Price Gouging
Matt Zwolisnki defines price gouging as the act of increasing product prices, especially during times of emergencies. Many of the products during these times come at a triple price or even more. Most people consider price gouging to be immoral and that it should be considered an offense. Many states have gone ahead to banning the act leaving few states still practicing it. In a state like Texas, the governor made it clear that price gouging id illegal, and anyone found to be performing the act is therefore considered to have committed an offense. Price gouging is, therefore, important in curbing overspending, among other things that come up with disasters. There is usually demand in times of emergencies, like in the case of a hurricane or even earthquakes. This paper aims at explaining the different views on price gouging and how different people love or condemn the act.
Branham Culpepper explains that the first cases of price gouging started on the arrival of hurricane Harvey and Irma. During this period, the prices of different prices rose, making it difficult for people to afford some products. Although different people condemned the act of increasing prices on the product, especially when people need it, others argue that the act is a way of moving products to where they are needed, most calling it a natural mechanism (Culpepper, 2017). The Texas state, therefore, banned price-gouging because they thought that many people in need were getting exploited by individuals who wanted to double or more profit. According to the attorney general Ken Paxton, the hurricanes made a lot of people suffer as prices shot. He explains that he had received over 600 messages on price gouging and that even the price of bottled water increased during the disaster. Many people complained of the tripled prices of the low prices that are usually easily affordable. Many of the individuals during the hurricanes complained of increased prices in everything which raised the alarm in the entire state.
There is usually a high demand for many things in case of any natural disasters. Demands for basic needs usually come on the rise with necessities such as food, water, and even lodgings being on the highest since many of the houses and shops were destroyed. Many business people take advantage of the situation to make profits, which to some people, it is considered selfish and to their personal gains. Some people consider the act as unacceptable and that these are trying times where people should lower the prices so that those affected can have necessities. Culpepper explains that if some states impose anti-gouging laws, it may be advantageous because people may allocate to other means of buying goods such as the first-come, first-serve basis. He, however, says that the means may affect those who are greatly in need of some necessities since they may end up missing them (Culpepper, 2017). A higher price in times of emergencies also serves as a hindrance to increased demand and supply for buyers and sellers. Many people will, therefore, learn to use the little they have and also learn to save. Higher prices discourage excessive use of resources and assist individuals in learning to survive in difficult situations. For instance, if a family’s house is damaged, the higher prices in hotels and lodgings assist them in looking for other alternatives like staying at a relative or spending the night in the house if it is not badly damaged to avoid overcrowding in hotels. The increase in price for the hotels also assists people to stay in their houses and give more space for those who have no options. Price gouging also discourages hoarding. For instance, if a person expects to stay without water for a specific period of time, then they are encouraged to buy enough water that will sustain them during the whole period and the same time, buy the amount of water that they will need since the prices are up. The high prices assist them in buying only what they require so that each individual can get what they want. If the prices were lowered to normal, there might be wastage of some resources, and others may end up missing what they want most.
On the supply side, those who were able to stock necessities before the disaster are much safer and can be able to save a lot of things. Increasing prices shows that an individual is prepared, which may help them save a lot during difficult times. During emergencies, demand for many things becomes very crucial, and stores and inventories do not want to stock a lot of things that may not be bought. It is, therefore, necessary for these stores to increase their prices so that individuals can buy what they need. Suppliers also need to travel to disaster-stricken areas, which requires bravery and a lot of demand hence increasing the prices. Since supplies make dangerous trips to these areas and are usually unsure of their safety, they increase prices so that they can be able to look for a safe place in case their life is at risk. The money used for transport and storing different items for sale can be a lot, which requires price gouging so that suppliers can be on a safer side (Hill, 2017). Although the mentioned reasons for price gouging may make a lot of sense, there are several questions that have risen. For instance, what happens to those who totally cannot afford the higher prices? What will they do if they need the item or depend on it for their lives? Culpepper explains that there is usually a solution to such individuals. He goes further to say that there are many organizations that assist people with money problems during times of disasters. An organization such as the Red Cross, private enterprises dedicated to charitable organizations, among others, assists those that are unable to sustain themselves. Survivors of Katrina remember how companies like Walmart assisted those who were in dire need of necessities. Walmart assisted New Orleans to recover and rebuild. Several companies also came together in the crisis of Irma and Harvey, where they contributed a considerable amount, which assisted the victims. With each company vowing to contribute $1 million, the victims got assistance and could live better. Walmart, in particular, dedicated $30 million while other companies such as Airbnb, Verizon, and Delta also had their amount in the contributions. Companies have contributed to various resources allowing different people to get help. Price gouging, therefore, does not greatly affect people since there are many charity organizations in the country that come up to help individuals during times of crisis. These charitable organizations ensure that individuals get necessities despite their ability to pay for the high prices. Policymakers should, therefore, leave those who practice price gouging since those who cannot afford are usually catered for. No one can miss any necessity they can be given if they cannot afford to buy the expensive necessities (Hill, 2017).
Most economists think that price gouging can advantage communities during a calamity. They say that very high prices are market at work and complete the supply-demand action. Price gouging assists normal markets in performing better, as explained by Michael Salinger, a professor at Boston University. Economists do not like price gouging for certain reasons. Firstly, on the demand side, the laws that keep prices law will encourage many people to buy various things (Zwolinski, 2008). However, these laws can only benefit those who went to the stores earlier, and others who may be in need of certain products may end up missing. The laws may also encourage overbuying and misusing of different products. If prices don’t rise, individuals may buy a lot of things, some of which they may end up throwing. If prices shoot up, it will be easier for products to stay in stores, and those in need may be able to get them. Individuals may also buy what they need only for the purposes of saving. Price gouging, therefore, encourages consumers to be a little careful when purchasing the goods. Matt Zwolinski, on the other hand, argues that when prices go sky high in areas affected by a disaster, the areas that are not affected will be willing to supply different products. The suppliers are usually willing if prices are a little bit higher. When the prices remain relatively low, it will not attract suppliers to come and do their businesses. He argues that price gouging can actually be admirable from a moral perspective. It is how we perceive it that will make people love or discourage price gouging. Since people usually have divided opinions on price gouging, it may be difficult for all states to practice. Price gouging should, therefore, be encouraged since it boosts the economy and creates markets for different individuals. Since many people are needed for different necessities, it therefore essential to increase prices so that people can buy what they need and not overbuy or overuse things. Although the state of Texas has discouraged price gouging, Zwolinski says that prices going up can really assist many individuals in making profits and in saving. He says that price gouging assists in limiting wastage, and humans are able to use the items properly due to the high prices that the necessities come with. When individuals take price gouging as an opportunity for people to utilize what they have and to avoid wastage (Zwolinski, 2008). It also assists individuals to co-exist properly since people are able to get help from different charitable organizations. When a state gets stricken by a disaster, different individuals from areas that are not affected come with their products for sale, which creates an advantage for both the victims and the suppliers. If the prices are not high, it may be difficult for people from areas that are not affected to go and sell their products. If the prices are high, it will be easier for suppliers since they know they can earn an extra con. Price gouging can also help in revenue and improving an individual’s business because of the high prices it uses. Different people can be able to record profit during such times. Price gouging can, therefore, be taken as a positive thing since it assists both the suppliers and the victims. Price gouging, therefore, allocates goods and services in a way that suits humans because of the exchange method.
Some people argue that price gouging should be illegal since it deprives people of pleasure to have different things. According to marketplace article, prices should not rise because of an emergency since it is not a good way of doing business. Individuals should, therefore, sell their products at the normal price they use on a regular day. Some economists say that selling necessities, a normal price creates a good rapport between victims and suppliers. Many of the victims will find it easier to interact with the suppliers and consider them as friends compared to when they raise their prices. Price gouging, therefore, has different opinions when it comes to its ethical values. Different people have a different perspective, which has created a debate on whether it should be legal or illegal. Some studies argue that businesses should pay attention to core values. During a time of crisis, individuals should be able to create cohesiveness and be ready to assist those affected by a disaster. People should not use such times to grab or take advantage of the situation to exploit others. The study also says that individuals have to think beyond the law of supply and demand but through the rules of humanity. According to the research, price gouging should be illegal and that legal measures should be taken against those who are involved in the act (Zwolinski, 2009). Individuals involved in price gouging, on the other hand, say that they are trying to reduce the amount of wastage individuals may be involved in if they sell things at a lower price.
The state of Texas recently came up with different solutions that can help reduce price gouging. There are different ways in which individuals can report price gouging. The state of Texas has come out with several laws and different methods where an individual can report price gouging. The attorney general has the right to sue any person or business that engages in price gouging in case of any disaster. Whether natural or declared by the government, any disaster should not force an individual to buy things at higher costs. Although suppliers can increase their costs, they are not allowed to increase beyond the buyer’s ability since many people may suffer (Paxton, 2020). Texas, Deceptive Trade Practices-Consumer Protection Act, says that it is inappropriate for an individual to falsify or sell different products in a deceptive manner. The deceptive manner comes in the form of prices. The act states that individuals should not take advantage of such situations to manipulate people. For instance, selling or leasing fuel, medicine, food, among other necessities at a very high price, is a crime, and an individual can be prosecuted. They are demanding an excessive price for connection with the sale or lease of necessities such as food, medicine, water, among others.
In conclusion, price gouging has created a lot of debate on its morality. Different people argue on legality, while others say that it is an act that deprives people of their right to enjoy cheap services during times of crisis. Different individuals have mixed reactions on price gouging with some states such as Texas and South Carolina, making it illegal to increase prices during times of emergencies. Morality is, therefore, a thing that is in an individual’s mind and not society. If one feels that price gouging is good, it is, therefore, according to them to conclude whether they should sell their products at a higher or lower price. Different research shows that different individuals have a different perspective on price gouging. Zwolinski says that price gouging is effective since it assists individuals in managing their few things properly. Different individuals should, therefore, be prepared in times of disasters so that they can avoid overspending. Salinger explains that many people tend to overspend during times of crisis, making it more difficult for suppliers to cope up with the demands. It is, therefore, essential for individuals to be prepared in case of a disaster so that they can save their money. The government of Texas came up with laws that can help to reduce price gouging. Texas, Deceptive Trade Practices-Consumer Protection Act, explains how individuals should report any case that they feel they are getting overcharged.
References
Branham Culpepper. (2017). The Ethics of Price Gouging in a Natural Disaster. Retrieved April 17, 2020, from http://georgiapoliticalreview.com/the-ethics-of-price-gouging-in-a-natural-disaster/
Hill Adriene. (2017). Economists don’t think price gouging is a problem. But what about our social values?. Retrieved April 17, 2020, from https://www.marketplace.org/2017/09/01/why-economists-dont-think-price-gouging-problem/
Paxton Ken. (2020). How to Spot and Report Price Gouging. Retrieved April 17, 2020, from https://www.texasattorneygeneral.gov/consumer-protection/disaster-and-emergency-scams/how-spot-and-report-price-gouging
Zwolinski, M. (2008). The ethics of price gouging. Business Ethics Quarterly, 18(3), 347-378.
Zwolinski, M. (2009). Dialogue on Price Gouging: Price Gouging, Non-Worseness, and Distributive Justice. Business Ethics Quarterly, 19(2), 295-306.