Cliff Witchalls on The Price of Everything

Clearly, price-gouging is a very emotive issue, and one that economic models can’t rationalise away.

Rationalizing away passions can be difficult.

What he's saying is that passion often trumps reason. However, this is especially true if no reason is offered.

"Price gouging" is an emotive phrase and people like to bring it up when they find a price too high. They don't consider the alternative.

I've removed a comment on this post purporting to be from a famous economist. It did not match the correct email address for that person so I do not think the famous economist actually wrote it. If I can verify it was written by that person, I'll put it back.

I was thinking about opposition to "price gouging" a couple of days ago, and wrote about its similarities with opposition to organ markets.

The objection against "price gouging" seems to take on a similar form to the objection against selling organs, that is, the more desperately someone needs a good or service, the less they should be expected to pay. Organ transplants are often a matter of life and death, and therefore, the recipient should not be expected to pay anything.

What is interesting is the popularity of legislation which forces this upon the unwilling, both potential sellers and buyers. More colloquially, the objection is phrased in the context of taking advantage of another’s misfortune, which third-parties wish to prevent even if it worsens the misfortune. Giving, rather than selling, is valued so highly that selling is actually prohibited, presumably to stop the insufficiently compassionate from deriving a benefit.

Price gouging laws politicians pass come at a price. These laws ring well to the ear and to constituents; but these laws carry a price that create shortages, long lines, and more attitudes that services and goods are rights.

that is, the more desperately someone needs a good or service, the less they should be expected to pay.

In other words, "for each according to his needs."

I know I've heard that somewhere. Where?

I'm not sure exactly what this reviewer is getting at when he recites Russ' "pro-gouging" arguments, then says, "However, price gouging is illegal," as if Russ didn't know that.

Yes, it's illegal, but Russ is arguing that it shouldn't be. Just because people get emotional about it doesn't mean we should cater to their economically-illiterate whims, does it?

How timely. I'm sitting here in Atlanta with my eye fixed on my gas gauge. Georgia's governor enacted a price gouging executive order about 2.5 weeks ago. I've not seen gas available at my nearby stations since then.

And yet, when I talk to friends, co-workers, and neighbors about how these long lines and widespread outages are mostly caused by the governor's price controls, I'm amazed at the blank stares that I get in return. The concept is so foreign to people -- even to those I consider much much smarter than I am.

To me, the market price for gasoline during an emergency is no different than the price of a stick of gum. If I want gum on the shelf and gas in the tank, the price should be left alone.

Sadly, I often feel the same as if I were the only person on the planet embracing the Copernican model. (Thank goodness for EconTalk!)