September 07, 2005

In Defense Of Price Gouging

You know, this is where I get frustrated and start having that internal inclination to think that conservatism is just an idiot's game. Then I remember that there are perfectly intelligent people that hold conservative ideologies and I just disagree with their fundamental principles. Still John Stossel isn't exactly a nobody with a blog. He's not exactly the front line of the modern conservative movement but he's big enough to have name recognition, yet he writes an article defending price gouging. Jesse tears it down plenty well enough so that I don't really need to explain why Stossel's argument is absolute crap, but I will add one thing. Here's the definition of price gouging for the people that don't seem to know what it is:

price gouging

n : pricing above the market when no alternative retailer is available

The definition presupposes that the product is being artificially priced above the market as a means of screwing people that have no alternative. Honestly, this argument is just stupid and that's that. If this truly is what modern conservatism is all about, then modern conservatism is stupid as well.


Unknown said...

John Stossel is an idiot. His arguments are simplistic and glaringly oversimplified. He has just enough knowledge of economics to be truly dangerous. But his understanding is shallow.

It's like he read The Fountainhead when he was 16 and has been going off half-cocked ever since.

Noumena said...

Well, as near as I could tell, Stossel's argument was that price gouging is impossible -- hoarding critical supplies until they're in short supply and then jacking the price up 2000% is nothing more than a smart business move, not a display of a complete lack of compassion for one's fellow human beings.

As I was telling MosBen earlier today, my brother is an economics major at Pepperdine, a school associated with the Church of Christ which features such faculty members as Ken Starr. When I saw him and my mom on Mother's Day, he and I got into a large argument at lunch over welfare -- he argued that it wasn't 'efficient', as though economic efficiency were an end in itself. Stossel seems to make the same error here: the purpose of economics it to distribute goods and services, not make some people wealthy. Stossel's reference to Adam Smith in this regard is especially atrocious, as Smith's argument in the wealth of nations is that, except in extraordinary circumstances (such as a natural disaster which has basically done away with civil society), and with some mild government regulation to prevent opportunism and the gaming of the system by the rich and powerful, a free market is the most efficient way to pursue that end. Smith would most emphatically reject economic efficient as an end in itself.

MosBen said...

As my Law & Economics Prof pointed out today, lots of people throw around "efficiency" like its meaning is self-evident. An economy whose goal is to distribute the products equally among the people is performing indefficiently if the products get concentrated in a few hands. Welfare's only inefficient coming from a certain definition of what the economy's goal should be.