Michael Giberson’s article "The Problem with Price Gouging Laws" made a couple of interesting points about the policy of price gouging, notably how it runs counter to the basic ideas of supply and demand running a capitalistic market. I find it interesting that so many politicians are against price-gouging when it can actually be good for their regions. It seems almost counterproductive to spend so much money on enforcing an economic method that brings less commerce to your region, especially when it could benefit the people that vote for you. There should at least be a politician with the nerve to tell sellers to price gauge and then ask companies to ship more goods to their region, thereby helping overall commerce far more than by initiating anti-price gauging laws. Furthermore Giberson’s use of the article as almost a position paper is done quite well, and it is probably my favorite article I have read so far due solely to the amount of information supporting price gauging he is able to cram into 6 pages (every possible counterargument, examples, etc.).
My first question concerns the legal idea of “price-gouging:” in a capitalist economy, isn’t the practice of price-gouging simply the reaction by producers to economic stimuli, and if so, why is it illegal in so many areas? In the example given in the first two pages of the article, it seemed like what Weigle had done was perfectly legal and necessary for their economic viability.
My second question is not entirely related to the article but related to the subject: would the government ever limit price gouging –due to consumer complaint - so much that it made a market unviable in normal circumstances? I am wondering solely because of what I see as questionable economic policy on the parts of most current government officials.
My third question is simply this: what is an example of price gouging that does not involve a national disaster or a state of emergency (or, why aren’t there examples of price gouging based on seasonal goods, such as lobster, apple cider, or strawberries in areas that are in normal economic circumstances?)
The ignorance of those who support price gouging is almost astounding. I honestly do not comprehend how any professional economist or government official would not want to support price gouging, for it is simply part of the entire structure of the supply and demand market. As Professor Rizzo outlined in class on Monday, if the supply and demand don’t find an equilibrium price in a market due to a price ceiling, then there will be a massive shortage of the necessary goods. Furthermore, as Giberson outlines on the second and third pages of the article, price gouging creates the incentive for people to bring additional goods to a market, helping to create a lower equilibrium price again, while price gouging doesn’t do nearly as much. I understand how infuriating it may be to see median prices for everyday goods rise sharply during a state of emergency, but at the same time, I think it is more harmful in the long-run to have price gouging than to have government interference in the markets to avoid price gouging.
PS I would like to note that the Critical Reading based on the letter to the Florida Ways and Means Committee was so appalling that it solidified my desire to move to Israel instead of staying in this horrid borderline-totalitarian society we now live in.
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