Here’s a letter to a new correspondent.
Mr. Dimopoulos:
Thanks for your email in response to a post in which I point out that persons who offer to sell nothing to natural-disaster victims are, economically speaking, “price gougers” no less than are the merchants who actually sell goods and services at unusually high prices.
You write: “Price gouging is the actual charging of unconscionably high prices…. People who don’t sell anything don’t charge those prices and aren’t guilty of price gouging.”
With respect, I disagree.
Suppose a hurricane hits New Orleans and, immediately afterwards, Alphonse (from Houston) drives into Mississippi and Alabama to buy tanks of propane and, upon hauling these tanks to New Orleans, sells them there at prices four times higher than before the hurricane. Gaston (also from Houston), in contrast to Alphonse, remains comfortably at home doing nothing but accusing Alphonse of “price gouging.”
If there’s a post-hurricane price of propane tanks high enough to induce Gaston also to drive to Mississippi and Alabama to purchase propane tanks, haul these to New Orleans, and sell them, then this reality proves that Gaston is an even ‘worse’ price-gouger than Alphonse. Gaston doesn’t exert the effort to supply desperate New Orleanians with propane only because the price of propane isn’t high enough for him to do so, although it is high enough to induce Alphonse to do so.
In other words, Gaston demands a higher price than does Alphonse to induce him to sell propane. And yet most people – likely including Gaston – pour scorn on Alphonse without putting any blame on Gaston, despite Alphonse’s willingness to sell propane at a price lower than Gaston would ask.
Of course, because Gaston sells nothing, he isn’t literally a “price gouger” as legislation defines this term. But this semantic distinction does nothing to justify the moral condemnation of Alphonse. If you insist on passing moral judgments based upon what people commercially choose to do and not to do, surely Gaston’s offense is worse than Alphonse’s.
Now you might wish to change the example by assuming that Gaston refuses to sell propane at a high price simply because he believes that doing so is immoral. You and Gaston are entitled to your values, but it remains true that Alphonse does far more than Gaston to relieve the hurricane-victims’ suffering.
I’d have more sympathy for the Gastons of the world if they expressed their disapproval of the Alphonses, not by pontificating against the Alphonses, but instead by themselves accumulating inventories of high-demand goods, hauling these to disaster areas, and either giving them away or selling them at prices close to the prices they paid for these goods. Such generous action would indeed be applause-worthy: it would help relieve human suffering by putting more goods into the hands of disaster victims and by lowering the prices that the Alphonses of the world can fetch for their goods.
I have little patience for individuals who reject economic reasoning in order to enjoy the cheap emotional thrill of expressing moral outrage at phenomena they don’t understand. When natural disasters strike, many innocent people are suddenly burdened with desperate material needs that can be met only by marshaling the cooperation of countless strangers.
It’s childish to insist that charitable impulses or public services should be sufficient to elicit the cooperation of enough strangers to relieve all of these burdens at no unusually high cost to the victims. We all wish it were so. But it isn’t. To then tar those individuals who actually do help to relieve burdens, if only at premium prices, with the label “price gougers” is as hypocritical as it is counterproductive.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
