| sapphi_snake said: @Kasz216: It's why research tends to show that anti-price gouging laws actually cause more deaths in disaster areas. Most governments though would rather have more people die, then have more people of all classes saved, but the rich saved first. This makes no sense. If it's a disaster, and prices are exaggerately inflated, then how will anybody but rich people be able to afford the products? |
How does it make sense? It's common sense actually, one just needs to actually think about it. The Research bears it out.
Two situations.
As it works now...
a Big Disaster is coming...
everbody rushes to the supermarkets and stock up.
The first 10 people or so through the doors end up buying 3-4 months worth of Fresh water and other supplies even though they have to and clean out the supplies. Because that's exactly what happens in these cases because people panic and they're going to eventually use the water and food anyway. (Think of all the cases of cleaned out store rooms)
Companies have no incentives to rush product to the disaster areas ahead of the disaster area because they can make just as much selling their bottled water in a non-disaster area without having to pay their truckers disaster pay.
The government gets together aid and sends it down there.
Everyone outside of those first 10 people are screwed.
As it works in a "non" price fixing enviroment. Word of a disaster is coming. Stores jack up their prices. People are forced to make real descisions and instead of buying 3-4 months of water instead only buy 2-3 weeks or so since the disaster is expected to last only 1-2 weeks.
So more people out of the gate. REGULAR people are saved, though it costs more per product. (Hell all the rich people have probably left the area, because you know... they're rich, they have money to start again.)
Furthermore when stocks run out, drivers are sent to disaster areas to restock before the disaster hits because it means big profits.
In fact, areas and local buisnesses probably keep a larger stock then usual around disaster season... since if a disaster DOES happen, then it means big profits. While in the above scenario, extra stock probably just means extra loss in storage space if a disaster doesn't happen which is more likely. (Like Oil companies do with oil. Which is why some oil companies have record profits even when gas prices are rising. That's $5.60 for them to get gas to you with the gas they're buying now... however some of the gas your getting is gas they stored back when gas cost $3.20. It's why private oil reserves exist and thankfully are so big.)
Entrepenures may come in from neighboring areas clearing out their local stores and start going door to door selling things like generators and water. Or heck, maybe even locals stock up ahead of time knowing that not only will they be ready, but they can make a profit selling to their neighbors.
Then, The government gets together aid and sends it down there.
Price is NEVER going to get so high that the product doesn't get bought... because the money makers need to sell their products to make money. After the disaster it's all going back down to market value.
Makes sense when you really stop and think about it, no? There are a lot of "Simple" issues there are huge misconceptions over, because people ignore the human element in economics.
Formulas and charts create lots of flaws that never bear true in the real world, because Keynsian economists forget that the economy isn't non-living math. The core base of the economy is people. People are organic and can't be eaisly predicted.
Or, to put it in an economists words.
http://blogs.forbes.com/artcarden/2011/06/17/price-gouging-laws-hurt-storm-victims/
