The day congress declares war on Iran, if you significantly raise fuel prices at your gas station but the wholesale supply hasn't changed, you're generally trying to take advantage of the consumer's fear.
We're for some reason cool with this in the financial markets, but for tangible consumer goods like food and fuel it's (rightly) considered predatory and criminally anti-social. Unchecked gouging can lead to real and dangerous social destabilization.
It is this attitude that creates these opportunities. If we collectively understood that allow "surge" pricing is the fastest way to respond to a spike in demand and to quickly return to a more normal market equilibrium we would have fewer and shorter situations like this.
There's a pretty prevalent model for Risk Communication that compares the actual hazard (how bad something will be if it happens) against a person's outrage (how bad a person thinks a thing will be).
When the prevalent authority communicates risk in a way that lowers a person's outrage too low you can get inaction (like a president saying "don't worry" or “I think that whole situation will start working out.")
When the prevalent authority communicates risk in a way that raises a person's outrage (like surprising a population who were told to ignore a situation by then banning travel, closing borders and telling people we don't have testing capacity) you can get very strong reactions.
It's good when outrage matches hazard, that's where we want to be. But when hazard is, say, in the middle, and outrage is raised above that, you can end up with people feeling like they desperately need things.
At this point, they throw whatever money they have to at the things in order to mitigate their perceived hazard, and that's where opportunists and gougers come in. These people aren't acting rationally (they're perceiving a higher hazard than is real) and are vulnerable to ignoring market conditions in that "a free market works when both parties have perfect knowledge" sort of way.
So understanding this, we take actions that kneecap the unrestricted free market, because it doesn't have compassion and we want to be compassionate toward our neighbors that got too freaked out for their own good.
No one should try and take advantage of a vulnerable party, and it's a good thing to have safeguards against that.
No thanks. I'd prefer inflicting a social cost to disincentivize the behavior in light of the taint on one's reputation for doing it.
You are choosing to create shortages and encourage irrational purchasing behavior because it is better to "inflict a social cost". I just don't understand that tradeoff.
What does end up happening is something (like a outbreak or natural disaster) causes a regional shortage of a good, which is often extended because there is no real incentive to divert goods to fill the shortage.
Today that if often mitigated because of large national companies like CVS, Walmart, Lowes, Home Dept, etc who will move their supplies around based on normal prices
But in some situations Mr. Bill that owns the local store may have an excess supply of Good X, and would be incentivized to move them to an area of shortage if the price was higher. With Price gouging laws he will not bother.
Further Increasing in prices also in some ways allows for people with the greatest NEED for the items to actually get them, and discouraging hoarding.
The other issue is people, like in the article, just buying up a bunch of stuff so that other people literally can only buy from the opportunist. Consider the battle for concert tickets, which the band might sell for $20 but a scalper would buy and try to resell for $100. Yes it’s technically possible, but it’s fine for a society to determine it’s better for everyone if you’re not allowed to take advantage of people’s needs or vulnerabilities like that (when it comes to health supplies, for example).
While I am sure there are opportunists as you call them, that is not the primary reason people are buying up the stocks of goods. Most people are not bulk buying with the intent on reselling.
>>Consider the battle for concert tickets, which the band might sell for $20 but a scalper would buy and try to resell for $100.
That is not what is happening right now, and personally i have no issues with scalpers but I am also anti-social and never attend events for which a scalper would be able profit from. The solution to scalping is not price gouging laws, but non-transferable tickets, or individually named tickets. Many events are already doing that because the practice of scalping hurts attendance and the fan base. No government intervention is needed to resolve that issue
>but it’s fine for a society to determine it’s better for everyone
This will be our deviation point in philosophy, I am an individualist, holding the individual rights are in fact more important thank what society determines to be "better"
