RoR: Forum

Jay,
Post #138 is appreciated.
Thanks,
Glenn

Post 141

Tuesday, September 6, 2005 - 6:47am

Talk about emotions over reason, dropping context and not knowing your basic economics. "Price Gouging" does not exist, if people pay for something they must have thought it was worth it.

If you have $20K and the BMW dealer won't sell you a car, (even if you really need it-its an emergency, I have to get to work) he is not "price gouging."

If you own a gas station and your inventory costs $1 per gallon and the next shipment is going to cost $2 per gallon you have to raise prices now to have the money to pay for the inventory.

MSNBC was complaining about $10 for a bag of ice (he was favoring money over people, boo-hoo-hoo) Talk about dropping context, with no electric it wasn't being made or stored in N.O. so someone had to bring a heavy and easy to spoil product from some where else incurring more cost.

If man needs a moral code as a set of rules on what is right or wrong for him as a rational being, can society change it on whim because of an "emergency?"

Post 142

Tuesday, September 6, 2005 - 7:35am

I've been in the marketplace for a long damn time, and I take the common meaning of price gouging, which implies someone doing something they shouldn't. In capitalism, the moral why of that doesn't matter- they are doing something that is stupid. They are stupid. Price gouging is a conceptual tool used by certain people in business- it exists. When they think price gouging, they think fucking people over. That is not value-for-value exchange. Their actions are incongruent with reality, and, generally, that will limit their growth in business. Period. Price gouging is a mindset, it is a technique, and it is flawed. Price gouging is not about doing what must be done. It is about exploiting and pushing the parameters of all-the-market-can-bear thinking.

Scott and I have both distinguished how it is different (once you accept that it exists, that there literally people who go to market thinking price gouging) from maintaining healthy margins.

Is price gouging "immoral"? Whether it is willful or not does not concern me- it is stupid. That is why capitalism is so beautiful- it detects it.

Post 143

Tuesday, September 6, 2005 - 8:08am

Joe,

Not running away from you, said in the post that I wasn't looking to get into it.

That's right. My comment was snarky and unfair. I apologize.

Andy

Post 144

Tuesday, September 6, 2005 - 8:12am

Jody,

I agree with the heart of what you(pl) are saying, I HATE the very term 'price gouging', but let's not chase away another of our women!

Your gallantry serves you well.

Andy

Post 145

Tuesday, September 6, 2005 - 8:26am

Rich,

When they think price gouging, they think fucking people over.

This baffles me. In any transaction it takes two to tango. A buyer always has a choice not to buy. A seller's price is too high only when the buyer refuses to pay it. In a free market that rule applies whether the sun is shining or there's a storm brewing. It simply doesn't matter what the seller's attitude toward the buyer is. The idea that the fairness of a price depends upon the concern a seller has for a buyer's well-being is nuts.

Andy

Post 146

Tuesday, September 6, 2005 - 8:27am

I would like to caution people about associating and equating the concept of value in the context of this discussion only with the term "money". A businessman who stockpiles emergency supplies and who determines that an emergency will not require all of its use, has a surplus that could be directed towards assisting others. People can also represent value. A rational businessman might look at them as potential future customers, but even if one is not a businessman who thinks of people in these terms, I would say that it is indeed rational to give water, or food, or shelter to another human being who may be dying or at risk of dying of dehydration, or starvation, or exposure, rather than sell it, or auction it off to the highest bidder. In large societies most people are anonymous to one another, but the majority do produce more (thanks to division and specialization of labor) than what is required to support their existence, the excess contributing to a growing economy from which everyone benefits. Unless, as Rick says, you have prior negative knowledge of those in need of help, the lives you directly save as a result of the resources you provide freely are statistically likely to represent a value to you in the long term. Perhaps not directly, but probably indirectly. When people are dying, resources go to those who need it the most, not to the highest bidder. Auctioning water and provisions during emergencies for money may be appropriate in many instances, but no Objectivist may claim it is proper or moral in ALL emergency circumstances.

Post 147

Tuesday, September 6, 2005 - 9:22am

Steven,

Auctioning water and provisions during emergencies for money may be appropriate in many instances, but no Objectivist may claim it is proper or moral in ALL emergency circumstances.

I don't think anyone here has said it was. Charity is a virtue. It is not in conflict with self-interest and the pursuit of profit. An Objectivist is not homo economicus, that execrable (and mythical) being for whom all human interaction is reduced to a calculation of profit and loss. An Objectivist is not morally obligated to measure his rewards only in dollars and cents. He will often, probably usually, find reward in the exercise of virtue.

The objections many of us have voiced here to the sob sisters are two-fold. First, the free market as a practical matter is not only more efficient in serving the needs of those stricken by disaster, it is also more compassionate. Second, government restraint of the free market actually reduces the opportunities for the exercise of virtue in responding to the dire needs of people in distress.

Andy

Post 148

Tuesday, September 6, 2005 - 9:34am

Andy,

I am speaking more pragmatically here, not theoretically. Both hack and seasoned business people know what price gouging is. It is considered a technique, therefore, it freaking exists! What the seller thinks absolutely does matter! I don't understand how you think otherwise. How are negotiatiing strategies forumulated? They are conceptually driven, and that includes by weak concepts. You can gouge a person. I can go out there on the sales floor and do it right now. If gouging doesn't exist, does short-selling also not exist?

To say that gouging isn't real suggests that there is no mentality applied to negotiating strategies. And, if your ethics are in order, they will support why you don't price gouge. Price gouging (as it is commonly known to be, at street level) is first and foremost weak on a functional level. That is why it is also weak on a moral level, if in fact you believe in an objective morality.

Post 149

Tuesday, September 6, 2005 - 9:36am

Andy,

Capitalism is never fraud and is never the method of a criminal organization. ... Capitalism by its very nature cannot never be a method of criminals.

I just want to clarify something here. Are you saying that capitalism is never bad or people who use capitalism are never bad?

Sarah

Post 150

Tuesday, September 6, 2005 - 9:45am

Rich,
For clarification. Are you equating price gauging to those instances where a seller is aware of information not known to the buyer and exploits that lack of knowledge to his financial advantage knowing that if the buyer were privy to such information he would probably not pay as much? -Steve

Andy,

I agree with what you say.

Post 151

Tuesday, September 6, 2005 - 9:47am

Andy,

Yes, emergency situations can (and sometimes do) arise out of the operation of the natural, non-human world. If someone is already in the emergency situation of having to choose between saving his own life (or the life of his child etc) and saving the life of another, then he is not in the objectively criminal position of destroying civil order by choosing to place another person in an emergency situation. Your "example" breaks context in exactly this way.

Part of the difficulty Linz and others here have in understanding this point, comes from the fact that one of the functions of the market is to create an equilibrium price, which then applies equally to all buyers in the market. Many countries today have laws against "price discrimination," so most people do not even think of context-sensitive pricing as an option. But it is an option, and in near-emergency situations context-sensitive pricing is often more rational than charging the same price to everyone.

In near-emergency situations, such as medical services in an epidemic, or food and water in the midst of a flood, it is in the interest of the rational man to maximize his profit while also preserving the contextual preconditions of a civil society. So in the midst of an epidemic, it is rational for a physician to set her fee according to what each patient can pay without resorting to violence to get the money. That might mean charging a multi-millionnaire a million dollars for the same service that she will perform pro bono for a truly destitute patient. If she chose instead to charge a uniform price in spite of the near-emergency context, so that it became contextually rational and selfish for a patient who could not afford that price to obtain the money by looting or other violence, then the physician would become morally (and under objective law criminally) responsible for the consequences of the breakdown of civil order that will result from her making that choice.

In practice, laws against "price gouging" are a non-objective package-deal, outlawing both rational practice (such as context-sensitive pricing) and irrational practice (such as creating emergency situations that destroy the civil order) by the same stroke of legislative pen. You don't have to buy into the package-deal, and it is unfortunate that some participants in this discussion, who as Randians should know better than to lose track of context, are buying into the package deal on one side or the other.

(Edited by Adam Reed
on 9/06, 9:48am)

Post 152

Tuesday, September 6, 2005 - 10:00am

Apology accepted, Andy. I don't have a beef with your defenses, because, like I said, I am mixed on the subject and do believe that a legit businessman does not "owe" the victims anything.

Post 153

Tuesday, September 6, 2005 - 10:33am

Sarah,

Are you saying that capitalism is never bad ...

Never, because of capitalism's nature. It is an ethical system of trade that arises when a society operates upon the rule of law and embraces the trader principle. Coercion, fraud, cronyism, and caveat emptor are not manifestations of capitalism. They are the evil men do in any system of commerce. In capitalist societies these evils occur less because the rewards of honest trade reduce the incentives for corruption even for those inclined to be unethical.

... or people who use capitalism are never bad?

Sure, they are capitalists who are evil, but not because they are capitalists.

Andy

Post 154

Tuesday, September 6, 2005 - 10:45am

Rich,

I do not understand your association of short-selling with price-gouging. A short sale is perfectly legitimate. This statement is more troubling ...

What the seller thinks absolutely does matter! I don't understand how you think otherwise. How are negotiatiing strategies forumulated?

If you are saying what a seller thinks determines whether or not his asking price is price-gouging, you are making price-gouging a thought crime. That could make me liable as a seller to my buyer if I do not disclose all my thoughts behind my negotiation of price with him. So I would be in the ludicrous position as the seller having to make my business a completely open book to my buyers so that they could determine there is no evil intent behind the price I am asking, while they do not have to disclose anything to me.

I cannot imagine this is what you intend, but how can what a seller thinks matter unless that is to have consequences - for example, the ones I described?

Andy

Post 155

Tuesday, September 6, 2005 - 10:50am

Adam,

Thanks for the meaty response to my questions. I'm onboard with you as to how an Objectivist businessman would ethically conduct himself in an emergency, but I'm not sure how the law could objectively define a businessman's contribution to the breakdown of civil order as crime. I'm going to have to chew some more on your ideas.

Andy

Post 156

Tuesday, September 6, 2005 - 11:29am

I am surprised and dismayed that there are those on this board, such as Sarah and Kat, who seem to be Objectivists but have such little grasp of elementary economics. It is especially disheartening because one would expect them to have greater insight than all those people who have never even been exposed to objectivism.

There is a great amount of work to be done and it seems to be against insurmountable odds.

Sam

Post 157

Tuesday, September 6, 2005 - 11:56am

Steve, to answer your question...

Not necessarily, although the people that operate under those kinds of weak techniques certainly welcome incoming data. What they do with it is another matter. The technique they are considering is not unorthodox, it revolves around opportunism gone wrong. It does not allow for the creation of business relationships. That kind of thinking is short-term. Where it comes from does not make any matter, although usually it involves some philosophical flaw. It is cut and burn thinking. It is nomadic, it rejects the concept of having a need for ongoing fair trade in general. That kind of thing catches up to people, long term.

Bruce Lee defined luck this way: "Luck is when preparation meets opportunity."

True enough. The question is what is living in back of the preparation, and I believe that is a moral question, if you are looking at how you fit into everything.

Gouging is a technique, it is an old one. There are many old negotiating and business practices. The good ones flourish over the long haul, the bad ones die out. What that does not preclude is the constant reemergence of the bad ones. Again, that is why capitalism is so beautiful- in the end, it usually will take care of that, with no moralizing, no blame- it just eliminates, eventually, usually. It is nearly perfect.

Gouging is a willful practice, it means thinking that you can get something off that you normally couldn't over the long haul.

The current model we are talking about involves gas prices, and that is a bad one in that there is considerable political and economic complexity in play. But, behavior is behavior, and I trust capitalism. I also trust that people will remember. If you are in city "A" and there is one guy "gouging" (I know, it doesn't exist), meaning he sticks way out of the crowd, without any apparent reason, in the end, this is not going to be good for him. He was being greedy. Greed is irrational, because it involves thinking that you are entitled to something that, in the end, you are not.

(Edited by Rich Engle on 9/06, 11:58am)

Post 158

Tuesday, September 6, 2005 - 11:57am

Sam,

Are you saying that because of my single post in this thread or for some other reason?

Sarah

Post 159

Tuesday, September 6, 2005 - 12:18pm