Assessing Anti-Price-Gouging Statutes In The Wake of Hurricane Katrina:
Why They're Necessary in Emergencies, But Need to Be Rewritten
By ANITA RAMASASTRY
http://writ.news.findlaw.com/ramasastry/20050916.html
True price-gouging is very ugly: A fellow citizen jacks up prices to exploit fellow citizens' vulnerability - due to a natural disaster that has left them bereft of the necessities of life.
But allowing "price-gouging" does have some arguable benefits. For one thing, it will incentivize shopkeepers and homeowners to devote their back rooms and basements to stockpiling for a natural disaster - when they otherwise might not find it economical to do so. Knowing prices will go up in a disaster, incentivizes us to prepare by buying them at normal prices now.
For another thing, allowing "price-gouging" may prevent a run on stores when a disaster does occur. If prices stay low even in a disaster, then a store's neighbors may quickly buy it out - buying beyond their needs. And subsequent would-be store customers may find that, for them, necessities are not available at any price.
Moreover, allowing suppliers to charge high prices allows them to offset substantial costs, hazards or inconvenience to themselves. Some storekeepers will selflessly stay open, despite risk to themselves, out of loyalty to their customers or plain human decency. But human nature being what it is, others will need a financial incentive to do so.
For these reasons, many free market fans feel "price gouging" gets a bad rap (and should have a less pejorative name). In their view, such pricing practices are simply a system for quickly distributing scarce resources to those who need them most -- as evidenced by what they are willing to offer in exchange.
But when people are poor - as so many affected by Katrina were - ability to pay is a poor proxy for need. Those who cannot afford to pay inflated prices, may find themselves in desperate straits - without milk for babies, or the drinkable water, minimum food, or important medicine needed to stay alive. We have rightly decided, in our society, not to let people suffer this way. And in an emergency, those who are most vulnerable need to be priced in, not priced out. Otherwise, human suffering - as well as "looting" and panic - will ensue.
Access to money, too, can be affected by a hurricane: If ATMs are underwater, or electricity is down, it won't only be the poor who have limited cash. If health insurance companies can't be reached to confirm eligibility, few will have the cash on hand to pay for expensive and urgently needed prescription drugs.
On balance, then, price-gouging laws may serve an important public policy for a very limited period of time. But to make sure the benefits of such laws exceed their costs, we need to be clearer in defining "price-gouging" in our statutes - making clear that such laws apply only in very limited circumstances, during the aftermath of a natural disaster.
(It's important to note that generally, the most-affected residents of New Orleans did not own cars to flee Hurricane Katrina. Rather, they needed access to basic food and water in the days following the Hurricane. The rise in gas prices in states like California is a secondary effect of the Hurricane.)
)lone holdout to get with the program (here's the problem)
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The founders weren't poor men. I'd bet cash on the barrel that if Patrick Henry were alive today (if he wasn't in jail-sold up the river by his fellow citizens on a jury-for making MGs) he'd AT LEAST go get an FFL JUST to have a no cost transfer festival (ok, maybe he'd recoup the cost of the FFL, but maybe not, because he understood that a little sacrifice makes a patriot hardened and perma pissed at tyranny).