florida, and sells it at a premium? What's wrong with that?

Also, why are you guys all scared to officially debate? Why leave these sniping comments? Afraid you'll lose?
Posted by FanboyMctroll 10 months ago
FanboyMctroll
Welcome to the greedy world of capitalism, rip off people for as much as you can, so you can buy your 5 car garage mansion and fill those garages with Mercedes and BMW's and fill each of the 12 rooms in the mansion with 75 inch panel TV's, then throw lavish parties to show off to friends, from the proceeds of ripping off the poor and unfortunate people!!!

That is the American Dream!!! Who can stab someone else in the back first and fleece them!!!
Posted by TheUnexaminedLife 10 months ago
TheUnexaminedLife
If you are talking about Amazon's 'price gouging' pre-hurricane, the issue is that of profiteering on the back of natural disaster. There was nowhere near a commodity shortage in the region and if there had been Amazon as a global chain could have easily imported such commodities to the Caribbean from its vast trading network. The issue is about corporation exploitation, not clever (unpublished) disaster-planning.
Posted by commonsensepls 10 months ago
commonsensepls
Ok, and what happens to the people who still need those same supplies, and now there are none available?
Posted by Perussi 10 months ago
Perussi
You are an idiot.

The reason we suddenly lose the supplies when prices are lowered is BECUASE THE PEOPLE WHO NEEDED THEM TOOK THEM, DUH!!!!!!
Posted by Perussi 10 months ago
Perussi
You are an idiot.

The reason we suddenly lose the supplies when prices are lowered is BECUASE THE PEOPLE WHO NEEDED THEM TOOK THEM, DUH!!!!!!
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