Rebirth of Reason

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Post 220

Wednesday, September 7, 2005 - 8:16amSanction this postReply
MSK, I defined "price gouging" quite early in the thread. The post was #23.

Post 221

Wednesday, September 7, 2005 - 8:40amSanction this postReply
Oh my - a person 'belonging' to someone else? - how provincial, and how very non-objectivist... [d'you get a bill of sale with it?]

Individualists stand - and fall - on their own... they don't need 'ownership' for substance...

Post 222

Wednesday, September 7, 2005 - 9:52amSanction this postReply
OK Rick,

Let's repeat it.
"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.
You state a few evaluations on it and state what you think it is not. Sorry, this is not a definition. That's precisely what everybody else has been doing with a whole lot more bombast.

Shit. Nobody will do it, not even the author of the article, so I will. A Google search is the easiest thing in the world - even easier than driving to a public library:


One definition:
The term price gouging refers to the phenomenon of sharply rising prices of items in (often temporary) high demand.

One knuckleheaded Florida statute:
It starts thus:
501.160 Rental or sale of essential commodities during a declared state of emergency; prohibition against unconscionable prices.--
No specific definition is given, but "unconscionable prices" and "emergency" are essential components. Also, an arbitrary time frame to ascertain an average price preceding a sharp price increase is stipulated.

You can have a ball with this one talking about gas stations:
"It's a very loaded term," said AAA's Comey. "The actual definition is determined by state governments, who define what taking 'unfair advantage' of a crisis is. Attorneys General monitor these situations closely."
Gouging is distinct, by definition, from price fixing, which is the collusion of multiple gas stations to set prices. Gouging is the act of an individual station taking advantage of supply problems (and even perceived supply problems).

OK. Now we have a repetition of emergency (the word used is "crisis"), "unfair advantage," "supply problems" and individual action as opposed to collusion.

Can anybody see where this is leading? It is arriving at the essentials of a definition.

Here is an excellent definition with a built-in contradiction:
Noun 1. price gouging - pricing above the market when no alternative retailer is available.

(How can there be a competitive market when there is no alternative retailer? LOLOL... Still, there is an interesting essential here for those interested in thinking about it.)

Illinois adds its two cents:
... in 2002 Indiana promulgated a new statute that is triggered when the Governor declares a “State of Disaster Emergency” or a “State Energy Emergency.” It allows the Attorney General to investigate and pursue allegations of price gouging. The gasoline price gouging statute requires the Indiana Attorney General to consider pricing which grossly exceeds the average price at which gasoline was available for a retail market during the seven days preceding a declaration of emergency. The gasoline price gouging statute also requires that the increase in price is not attributable to reasonable market forces.
Whatever definition of gouging is ultimately used to identify illegal pricing, it must be grounded in the state’s existing body of law and it must not interfere with interstate commerce which is the purview of the federal government. Moreover, like the Indiana law it must acknowledge that price volatility is sometimes attributable to reasonable market forces and it must lay out a means of differentiating between market factors affecting price and blatant opportunism or profiteering. Given the complexity of factors affecting the price of oil and gasoline this is not a straightforward task.

Now we have "declaration of an emergency" by a government authority and a time frame before such declaration to ascertain a good that is "available for a retail market."

I mentioned the connotation of force in another post on this thread.
The term connotes the use of force by a seller, but force is not present without thugs. So in that respect, it is an anti-concept and you are correct. It connotes one thing (thugs or some unsavory threat of violence present) but is another in fact (simply higher prices).

Where the term is used in emergencies, the force of thugs has been substituted by the force of a suddenly hostile environment. That force is real, no longer implied. I happen to agree with Adam Reed about emergency situations. In my own words, a person who uses the force of a suddenly hostile environment to set an impossibly high price is gouging. That would be one example you keep asking for under Objective reasoning. To be clear, the seller is not using force generated by himself - but he is using force by "borrowing" it from a life-or-death environment.

I could go on, but I am tired of doing this basic research, which should have been done at the outset. I think price gouging is a stupid concept to base laws on. That does not mean that the concept does not exist.

Saying that it does not exist is precisely what plays into the hands of the enemy. Ostrich thinking.

The definition needs to be ascertained precisely and dissected point by point to refute it. Not simply butcher a vague idea. That does nothing but display a Tarzan holler.

I repeat, parroting Rand to strike down straw-men is easy as pie, but it is a completely useless form of rhetoric. Issues need to be discussed according to essentials, starting with a definition. Simply making straw-men out of posters who clearly hold other ideas adds blatant dishonesty to this way of arguing.

Anybody want to try to distill a definition from all this? There's more stuff out there if anybody really wants to research and discuss this particular issue instead of striking Randian poses trying to defeat the "Mr. Thompsons" they feel that infest Solo. I think all the essentials are given above already.


(Edited by Michael Stuart Kelly on 9/07, 10:01am)

Post 223

Wednesday, September 7, 2005 - 10:15amSanction this postReply
Sounds a lot like Marx's definition of exploitation of the prolitariet.

Supply and demand predates Rand. The price mechanism works like that for a reason.

Simple arguement, no Rand nescessary (though I could think of half a dozen examples I could use).

Just an observation.


Post 224

Wednesday, September 7, 2005 - 1:54pmSanction this postReply

Maybe the problem with the term is that the common street definition has overcome the technical one. The one you give is valid, it is  looked at as a statistical phenomena.

I go with the word origin, myself. Gouging means sticking someone. Gouging is a thrust, it is very seldom used in a retreat, but can be.

I view price gouging as an attempt to do something that doesn't make sense to do. It is coming out of the blocks too early, with the wrong message.

Actually, it's pretty funny if you take this down to word origin, as many of my Objectivist brethren enjoy doing in the thick of debate. Nothing like a good drilldown.

Drilldown is right, I suppose... Because gouge leads you to rout. In the end, it amounts to a pig sticking its snout into something and rustling about for food.

I agree with that depiction, on the whole.

Always about mentoring.

(Edited by Rich Engle on 9/07, 2:34pm)

Post 225

Thursday, September 8, 2005 - 9:57amSanction this postReply
An example of public perception versus reality:   Since Oil prices reached $71 a barrel the day after hurricane Katrina, oil has declined a whopping 10% to $64 over the past ten days.  So much for the myth of those oil companies raking in the profits as a result of a natural disaster to the detriment of a "price gouged" public.   

Post 226

Thursday, September 8, 2005 - 10:41amSanction this postReply

Not much reporting on the drop?

Wait ‘till it goes up again, though. “Oil up again!”

Then down, silence.

Then up a little, “Oil still climbing.”

Then down somewhat, silence.

Then up, “Public frightened with another jump in oil!”

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Post 227

Thursday, September 8, 2005 - 11:26amSanction this postReply
Yes, as someone once said or should have said, a figment of the imagination is just that: a figment of the imagination.
It is only a figment when someone defines something that is not price gouging  as price gouging. It is common term, hence it is a wide one.

There are business people that embrace gouging as an acceptable tool. They have a defined technique, and they often refer to it as price gouging. They're often proud to gouge, unlike the pig, who simply routs around because that it what it knows how to do. Sometimes, they are ashamed to do it, but they can't figure out a better way.   It is a flawed, malevolent concept, linked to other flawed, malevolent concepts, but they do not always know that. If they do, they deny and disown reality.

Reality is overrated in terms that it does not disallow the use of a faulty concept, or mindset. What happens after that, well, results may vary.

That is the nuts and bolts a specific contextual definition of price gouging, as understood by certain business people.

Figments of the imagination cause action in people as much or more than real thoughts can.

(Edited by Rich Engle on 9/08, 11:28am)

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Post 228

Sunday, October 16, 2005 - 7:55pmSanction this postReply
I came into this discussion rather late, which is why I am just now responding to Scott De Salvo's first reply (Post 1) of this thread. He wrote:

"There is something unsavory about kicking someone when they are down. And that is precisely what you do when you make outrageous demands of another man when you have something he must have.

"Why don't surgeons demand 20 million dollars per surgery when its a life threatening ailment in an emergency room, why dont they run a credit check on the sick person, and then gouge them so that they are penniless? Why not? The sick person has the demand for the surgery, the surgeon the supply." Etc.

Hi Scott! May I ask you a question? It's a rather simple question really. Is a person morally justified in refusing to work for others, if they need his services? Or do the needs of others confer a moral claim on his life, his time and his energy? If, as I think you would agree, he is morally justified in quitting his job or in refusing to offer his services for money, despite the fact that others may need them, then why isn't he morally justified in making his services available at an exorbitant price if he thinks that others will pay it? Making his services available at an exorbitant price is a better deal for consumers than not making his services available at all, wouldn't you agree? Well, if he is justified in not making them available at all, then surely he is justified in making them available at an exorbitant price. Conversely, if he is not justified in making them available at an exorbitant price, then he is even less justified in not making them available at all, in which case, he is a moral slave to the needs of others.

Let's assume, for the sake of argument, that he is indeed a moral slave to the needs of others - that he is ~not~ morally justified in refusing to perform a service for those who need it. In that case, what price is it moral for him to charge? And how does one determine what price that is? Under economic altruism, the standard cannot be supply and demand, because supply and demand depends on the profit motive; it depends on charging whatever price the market will bear. If the market will bear an exorbitant price, then that is the price dictated by the law of supply and demand.

Of course, an exorbitant price will bring an exorbitant profit, and exorbitant profits invite competition. Others will want a piece of the action, so they will underbid the "price gouger" in an effort to make a (slightly less) exorbitant profit for themselves. Even in the case of a one-horse town, suppliers will be lured from other towns by the scent of money, and will come galloping in as fast as their steads can carry them. As competition increases due to the increased supply being offered for sale, profit margins will decline to the point at which there is no longer an above-average rate of return. Consumers will wind up getting all they need at rock bottom prices.

But suppose that due to the morality of altruism, according to which the producer is the moral slave of the consumer, the supplier keeps his prices low even in the face of a scarce supply and a vastly increased demand. In that case, there will be no incentive to increase the supply as needed, and as a result many consumers won't receive the service, because there will be no extra profit to be had by transferring supplies from other locales where the demand for the services is less urgent. By sacrificing his profits to the needs of consumers, the altruistic business person indirectly and unintentionally sacrifices the needs of the very consumers that he or she is seeking to benefit.

You continue, "What about an ambulance...why dont the drivers stop at an accident scene and haggle with the family of the 11 year old who just got run over by a car, life drifting away, second by second? They have the supply, the boy's family the demand. It's all okay, right?"

Because that's not a profitable way to do business. People would already have purchased medical coverage, with the price determined by competitive bidding between medical providers. Very few people would be stupid enough to negotiate such services at the scene of the accident, especially if they knew that no ambulance would answer their call for help if they were not covered to begin with. People routinely purchase accident insurance, so that they are covered in such cases. They would purchase medical insurance for the same reason. A hospital is a business, not a charitable organization. It cannot be expected to offer free medical care to those who are unwilling or unable to pay for it. If a person is too poor to afford medical coverage of some kind, he can apply for charitable assistance from those who are willing to provide it. But he must earn even that by showing that he is not an irresponsible wastrel. He cannot demand that others take care of him, based solely on his need for such care.

You ask, "Why dont I just charter a large helicopter and offer to rescue those New Orleaners who can come up with the most impressive array of cash, jewelry and loot? Or I could go down there with insulin for the legions of diabetics and open up shop. Only $10,000 per shot, I don't care where you get the money."

If insulin were needed, such that people were willing to pay $10,000 for it (a price that is substantially above cost), don't you think other providers would see a profit opportunity in offering it for less? The reason people don't charge exorbitant prices is because they can't sell their products at those prices; others would underbid them. You are certainly free to charge $10,000, just as you are free not to offer insulin for sale at all. But in either case, you will be forgoing a profit opportunity if you do, so why would you?

You write, "This article makes me ashamed to be a SOLOist."

Really?! Then what in Galt's name are you doing on here? This is an Objectivist list. Steven's article was perfectly consistent both with the Objectivist ethics and the economics of laissez-faire capitalism.

- Bill

Post 229

Friday, July 12 - 8:03amSanction this postReply
I think spontaneous order is an interesting if not trivial idea. Central planning and conscious reform efforts by government have all sorts of shortcomings. And it is true that social institutions can be described as a spontaneous order just like biological evolution can. But it is extremely misleading to imagine that these processes are just processes, when in fact they (like biological institutions) are actually just chains of causation that are made up of individual instances, each one of which is often an instance of “constructivist rationalism” and not spontaneous order in my humble opinion.

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