Why price “gouging” like we see now in Texas is a very GOOD thing
What I think the reader was trying to communicate however was how awful the market and the market mechanism is. See, look! Those greedy merchants (ha!) are jacking up the prices of goods just to make a buck. How terrible!
I say what we see above is in fact fantastic and a great example of why the market mechanism is about as close to a miracle as there is in this flawed world.
As I said to the reader, I’d much rather have a $15 bag of ice than no ice at any price. Had the merchant offered the bag of ice I wanted at the regular $1.50 (post-hurricane), it would have instantly disappeared from the cooler and there would be none on offer. At least there is SOME ice at SOME price.
A price spike merely reflects supply and demand. People may not like that prices have gone up post-storm but if markets are allowed to fluctuate there will be at least some of a given commodity at a given price somewhere. If however governments institute price controls and hold prices below the market price for a good the government is basically guaranteeing shortages.
Of course some people won’t have the money to buy the bag of ice at $15. But they wouldn’t have been able to buy the ice anyway as ice at the regular price would have disappeared.
Market dynamics take a bit of thinking to get sometimes. Sometimes the lessons of markets are counterintuitive. But with a little effort the genius of markets become pretty obvious in my experience.
The problem is too few people choose to think.
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