RoR: Forum

Jon:

The difference is that the premise of the article is the price gouging doesn't exist. My posts are directly on point, because they stand for the exact opposite of the article's premise.

Roger:

"Anyone, and I mean anyone, including SOLO posters, who expects or demands that the oil companies not raise their prices (or moderate their price raises) during a crisis is operating not on the basis of compassion and benevolence, but on the same evil premise as the looters in New Orleans who took not just food and medicine (which is forgiveable, as long as an effort is made to repay it), but also appliances and the like."

For clarity's sake, that 'aint me.

"But by trying to keep the profit mechanism and supply-and-demand in operation during the crisis, they are NOT :"gouging." Anyone who does not understand this needs to take Economics 101 and should shut up until they do."

That's not my position, never has been, and I agree with you.

Rich:

"Price gouging is not a mythological concept; it is bad business practice. Price gouging is different than having to raise prices to keep your margins where they need to be."

YAY! Someone else gets the distinction I've been trying to make!

Rick Pasotto:

Yours was a short post, and as you requested, I re-read it. Same reaction. Sometimes, circumstances put you in a position, NOT just to raise your prices to keep your margins where they ought to be, NOT even to raise your prices to a point that will really make you a killing, but instead, put you in a position to demand the ridiculous, but the other bloke is in such a position that he MUST accede to any demand you make.

SO here's a crass hypothetical for you. You, your wife, your child are stranded in the desert. Let's call him Rick, a hypothetical Objectivist of your mindset. After 2 days in the desert, they come upon a guy in a hut. Let's call him Ricky, another hypothetical Objectivist of your stripe.

Ricky will allow Rick and his family some water and shelter, since they are already getting ill from lack of water and sun exposure. But the conditions are these: He wants all of their money. They agree. He wants all of their jewelry. They agree. He executes a bill of sale for their $400,000 home, and they agree to sign it. He wants to screw Rick's wife in front of the entire family. It is a tough decision, but the child is almost dead from exposure. They reluctantly and tearfully agree. Then, he wants to sodomize Rick. And rape the child. So their choice is death or utter humiliation, at a cost to Ricky of literally nothing. (He doesnt pay by the cup-full for his wanter, nor does his property taxes go up or down).

Well, hell, if they agree, then there's no breach of ethics here, right? Rick has the demand, Ricky the supply, and no one is being forced into anything, right? Are you so myopic that you cant see something wrong with this picture?

Contrast it with Ricky offering the family food and shelter for $500.00 per night, to sleep on the floor, when the going hotel rate is abhout $100 per night, and charging them $20 for a phone call for a rescue. That's fine.

Post 21

Saturday, September 3, 2005 - 1:49pm

The point I'm arguing is that I do not believe Steven is correct in saying gouging is mythological. I believe it exists within the toolkit, and that true price gouging is always a poor business practice, for the reasons I stated.

The typical price gouger has a mindset, and his talk usually involves statements about sticking things up inside of people. He or she is undeveloped in business skills. Usually, this is accompanied by generally poor ethical practices, but it does not have to be. You can gouge out of ignorance too, but with thirty years in business I find it less common. I will admit that that latter category is the one that scares me the most, because they are more volatile, and tend to cause collateral damage to whatever market they're operating in.

Post 22

Saturday, September 3, 2005 - 2:07pm

Pasotto has been a voice of reason here, to the rest of you, I suggest Economics in One Lesson by Henry Hazlitt.

And believe me, I never, ever, expected to have to say this to a crowd of Objectivists. Shame on you.

As a postscript, If I was fleeing New Orleans, I cannot tell you how happy I would be to see a gas station posting outrageous prices like $6 a gallon, that would mean there is a chance they would actually still have some gas left for me, as opposed to the case where they are letting it gor for $2 where there likely wouldn't be any left and my family would be stuck in the middle of the road. Good for them, they may not be objectivists, but atleast they have some business sense.

Post 23

Saturday, September 3, 2005 - 2:10pm

Scott, you still haven't understood what I wrote.

Your response is all about ethics, right and wrong.

I wrote nothing about that.

Do try to pay attention.

"Price gouging" is a moral (or perhaps emotional) evaluation. It is not a description of reality.

"Price gouging" is simply a way to say that you believe the price is excessively high. In your opinion. On your value scale.

There is no such thing as intrinsic value. "Price gouging" is not an identification of reality.

Post 24

Saturday, September 3, 2005 - 2:19pm

Well, Scott, despite your defense of me during the me v. MSK debate in my last article, we find ourselves oppose.

The idea of price-gouging is, indeed, a myth. Here's the concept, laid bare: "There are certain prices that are just too high to 'justify', someone is 'ripping off' people in bad situations and making 'too much' profit."

Alright, Scott, you tell me...let's say you would call $20 a gallon for gas gouging. Is 19.50?, 18.50? 11.00? No one knows, precisely because it is an anti-concept. To raise the price higher than the market will bear and to be dishonest, as M. Engle alluded to, is indeed bad business. But it's not price-gouging, because no such definition exists in reality.

M. Pasotto and M. Erica have it right...if the first few insulin shots went for 10 grand a piece, then I and thousands of others, attempting to get the same price per shot, would flood the market, driving up supply and lowering demand, along with the price. Furthermore, that 10 grand is worth it if I have the money and not the insulin. I would thank Galt that that individual brought me something to save my life. And if the price were so high no one could buy it, then the seller would be forced to lower it. Additionally, the idea that there is some moral "price cap" is just, to put it bluntly, dumb. It's that individual's initiative, their property, and their understanding of the circumstances that make them morally in the right to charge what they will.

A classic example exists right here on SOLO. M. Perigo et. al. sell a certain "brand" of life-nourishing philosophy. However, that brand can come with a high price: having one's core assumptions challenged and even being personally insulted at times. Those of us willing to pay the cost, because we recognize that something so great as SOLO is so rare, pay it gladly. Others have moved on. Objectivist cultures such as this one are almost nonexistent (much like insulin in a crisis), so I pay the high price of having my sensibilities burned once in a while. If Linz raised the cost too high (i.e., became too incendiary and exceptionally tyrannical) I would leave, because it's not worth it.

Post 25

Saturday, September 3, 2005 - 2:31pm

Scott,

Ricky has placed Rick and his family in a life-boat scenario.

They should deceive him so he thinks they are going along with his demands, whack him over the head with something, tie him up, take the food and water, and leave a $20 on the dresser.

Jon

Post 26

Saturday, September 3, 2005 - 2:49pm

   The only price gouging apparently going on is being done by the local, state, and federal governments where taxpayers have been forced to overpay for falsely "advertised for" services.  At least in the cases of those who choose to pay high prices for the gas, water, or transportation offered by "evil price gougers" under emergency circumstances, delivery usually takes place.
   In New Orleans, however, "delivery" has not taken place in time for many unfortunates. To make matters worse, many of those who realized they had made a mistake by waiting for delivery of promised services (at the Convention Center, freeway ramps, and Superdome for example) also had their civil rights violated by being prevented by police checkpoints from departing those hell-holes in order to make their own way to safety and shelter. Though not intentional, the effect of such action was to transform these areas into "concentration camps", where the "prisoners" were being "guarded" by armed national guardsmen and local police (their supposed "rescuers").
    The focus of the national guard and police on "restoring order", "controlling" the situation, "taking back" the streets from looters and thugs, and "protecting" the refugees from violence. Instead of dying from violence, TV viewers were treated to a surreal situation where the weakest and most vulnerable perished patiently, obediently, and in an orderly, quiet, but undignified way. If makes my blood boil with anger. I wonder if I'm alone.

Post 27

Saturday, September 3, 2005 - 2:57pm

MSK on post #9 and Jon are correct. It's a matter of degree. Price gouging is thought of as taking advantage of a large number of people, not just one family.

'Depraved indifference' is a valid reason for legal prosecution, IMO. Only sociopaths would behave as Scott describes.

Sam

Post 28

Saturday, September 3, 2005 - 3:19pm

Much of this is about when you catch someone. After an hour of watching the news, I get sensitive and upset, too. Another time, or on another day and all I can think about is how my portfolio should be positioned Tuesday morning.

What Scott is really trying to get at, I agree with. And Steven�s article is good and correct.

Jon

Post 29

Saturday, September 3, 2005 - 3:31pm

Steve:

Shame on you not not really reading the posts. We would all be pleased to pay the $6 per gallon. No one is saying any different.

Post 30

Saturday, September 3, 2005 - 3:31pm

Steven,
Excellent article by the way. The whole concept of "price-gouging" is absurd. Accepting it leads down the non-sequitur path of having to admit that anyone who bought a house recently or paid $400 for a share of Yahoo in 2000, etc..., etc... was "gouged". -Steve

Post 31

Saturday, September 3, 2005 - 3:35pm

There is behavior that runs afoul of the virtue of benevolence, period. Either benevolence is a virtue (value), or it isn't. Which is it?

Post 32

Saturday, September 3, 2005 - 4:05pm

Rick might also consider pulling Ricky�s pants down, smearing peanut butter about his genitals, and leaving the front door open. The coyotes will come in and, well, you get the picture.

Post 33

Saturday, September 3, 2005 - 4:34pm

Many great points have been made. My 2 cents:

The Background

For beings that have the choice to become happy: what's rational is moral, and what's moral is rational.

5 Principles

1. Thou shalt trade to thy benefit (both the producers of value, and the "consumers" of value)

2. Whosoever chargeth irrationally high prices will eventually be dealt with -- by an "invisible hand"

3. Those who findeth themselves in life-boats, shall not only taketh needed steps to get out their predicament, but shalt learn how to become so productive as to not get caught in such a crisis again

4. Everybody owns themselves, but has no moral claim to the wealth or ability of others

5. Producers who plan to hike prices, if they are to remain in the realm of the rational (the only place where they can succeed), shall taketh into account that reputation rules a free market, and reputation always outlasts transient, windfall profits

An exceptional context

An isolated man, about to die (if he doesn't receive your product), is not a normal case of a market economy. The price picked by the producer (in order to save this man's life) ought to be a price that the producer can happily live with -- and HAS to be the price that the dying man must live with. The key word is "happily" (because folks have a moral obligation to make themselves happy).

IF the producer picks a price so high that he has lost his own self-respect (or makes a vengeful enemy out of his "customer", or out of any onlookers' keen eyes) then his picked price was irrational, and it will be impossible for him to thus discharge his moral obligation to himself to make himself happy.

He has 2-3 possible fates (2 living fates; one death)

-he will be forced to live without loving himself (because you cannot love that which you do not respect)
-or he will be forced to die, with his neck in the hands of the vengeful man whom he had saved, but at some unjustifiably callous cost
-or he will suffer because those who've witnessed his unjustifiable callousness toward the dying man, will not only choose not to ever trade value with him again, but they will create a "reputation" for him (to harm his ability to trade with others not immediately involved), whether he likes it or not

Ed

(Edited by Ed Thompson
on 9/03, 4:37pm)

Post 34

Saturday, September 3, 2005 - 4:41pm

I'm having a weird SOLO moment here. I find myself agreeing with people I usually disagree with and vice versa.

Price gouging is an anti-concept because it's designed to foreclose thinking. It's based on the ages-old fallacy that everything has a "fair" price (the basis of medieval anti-usury laws and the like). There is no such thing as a "fair" price because nothing has a price outside of a market. Markets, not moralists, determine prices (and profits). Sometimes the market allows for a high profit, and sometimes it allows for a small profit, and sometimes it allows for nothing but a loss.

The scenario Scott D. proposed is a non-market scenario. The people with the sick child have no alternative but to deal with the psycho; there's no market to set a price on what the psycho has to offer. Assuming all the circumstances Scott described, I agree that what the psycho is doing is immoral. He's basically holding a gun to the kid's head in order to get a ton of loot and his rocks off. The parents are justified in taking what they need from him by force.

If you want to call what the psycho is doing "price gouging," then I guess price gouging exists. But IMO it doesn't make sense to call this price gouging, any more than it would make sense to call it "Capitalism" or "Exploitation of the Worker." Calling it price gouging is like responding to the argument that there's no such thing as ghosts by claiming that there are ghosts because my memory of my dead father is a "ghost."

Post 35

Saturday, September 3, 2005 - 4:44pm

I think one thing to do at this point would be to step back and let those who are using the term "price gouging" as if it has a realistic meaning put their heads together and come up with a definition of the term. Any takers from those of you who think it exists and that it is wrong?

Post 36

Saturday, September 3, 2005 - 4:53pm

Great article, Steven. Excellent commentary, Ed.

Post 37

Saturday, September 3, 2005 - 5:12pm

Thanks for the acknowledgment, Bob!

And ... back atcha'!:
You're a great guy, and you have a great talent in finding ways (usually through comics) to:

-make discussions more enjoyable
-and often -- through antics! -- even make discussion more directed toward progress

In short, it is such a treat to intermingle with you! Please, for your life and love of it, keep up the benevolent antics. Now, is that too much (pun intended) to ask?

Ed

Post 38

Saturday, September 3, 2005 - 5:16pm

Would like to know how you paste like that, tho - I right click and copy, but then in posting, am unable to paste - that is not available for use... no problem on emails and such, just in this here posting...

Post 39

Saturday, September 3, 2005 - 5:35pm