Is price gouging acceptable sometimes?

Tommy Tucker, WWL First News
Wednesday, September 13th

Tommy talks with Matt Zwolinski, the Director of the Center for Ethics, Economics, and Public Policy at the University of San Diego, about his case for why price gouging is okay.


Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

So hurricane Irma threatening. South Florida. A one way coach flight from Miami to Phoenix jumped in price from 547. Dollars and fifty cents. 23258. Dollars. And fifty cents in Houston picture of a case of water sold. For 42 dollars and 96 cents at best buy but best buy later apologized said it was a big mistake. 8000 complaints of Bryan Price gouging have been law and I believe we have a law against that in Louisiana as do some 33 other states. But some economists are saying you know what that's not necessarily a bad things and in a bad thing and it's not just in terms of supply and demand but in terms of actually helping people mad Smolinski joins us right now director of the center for ethics economics and public policy. And the University of San Diego good morning Matt. More are are you in San Diego now. Well thanks for getting up early fours tell me. About the paper that you wrote the ethics of price gouging. Yet so this statement was. An examination from a moral ethical perspective of the practice. That commonly referred to the right direction which is a wave referring to. Raising prices aren't certain kinds of goods usually the way. Some kind of emergency situation where the client that whose views are usually lower demand. And equities. Exceptionally. And what are argued that paper was that at least in some circumstances. Price gouging can beat any morally defensible practice. And outlawed against Christ candidate like the one have a museum there which is actually one of the strictest laws against Greg I think in the country. On can actually cause more harm than good and help hurting the people trying to help. People letter hearing this right now that have been through storms and evacuations are saying I don't know who that is from San Diego buddies out of his mind. And I mean that negatively Matt I'm just saying that I think if they read your paper so explain how morally it could help people vote. It and I'm presuming antibody every commodity but if something's. As the market where that was allowed to dictate. The prices on some things that is now viewed as price gouging ranked. Yet that's rate and so. You are in the wake of the disaster. Your life or work or poor for a year or current movie rentals but on goods that are related. Some way to coping with disaster bottled water generators to Africa. The boos. Are covered by the anti gouging statute that prohibits certain and great increases. Look I mean if you wanted to know why anybody close to and such a practice. Without being completely heartless. The fundamental fact that at the start with is scarce. In the wake of disasters is simply not enough to go around in order to meet people who meets. And so the question you have to deal with this is what is the pastor at least the least bad method for dealing with that scarce. In other words pro rationing these skiers resources. That they get into the hands of the people need to mode. I hope pride getting your potentially using. Market prices to ration resource is irrationality well I say. It's important that ought to be separate note to deal and it is in terms result in two separate Koppel first. Raising prices encourages people to cut back on the consumption could they don't need. And their by the state more than it is for other try to help people picture of the people on the Internet. Acting with pallets of water we in anticipation of these future. They wouldn't do that it is the price of that water adding creeks are addicted to because water chi. And the result of that stock up on that water was another picture that we saw a lot of you know which show. So in essence it first come first serve survival of the fittest or those that had the most resources. That's why one person got eight album because they can forum. As opposed to if it was more expensive then they'd only take the wondered do they need leaving more for somebody else. Again the fundamental fact this scarcity is not going to be up to program people's needs to the question is do you rational that they could get. Or you wrap on the basis of who will depend more on the presumption that people were willing to resource all we need more. The first problem yet to deal with the type of action existing supply most efficiently. The second problem at the deal with there's how to make that acquired by fear level apparently encouraged people. To bring more that applied to market so. If you live in the city you're buying one that's been. Been affected by disasters you've got app that bottle of water except electrical generators what's gonna encourage you to bring those resources would do well. To where there's needed more to the more people would be better off and the argument is that's what high prices do. I think he's done that real quickly in the wake of Katrina right he had contractors electricians plumbers roofers flooding into the state. To help people rebuild their homes that's some of those people did that are purely humanitarian reasons. But a lot of them were drawn there because they view it muddies. In app market. That's what prices dipped so low. If money when we talk about over socking him for a second if they have. Is a I don't know Home Depot has a lot of hurricane shutters sign up they make them or not but. In in Phoenix and they noted saying and that's a bad example that's a last minute thing that would do you couldn't really do that but. Anyway about water company oh Zarko wherever they are. Has a bunch of water and seeing sits on being sold and they want unloaded so they can sell it so they sent it down to Florida where there's an evacuation. But it wouldn't that demand be enough so they could get rid of the excess water they had in a different place. Without raising the price of it. Generally the that the high prices serve as a kind of signal. And so if you see you in the marketplace that waters telling war. Now with a bottle one place where is selling for trickle in the bottle and other I lose the signal that have been gone Rawle. With the allegation retort from the colts or people to bring the water where selling mode where violent crime and so that that a function. Prices Serb. We tend to get fairly self correcting crop that is the nice thing about it to people the guilt a lot of money by selling water there rooting services in one place. And it took flooded the market take it and it profit. But the more people flooded the market to take it in the proper. The low over the crop yet because there's more competition which is exactly what we want. I grow quick before religion gun get a lot of texts about this too. If you raise the price on everything and eight get theoretically two cases of water instead of eight because they don't wanna spend all that money. The water will be left but won't. People letter not a means or that that are poor wouldn't they be. In a way guy eighties were discriminated against and economically disadvantaged because then even if there was water left they wouldn't be able afforded. Right. I mean. Look again this is that bad situation where there's not going to be any perfect solution some people need to go and met. The question is what police baton that. It depends on the good rate so if we're talking about a bottled water that normally sell dollars and dollars it. There's not a whole lot of people were going to be absolutely priced out of the market at that call it's uncomfortable. Qaeda much herbal water treatment like it. But they're very few people would simply can't afford it maps. Terms so again the choices I mean we can do with humor is choice between. Expensive water rates or cheap war or in fact the choice is all that expensive water present and no water because some deal but per. East. I appreciate your time man I really do N and the only thing when and is for people letter. Think they're free marketers and and take a tough line and so we know what if you lose your job does America go find another one. There's a lot of out of its economic displacement or what I would term is but. It there's a lot of pain involved in that people led say that a lot of times haven't had that happen to them and that means it feel like live any and you've grown up here and your families here. Ian find another job maybe it's in Seattle or somewhere you don't wanna live. But if you're a free market economists that's the way it works and and the pain doesn't factor into that rank. You're bats are in your remark on the dirt predictor human being robbed Jefferson recession. Yeah yeah that's ray noted that it is not easy to thank you Matt appreciate your time hope we talk to you again that it.