'Price gouging' in Florida - Thomas Sowell - [page]

Posted by khalling 13 years, 7 months ago to Economics
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Wanted to post this excellently written article by Dr. Sowell from 2004 in wake of outcries over price gauging in the wake of Sandy
SOURCE URL: http://townhall.com/columnists/thomassowell/2004/09/14/price_gouging_in_florida/page/full/


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  • Posted by ObjectiveAnalyst 13 years, 7 months ago
    Thank you khalling,
    The article is an oldie but a goodie! Thomas Sowell would make a great president, but he has too much sense to consider the job and he is getting to be a little long in the tooth… I highly recommend his book Basic Economics. Can you imagine a Sowell- Williams ticket? That would be a path to prosperity!
    Regards,
    O.A.
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    • Posted by 13 years, 7 months ago
      believe it or not, I am arguing on FB with normally rational thinking individuals who are "appalled" at the "bad karma" of those charging 3x for generators and $50 to go across the Brooklyn Bridge. Rationing is inefficient, a violation of property rights, increased destruction and possible death. OH-probable government graft
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      • Posted by ObjectiveAnalyst 13 years, 7 months ago
        I believe it. John Stossel did a show on it last night. Governor Christie of NJ was noted for warning people they will be prosecuted for gouging if caught in his state!
        Regards,
        O.A.
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        • Posted by 13 years, 7 months ago
          I do not know why everyone is so enamored with Christie. One good stand up to the teachers' union and everyone assumes he's on the right page. Remember-he was the first to endorse Romney. We'd better steel ourselves
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          • Posted by DGriffing 13 years, 7 months ago
            Governor Christie is addressing a major disaster emergency in his state on a similar scale (though not involving terrorism) as 9/11. Though not perfect he has shown courage and character. In major emergencies there is a potental break down of social norms similar to what happened during the Rodney King race riots in LA two decades ago. Strong leadership that Christie has shown can thwart this. I'd forgive Christie for not undersanding the fine economic points about the price system and "price gouging" but the mistake is common, even among those leaning toward free enterprise. In her "Ethics of emergencies" Rand wasn't opposed to different rules in emergencies, although this doesn't square with sound economic reasoning. So I wouldn't go too hard on Christie.
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            • Posted by 13 years, 7 months ago
              There needs to be strong incentive besides govt intervention to get supplies quickly where they're needed most. Christie is well aware of the threat of hurricane in his state. there is precedent. elevated prices in an emergency is NOT looting. price gouging laws are violations of property rights and their freedom to contract. This does not fall within the noise of emergency.
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              • Posted by DGriffing 13 years, 7 months ago
                The roads are blocked or flooded, electrical lines are down causing electrical danger, and fire has taken out 120 homes in Queens. The damage is greater than 9/11. Granted, the whole social structure that people depend on is far from that of the model of Galt's Gulch but people do depend on. People will die if steps aren't taken to set things right. If that's not an emergency in the real world, I can't think of what would be. I'm not in favor of anti-gouging laws because they won't solve the problem and they violation property rights. But the gouging issue is small potatoes compared to the size of the damage and the action needed for those areas hit by Sandy to recover. Private enterprise will need to do it. Government can't because its wrong and because its incapable. "Strong incentives" cannot be created artificially by government. There's been a lot of property and value loss that can't be erased by a magic wand.

                What I liked most about Christie was when he waved his hand at all of the damage and said "its only stuff that can be replaced" and went on to say that the real values were the families and human lives that weren't lost and that people could go on and rebuild. Its that kind of spirit and leadership that can help people overcome a disaster.
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                • Posted by 13 years, 7 months ago
                  I need to clarify my comment. I agree about the size of the emergency. I do not agree that anti gouging laws are small potatoes compared to the enormity of the emergency. I'm not focused so much on the fairness of the violation of property rights, although true, as much as the expediency of the private sector to help people. Anti gouging laws will waste police resources as well as have the unintended effect of slowing down getting things to people who need them most. that's important and will be hampered in NJ.
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                  • Posted by DGriffing 13 years, 7 months ago
                    I fully agree that anti-gouging laws are a violation or rights and economically work perversely, not to counter the effects of an emergency but to prolong it. We are both in the same choir singing or preaching to each other on that issue. But you gotta pick which battles you go "all-in" for. There are imperfect in pro-free enterprise politicians like Christie (who is probably the most pro capitalist politician that a state like New Jersey is likely to elect) versus total socialists like Obama. If we spend significant ammo (or capital) going after people like Christie we will be like a "Mexican firing squad" attacking those who are basically sympathetic to us on free enterprise and liberty. Christie or his allies can be more easily convinced that gouging laws are contrary to the principles of liberty than Obama or his allies can be convinced away from socialist statism. But I'll let you have the last word on this.
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                    • Posted by 13 years, 7 months ago
                      I'm just still shaking mad over the BAD Bush decisions that we're all heavily weighted under today. Being critical and vocal is important. but I don't want to leave the impression I would throw the baby out with the bathwater. Good comments. Thanks
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      • Posted by DGriffing 13 years, 7 months ago
        What Sowell says is completely true from an economic perspective. But this is an Ayn Rand site and I'd like to raise the topic Ayn Rand referred to in her article "The Ethics of Emergencies", which asserted a different set of rules for extreme situations. Rand's article implied that its not OK to try to extract the last ounce of advantage out of dire situations where people's lives are hanging by a thread. I see the point of this but where do you draw the line. It looks like you could use Rand's "emergencies" arguement to justify lots of government controls, like the prohibition of "price gouging" and then expand the definition of emergency to include about anything.
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        • Posted by 13 years, 7 months ago
          Interesting question. I disagree with your reading of this part of the Virtue of Selfishness, exactly, "different set of rules for extreme emergencies." Here is the key passage that demonstrates that Ayn Rand does NOT believe that different rules apply in emergencies.
          "The proper method of judging when or whether one should help another person is by reference to one's own rational self-interest and one's own hierarchy of values: the time, money or effort one gives or the risk one takes should be proportionate to the value of the person in relation to one's own happiness."
          Ayn Rand would not approach the question from the standpoint of "extracting the last ounce of advantage..."
          Rather, she would look at one's rational self interest as explained above.
          I do not see this is inconsistent with Sowell's article.


          "
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          • Posted by DGriffing 13 years, 7 months ago
            I disagree that this was the key passage to Rand's essay about emergencies because this applied generally altruism and helping others rather than to the specific topic of emergencies. In my judgement the key quote was:

            "It is important to differentiate between the rules of conduct in an emergency situation and the rules of conduct in the normal conditions of human existence. This does not mean a double standard of morality: the standard and the basic principles remain the same, but their application to either case requires precise definitions.

            An emergency is an unchosen, unexpected event, limited in time, that creates conditions under which human survival is impossible—such as a flood, an earthquake, a fire, a shipwreck. In an emergency situation, men's primary goal is to combat the disaster, escape the danger and restore normal conditions (to reach dry land, to put out the fire, etc.)." And continuing a paragraph later: "It is only in emergency situations that one should volunteer to help strangers, if it is in one's power. For instance, a man who values human life and is caught in a shipwreck, should help to save his fellow passengers (though not at the expense of his own life). But this does not mean that after they all reach shore, he should devote his efforts to saving his fellow passengers from poverty, ignorance, neurosis or whatever other troubles they might have. Nor does it mean that he should spend his life sailing the seven seas in search of shipwreck victims to save."

            This explicitly supports my claim that Rand treated emergencies as metaphysically different and applied different rules. But was her analysis valid? Life or death situations are almost always an emergency to those affected by them but they are a part of normal existence. Economic and societal processes involve everything whether its an emergency to some or just a normal part of living. I don't have an easy answer to difficult questions, and I'm not fully satisfied with Rand's answers either, though I'm sympathetic to both her and Sowell.
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            • Posted by $ jmlesniewski 13 years, 7 months ago
              The point Rand was making about emergency situations is that you don't make rules off of the exception and emergency situations are the exceptions. Thus, all morality should not be induced from emergency situations.

              Regardless, I think I can explain her point better. She stated, "a man who values human life and is caught in a shipwreck, should help to save his fellow passengers (though not at the expense of his own life)." If life is the standard of value, then it is moral to protect it. Decisions are always highly contextual, but in this case of a shipwreck (assuming it's not a prison ship), it makes sense to assume most of the passengers are generally good (as that holds statistically) and thus protect life by aiding them based on the principle of justice. In fact, if you disregarded the passengers' lives without knowledge of them being evil, then you'd be acting unjustly. I'd even argue with Rand's last parenthetical. If sometimes it makes sense to put your life in danger to protect a high value, in this unique emergency situation it could make sense to put your live in danger to save the value of innocent life.

              The above does not justify government control because that is still taking the choice away from the individual to decide whether life or those people are a value to him.
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              • Posted by DGriffing 13 years, 7 months ago
                But, in fact, she explicitly did make a different set of rules for emergencies, which are exceptional situations. That was the main point of her article. Granted, morality, in large, cannot be induced from exceptional emergency situations, but moral guidance is needed and especially so, when the going gets tough in emergency situations. And a moral code becomes quite brittle and open to attack if it has easy, normal situation boundaries around it.
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          • Posted by DGriffing 13 years, 7 months ago
            (Inner circle) Objectivist lecturers usually reject "lifeboat" emergency scenarios. Two or three decades ago I heard an revealing second-hand anecdote about just this. In a closed discussion, one of the grand poopah inner circle Objectivists was asked what would he do in the actual event of such a lifeboat scenario. He was silent but made the jesture of looking both ways suggesting that he was verifying that he wasn't being watched and then he made a heaving jesture to indicate throwing someone else overboard.

            About 18 years ago another well know Objectivest made a similar but light hearted point in a speech before a group of Objectivists in the SF Bay area about hiking in the forest with an acquaintance and coming across a hungry bear, upon which he took off his pack and put on a pair of running shoes. "You can't outrun a bear" said his fellow hiker, to which our Objectivist replied "I don't have to, I only need to outrun you".

            My point is that life is a struggle for existence and at times there really are situations that don't have good outcomes for everyone, and even leading Objectivists have sometimes acknowledged this. Its in situations like these (though not necessarily so dire) that practical rules of emergencies kick-in when its either a choice of whether you die or not, or whether you or someone else die at the expense of breaking some other rule for which amends can later be made.
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            • Posted by 13 years, 7 months ago
              DGriffing,
              Welcome to the Gulch.
              "It is on the ground of that generalized good will and respect for the value of human life that one helps strangers in an emergency—and only in an emergency." This quote is completely consistent with the one I chose before-except-the part following the dash.
              I believe, you could help a stranger asking directions on the sidewalk if you have time and because human life has value to you. However, it would be wrong to stop to help if you had more important goals to accomplish that would be compromised.
              I'm skeptical of your antidotes, they smack of cynicism which Rand would loathe. but it adds spice to the conversation.
              Here is my real life emergency example: UA Flight 93. 1. death within a period of time was certain without action. 2. chances of success by action were small, but better than nothing. 3. one minor factor may have also been, even more people outside the plane would die if they did not take action.

              Now, go comment on my posts regarding intellectual property and Rand. :)


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              • Posted by DGriffing 13 years, 7 months ago
                I totally admire what's alleged to have happened on UA93. I've always acted toward strangers assuming that human nature is good fundamentally and that generalized good will to others is moral and warranted.

                The first anecdote was second-hand but from a very close trusted but deceased friend. The second was what I and many other Bay Area Objectivists heard first hand. And most of them laughed. But then they were dominated by the Kelley side of the Kelley/Peikoff "Fact & Value"/"Truth & Toleration" split.

                In the years I've been associated with them I've compe to be unlike many Objectivists I've known as I've become less brittle and suspicious of others as being cyinical. I'm not even afraid of Objectivist humor: "How many Objectivists does it take to change a lightbulb?" ... "That's not funny." I can see irony and humor in life, even in my own situations.

                But there are dire situations in life when normal rules can be put on hold. In an emergency like a fire, I'd break into a place to save someone's life without first asking. If I was shipwrecked in a lifeboat, I'd trespass (even) if the land needed to save lives was marked "Private, No Trespassing". I wouldn't even feel the moral need to apologize because I'd be acting as any other moral and rational person would act. The crime of trespass is less important than the lives saved. Life as a rational being is my standard of value. I'm assuming you are rational and moral and consequently don't think we are significantly in disagreement. (I'm new to the site and haven't seen the intellectual property part of it.)
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  • Posted by XenokRoy 13 years, 7 months ago
    I do not think I have ever seen a Thomas Sowell article I did not like. May be one out there but I cant think of it. Thanks for the link
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