Hurricane Matthew’s March along the Florida coast is the latest crisis to prompt reports of price gouging.
What’s so bad about price gouging? Americans accept it when they pay for Uber, and increasingly, when they buy tickets for sporting events. That’s called demand or surge pricing. Restaurants, hotels, airlines and other merchants have long adjusted prices based on supply and demand. So why shouldn’t gas station owners be able to do the same, now that their supply is scarce and demand is high?
Every crisis brings out the commentators, regulators and elected officials who criticize select merchants. The purported difference, we are lectured, is “need.” As if someone’s declaration of “need” is an article of faith not to be questioned but to be blindly obeyed.
The flip side of the argument is ignored. Is someone else obligated to provide goods or services for free? Is some supposedly neutral government watchdog more able – or more morally fit – to declare what’s a “fair” price?
The strongest deterrent to price gouging is the reputational risk a merchant would suffer with customers. Customers will, given a choice, avoid merchants with bad customer service or spotty products. Just look at how Chipotle’s sales have fallen this year.
But no one bothers to explain the strongest benefit. In times of need, allowing merchants to charge more will bring more competitors in. The result is unavoidable: people needing hotel rooms, food and gas will be able to find it — they’ll just have to pay more. But there’s no free lunch and nobody’s entitled to get stuff at a discount just because there’s an emergency.
That won’t play well with politicians who get elected by paying Paul after robbing Peter, nor with the segment of our indulgent population used to getting what they want for free.
But if I’m an enterprising gas station owner and I’m told I can’t raise my prices during a storm, maybe I think that my narrow profit margin isn’t worth staying open. Maybe I spend more time with my family instead. Maybe I say, “the hell with it.”
And guess what? You’ll have the needy running out of gas in the middle of the highway. But price gouging isn’t about the victims. It’s about the latest excuse to make business, any business, look evil.
And the Left, ever on the march, never misses an opportunity to exploit “the people” in times of crisis.