Price Gouging is a good thing?

Friday, September 29th

Is it cruel and immoral NOT to price gouge?

Why Economist Russ Roberts believes price gouging may be a good thing for the people in need.


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

Rockport Texas. And I think I am our games are being over high prices had increased more than seven dollars a gallon this was immediately investigated as the price went up that's sickening it's disgusting it's unacceptable and we're not gonna happen. Scared for their lives forced out of their Tampa hotel in Thursday. That's I think. Phelps an eight. As a nephew Darryl didn't she says it's raised the rates by more than triple they just an advantage over its they're taking them. Little great extra money because they're a hard thing coming. C'mon you could hear the little baby crying imagine how can you defend price gouging when you hear stories like fat. What do you think about price gouging is it a good thing. It's seven figures I'm seeing wider sticky so much for joining the podcast every week and things are good friends and family first credit union for helping us out with this and keep it going. Really evokes that price gouging today because it's inevitable right with every natural disaster what happens the buzz word price gouging and most of us. Our initial feeling is that sounds dirty that's not right it's greedy it's immoral. But there are people who feel it is necessary price gouging is a good thing. How let's find out it's time to catch you would they're experts Ph.D. an academic posts and each time talked podcast Russ Roberts thank you so much for joining a podcast today. Mark what are now it might teach teach at the you'll bar for a little bit there. I care. 1980 to 1980. Are all involved in this righteous to die until. You expect and and spirit reporter critic well welcome back welcome back to Rochester. Now I heard you I and a podcast. We if who was it with Adam Carolla. You the first person that I heard to say price gouging. Could be a good thing. I have never heard anybody to boldly make a statement I got. Now I can definitely no politician would ever take that stance. But are benefits to price gouging that we don't even. You know see. Well I love a lot that were captured it is so. Did it it's and cinematic you can batted it conjures up Somalia and attractive images. So it is hard to defend it so I what I'm interested in news. What happens after and before. Or especially after a natural disaster or a hurricane and earthquake. Storm or snowstorm. Pocket or what is would happen if if the government. Did nerve pain what would happen naturally. Is that some prices would go up and perhaps quite a lot. After that disaster because people all the sudden realized or underwater they don't have electricity needed generator. They went all credit to basics. That they probably didn't stock up on and it cancer could start applied. And the natural economic forces there are gonna pursue those prices up and so. That's called often called country it's taking advantage of people at a time eat. And it sounds terrible and a lot of what happened that government does anybody doubt a case it edged out raised prices. And as a pay raises prices exhort good company or possibly link you're going to be fine to put jail I'm so want. This is sounds very unethical. If he does. It does. It's sounds cruel even. But my client is that stopping those prices for rise again discouraged and are strides as its own Earl is well. That we expect about which world record a live event to make it back it is there's the underlying truth that can't be avoided. Are there people who want to abide were stopped and Irish stock available that's what caused the price to go up all these items were talking about. Another question as that's gonna be part on where people obviously eternity consumer especially our report people. Some of them may not be able to reported so. The natural impulses to stop that Christ's. From going out that price spike Apatow is a symptom of the problem not the problem itself. Again underline problem is all the side and peep about block workshop again it is available and they beat back competition to get at it they allow. Sellers took profit from app or race and approach so it goes we say that that's wrong. Which many many states too many cities to and we passed laws against that what that means is the price will go up. What that means there's is that the amount has stopped available in the got to change. What the increase in any Japanese keeper be able to get the stuff they desperately needs sometimes like Britain like saving things they need. Oxygen or they're sick parent that was racially story. Where a person in line I oxygen. Odd gave it up. For. I'm someone who desperately needed it per parent who has gotten up to beautiful. Or not I priced is it encourages people who don't desperately needs some things. To step aside and let other people get it's you needed and more importantly it encourages people appear caught. To bring additional supplies into the area. So after hurricanes for example people often load up a pickup truck with lumber and drive down to the devastated placed it. Ever been out of the goodness there are public enjoy helping people but they're going to make money helped dispel that lumber from port to make it work. And op and the reason they're gonna drive for hours and a pickup truck is because they know that the numbers very valuable in the implored his right. They know the water is very precious and placed there are gonna drive toward the disaster. I think that's the thing people forget that forget that the supply it next. And outlawed there's not going to be enough or something depends on what you let the current rise to encourage people to bring those supplies. My favorite example this. Was in a it's a it's a very. Dramatic example of what was in Sydney Australia. There's a terrorist attack in a part of town. Or appear to terrorist attack it and bomb went off. And Cooper which has what's called surge pricing which is people would call catching cruel he's often. People do often describe it that way and and unethical. Adverse. Computer system raised prices. To get people. Two. They raise the price they charge people to take a new breed at that time whenever this incredible your results aren't there a bunch of people want to get out of this area. And get somewhere else. And people so that was wrong. The current and maybe there's I don't know what I do know is that it encourage people had to ride in torque incher. To help people we needed it desperately wanted to get out of danger so to people who say this is wrong and ethical Colette right right. What's your mechanism. For helping desperate people get the supplies that they want now it's still the case it's going to be harder and poor people all below. I remember very vividly as student count me one time. It sheik did choose an adult not a young student. She said her she was before hurricane or edit this comment. She was gonna stock up on generator surety pat. It's about cash get a backup. Is very comfortable financially well which he's not a crisis that now I'm okay at three. Yeah opportunity percent and we didn't have any to have it. The beans and a kinda trade off but I think we should think about always think about these laws there's nothing perfect about letting a crisis right it's hard on some people. But not letting it rise is also our diplomats and spies that's our real. So it alleviates courting. The editors of the world career. But this didn't need to increase as much as it does nine dollars a bottle of water is what I saw what was it a best buy you for hurricane Harvey was the big thing going around. Did you really need to go up that much. Well. They are not against it where are hungry she'd top it off I think. And I moved when timer from saint Louis Missouri to Washington DC eight. I had to pay. More from my house apparent. Ended up pain I got a slightly smaller. And but not as nice a house smaller land. Now this is charming house about twice a month to protect. The guy who sold it at now. You had bought it in 1968. I bought it in 2003. When he brought it 1968. It was one tent. What he had paid it well what are paid for married I'd hate ten times more. He received ten times more that he had paid for that last. And match and I said that I am. And it just like twice as planning. He really needed it and I'm Smart. They are laughing but look at it up it's a similar question no the pot it would be exploited and he could've sat in a really need to take advantage of this I. But the reason he was able to charge ten times what we create that out is 'cause a lot of people wanna live in the Washington DC area now compared to thank. OK so might think here's a little bit of a difference. You hat you did half to have that house in that neighborhood just like cheers locally on new track. You lived here so you are familiar at this yet to deliver on the east side cost more money for the exact same house. As it does on the west side an unfair and next and I think it's unfair absolutely and at parties. But easy I don't skin pick and choose if they want to live there win you have no water and there has been a natural disaster. Now you're just praying and those who had zero nothing no choice. Correct well they have choice as a lot of store selling lottery nine times the price or six are interpreted yeah accurate but it I'm right where ago. And that's because there's not enough to go around so again we're back to the the battle and what are you looking happened mind as a people have in mind yeah and and it's it's a reason opera dot presumption basic and it is an apology. I show up at my store and I like I need to water well it's real spiritual expands today. Well. Actually crawl naturally mean why do an activity well that's the going rate. I'm not the one doing yet it's all over town and I can find it pretty last I'm not I'm not exploited yet. Right you could do what what why don't. It's a market that caused this situation back at so many people wanna buy to keep people but you don't have to follow that you could just charge. Of the ten targeted districts five times more your being cruel you're profiting from my desperation you know district that right. And he could say. You shouldn't charge ten times five times on treat our herb you. In your wish I think it should be well it could do that you'll be out in. And the president shows up two weeks two days to hours whatever later. I need water. And not a tiger is not so the other thing keep in mind years. That back it'd be you allow it to be nine at art means next time. There's an encouragement of the sort of stock option. So is that it is the problematic area okay so is that really what it is. I don't off art raised the price of the pop tarts. During an actual Nash natural disaster. They stock up on popular they are Everett I think it's probably true that only people by it'd be a natural disaster so when people. To the forecast for hurricane are huge snowstorm. Wal-Mart starts up I read it but again it might be apocryphal but it doesn't matter there are things sure they stock up on you I predict back up on beer. Because it is not air ball up and pop art and I'm sure they are up on bottled water other bank. I don't know the week before the hurt the week or this term that upheld it is really advocate they've already taken that into account at a certain. Expensive then they'd have to deal wet and it's an extra costs of storage or whatever urgency to get it there and by the way it's perfectly fine. Parikh Keller just say as a public relations gesture. We are gonna shell water and it is regular price. Because we were Smart enough. To order an enormous amount yeah act and in Bergen that we're gonna not lose money but we're not gonna make extra money that's okay. I think it's tough to stomach is people are making a profit. Owner of those but. Now you made it very good point I was I was ready dubbed battle YouTube actor do you mean a very good point in net if you plan. Ray if he's not playing the vick's down a squirming I have no water and afraid to get a feed my baby's water. Any if you plan did you live in a hurricane area. Or leg in Rochester. We can just expect snowstorms week or shouldn't have yap a lot we should just our generator. You can't complain if you don't plan is really what you're saying. That's part why wouldn't they can't compliant economic speed aggressors at he'd he'd be angry but I think you should think eventually we're being angry at earlier. You think you're angry at this for you out but they aren't here going to be which is the situation in Venezuela right now we want Brett. Don't read in the store at all because the government is good pricing on number admiral depressed coated actual rate. That's what the situation has that they alternative. Now that's an extreme burst and don't turn it back as it always like that. And again I don't have any idea wonderful people wanted to cheer their Water Cube there waterway. I go over to their neighbors in eighty do we able to get water now here's sob would I would never suggest. For example. That it might interpret my neighbor crying. That's what's wrong I went to the story at least ten times the regular price could order it all right. Just too much for me I didn't wanna give up something else for my children at reliant on. Curse now. I could not. In China chair. So I mean it is not look like. Eric what you think you should object let's get that idea a very different situation or stranger retailer situation. And is it a great moment and not. The movie it's a wonderful life. Where do Bailey yeah my mind to George Bailey is about to go on his honeymoon there's a run at the bank. And he confronts all the customers and he says you really need to call your money out. And they talk it through and to make sure everybody knew who need money desperately get credit and so on. This all count situation in Rochester as it is. Wonderful account as it is I would not colony small town it's not small city but a place where you know people and that's why I mentioned my neighbor for the people in my. Byron my synagogue at our church for our mosque people who who interact at my and other reports we get all the time. Help each other and don't exploit each other don't raise prices today are you need to pushers car out of stout edge. Okay good next time you're gonna have to I'd expect you'd help being a Rick at least deal. That's not what we do with people we see face to face a wreck it and even stranger distressed. And I think we take that logic which is good it's a very valuable and a huge part of being a great human being which help people strapped. We table Wal-Mart should help people on the stress. Warmer our person. Wal-Mart store in exists to. Coverage cost unemployed people. And at least say to them you cannot. Cover your costs or enjoyed the benefit of your advanced planning. We're going to discourage the things that we really desperately want to be great if all market data which shareholders. Current employees. And talk like a little cut this week it will keep prices edged Ed will bring in the worst doc anyway. I think you just yeah it makes it makes sense and paper. And but I think it's just hard. To swallow when you seed a big man make it all the money in our Carlos belittle people. It out at our expense. When we sell our houses. Prop that we should keep that in mind that we are the man at that point to. Then that's your secretary Gerald Syria and underlying. Message here is. To get people. She works to tip planned to. Be held accountable. Now let's move into a little bet and suggests. The economy in itself. What do you see that is broken beat indeed do you think there are too many people are more people living off the quotes system and what will keep them motivated. To have a financial planner with Iran. Well I think there's there's a there's a lot they're good to talk about I think. Potential plan are typical. Does come naturally to us federal most of us at all and I thought yeah UW and Atlanta may in fact I will I will. I'm an economist. I think you mentioned the PHC. The last time I balance my checkbook or lived in Rochester New York that was 1983. So I'm not the best. At those kind of bank and I think recognizing. At. He huge step or two personal financial sanity you have to know your limitations. Be aware of what you're not good that can't edit he had a tendency to be an impulsive shopper. And to buy stuff on odd you don't need. And two. Not take account. What you can port EU wanna make sure you don't so situation arms. Where you're going to be easily sway to make decisions are gonna pay court later this number watt. OK so I win your weaknesses yeah yeah yeah dat dat going in excess at out of power for credit card to. Credit card a wobbly bang but it's very easy to be still struggle with. Reality of sometimes our park too much money buying a house you can't rule for so watch. I think it really too rigid you're wanted result crawl that's a very big challenge for every bit and the second issue is just what are the opportunities available. At any given our education or skills or gaps are big and we were due to Gruber so Olson entered armed. And I think right now in the American economy. I would say the biggest challenge is if you don't finish high school. And increasingly if you don't finish college. You may have a tough talk for time they used Al and I think that's a hard adjustment for people to bank. Part of the recent target circle systems is burg flawed. Public schools systems in in many places is wonderful amid a crisis that's totally inadequate. And culturally we struggle to us stay on track I think all the individually struggles aren't just do the right back and so. A series of bad decisions early on in life. Are going to be costly later on its heart and is it that hard chip repair or art. To be aware even so. I think a lot of Americans today. We have the highest living in human history. And a lot of people aren't enjoying it or are struggling to find medium what they do. Or from their daily lives because their skills are such that they don't command a very good up and snatch that serve our. And it really is your product a year environment and there's two components to six facets education like you sad and family. Simmons you encourage your grade said to push you you can succeed don't. Don't play the victim get out. Yat ticks and triggered take aren't there hero and yeah salt it is very hard work again we always want to blame someone else a church in the impulse. Bob. And. Makes sense EA kind of makes sense if you if you are struggling with that well. You know I would imagine like a god how did I lose control let me blame it on the system or her somebody else right so. You can read it and asking my parent. Eads that that would be a bad thing right. It cut its consolation. And that's very important and in fact. You know if I remember my family is struggling American assay pitcher Paul you're a loser right that's not helpful. I the problem is is that you constantly hear of only is the breakdown. You lose the job in the senate and power to take account of your actions to do better in the future you know I think that the real challenges. Pushing the past. Away. He comes over all of us and Yang. Are today. I mean do better yes tomorrow targeted to better you know what way to think about it losing weight. Which remarkable to me is how easy it is it's sometimes about 5% stock and he deserved Cabrera should desert during the week oracle really bad strategy permanent. Other times it would it feel like I can't help and so. And I think. Getting controlled that sort of impulse to each shop. Yeah. It's very hard and I think we underestimate. The power that lawyers are wide some are. And we will stumble we just got to make sure that we get ourselves and tracking after you know and our. And I don't know how much. You would have to say about this but having your Ph.D. in economics I'm sure you have an opinion about it there was done a few episodes ago we had done. Former bankruptcy judge John M time with us and you know he was telling us how to clean up our finances and one of the ideas that he said if we all just paid with cash. Bought what we could afford. We cashed. Our personal debt would be eliminated. But yet he questioned what it would do to the general economy in an of itself do you have a take a matter an opinion. Well I could barely. I do actually were right. I think for people who struggle. Where is not easy credit. Are going current cash Thomas fantastic advice it's painful obviously. Is vary it based. It means delaying gratification. Which is a very difficult thing to do you know our current culture or culture's all about now now now I want yesterday. Got a wanted to tomorrow around yeah gotten. And it but let the great let that apparently they try to help markets. I sing at your children is a fine by like to think my job apparent. Not to be their friend that Peter error beat her dad done. I don't think saying yes all the time it's good for BM they're proud that are the appropriate act yeah. So now is a really valuable lesson I think because like this all now down the road it could get used to it in my opinion. But at depth at the ready case by yeah but going back of course about the economy is all it reminds me of when people today. I purchase a Bible argued that in December. I would love for America to spend more time around the fireplace. And got the dinner table band are in the ball. I think the commercial aspect. The Honecker Christmas frenzy is not good for the soul. And certainly aren't related to the religious its virtual lessons of those dollars. And then people say to make. But if people don't spend all their money during Christmas city huge part of the regional. Marketed it and then people will be out of work and editor well it's also like sank it would work. 10% last 20% last and spent that time do whatever we found the meeting Poehler are able. Teacher ourselves an instrument out of read French. Talking to Mike more of my parents or grandparents are helping other kids whatever it is. And that somehow that's bad for the economy and that's just the weird. Understand what the economy as we're the economy. Not true there'd be transition yeah it would be hard to suddenly all of a sudden people said. Let's stop critter shop and yeah will that would be hard to a lot of retailers plan almost. Extra sales and they've hired people that those people would eat. Let it go and they would get the money they expected that would be really difficult to overtime we became these small economy. Because who currently more spiritual meaning or whatever you all lives. But he could be economy as we heard the economy. Out there be less make sure dollar value. That's what it's like status action in her life satisfaction spinners it's absurd that are horrible I didn't think that somehow our. The merits of our lives are measured by how bigger GDP is Kurt Kurt this they also are stopped. Yeah that just those are met those or vehicle those front ends in themselves. I hope. It's linked all is to be cheesy but easily Deb Beatles signed every hit hit epic can't buy me love. Yeah it is singing in my head as you were saying your. Sure of the great great great idiot then and I disturbed ground and it's aren't. Russ Travers. You are awesome I really appreciate you joining abide jasmine Ph.D. in economics Molly year old's your RC ends are. Waving you off hello right now. Aren't they are back and I don't want to be there and check out Russ Roberts and his podcast each time talk thank you so much I appreciate it very hard. You're listening to this podcast right now so we know where you wanna be financially but what is your significant other and they doing right now. Aren't they on the same pages you when it comes to planning for your future. Either you guys are on the complete opposite sides of the savings factor emerge and out due out next week. How to motivate your spouse to come down to your side for at least you can meet halfway. Dad and it's great ideas on site hustles. Ways to make some quick easy cash next weekend seven figures thank you so much for emailing me anytime CAD at Rochester buy dot com. Or check it out the podcast and Rochester drugs dot com and I'm iTunes in Google play and also follow us on Twitter at seven figures tied. Also big thanks to our good friends and family first credit union have a great weekend make sure you dominate your finances this weekend totti next week.