Posts by Keith Ng
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OnPoint: On Price Gouging, in reply to Ben Winters,
This is not complicated.
Well, if you can sell the petrol for a very modest $1 per litre markup from retail and assuming the tanker carries around 30,000 litres, you'd make $30,000 gross.
I have no idea how much it costs to hire a tanker plus a driver, but let's make a generous estimate of $2,000 a day inc insurance, and assume you can deliver and sell within 3 days, that would get you around $24,000 net profit for a few days of non-complicated work.
Surely, that's worth your while, right? You should totally do it.
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OnPoint: On Price Gouging, in reply to Rochelle,
Do you think Keith that you could keep the English language more accurate and less offensive, by using "mess" and "messing" instead of the f.... words above.
Hmm. I'm a little torn about this. I know some people are offended, but on the other hand, I use these words specifically because they are the most accurate words I can find.
I did not mean to say that "price gouging will mess with the core of the community". I very much meant to say that "price gouging will fuck with the core of the community". To use any milder word would not accurately convey my meaning.
I'm afraid the best that I can do is to be restrained and sparing in my swearing (which I am already doing). Also, I'm glad you didn't read the footnote, or you may have been considerably more offended.
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OnPoint: On Price Gouging, in reply to Dismal Soyanz,
Kinda like paleontology?
And evolutionary science. 8-)
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Actually, I'd take issue with this. To the extent that they are predicated on unstated assumptions of ethical egoism - that people should do whatever is in their best interests, and screw everyone else - then that is exactly what they are.
It's not as explicitly normative as you put it. Their argument goes: people are self-interested (empirical/axiomatic), but this results in optimal outcomes (empirical to an extent), and therefore being self-interested is good (normative).
Sure, they may treat "self-interested behaviour results in optimal outcomes" as a matter of faith, but only a select, special few would maintain that self-interested behaviour is inherently good, regardless of its consequence.
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And in some situations, self-interested behaviours really do result in optimal outcomes.
If everyone had equal wealth, price rationing (and the profit-maximising behaviour on the part of the shopkeeper required to make this happen) would actually work *perfectly*. Those who need it the most would pay the most for it, and the goods would go to where it's needed the most.
Of course, wealth isn't equally distributed, so it never works perfectly, and always results in inequality in practice. But the *source* of that inequality isn't in the pricing of goods, but in the income distribution.
So I don't think that it's evil to say: "People should profit-maximise because it leads to the optimal outcome." It is not true in this case for very specific reasons - doesn't mean that it can never be true. And even if the factual component is wrong, that just makes it wrong - not evil.
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So to summarise economists are, and have always been, full of shit.
They are not full of shit. They are asking a vital question: If there's a fixed amount of resources, how do we distribute it? It's a difficult question because sometimes, there's just not enough to go around. Somebody needs to be the bastard who figures out who misses out.
Economists should and do think about issues like fairness, morality and being a fricking human being. Some give it more consideration than others.
And the answer is always shit - but that's just because the question was shitty to begin with. If there's not enough, *someone* will have to miss out.
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I'd emphasis again that the price of price gouging is NOT lynchmobs, at least not in our society. What it damages is people's willingness to go above and beyond for their community, which is a really big deal in the circumstances.
There are a bunch of businesses that have a model which enshrines "price gouging" though
People don't act selflessly towards those businesses. It's a normal economic relationship.
What I'm saying is that if we want to preserve the *extraordinary* relationships that people have at the moment, we must avoid price gouging.
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OnPoint: On Price Gouging, in reply to Neil Morrison,
How is people freely choosing to allocate resources according to exchange criteria of their own choosing not a free market?
I was specifically using the word market to mean resource allocation based on price signals.
Can't have a market without trade. It's not trading if you don't ask for anything in return. Hence, no price = not market.
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Price gouging takes us back to the State of Nature. And we really, really do not want to go there, ever.
Oi! Shuddup! *I'm* the Hobbesian around here.
But seriously though, I've always thought a lot of the civil society stuff was fluff compared with black and white lines of coercive force and law. This has made me rethink that.
We're not talking about inequality shifting people from business-as-usual to lawlessness, but about it stopping people from going to an extraordinary degree of civic-mindedness.
None of the Hobbesian life and death stuff comes into play, nor is this about the relationship between individuals and the state. It's made me realise that there could be many more shades of nasty and brutish even in a stable society, and it's made me glad that we're not there!
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OnPoint: On Price Gouging, in reply to Lew Stoddart,
Thanks Lew! Just read your piece - we made many of the same points. I particularly like your description of why price rationing is divisive:
it draws a distinction between those below and above the newly-established price margin which dispels the illusion of shared experience
I think the argument with water is the same as with petrol - both are cases of hoarding. However, the social cohesion argument applies to any good, including petrol and water.
The trouble, however, is that those who can't afford to buy at the inflated price still get left out.
Exactly. And while there might be less ill will towards the shop, the problem of inequality between neighbours remains.
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I don't know why I'm arguing this anymore.
A two party trade (NZ government & NZ public) of a good with a clearly defined monetary value (shares) is pretty close to a zero sum game, not factoring in the time value of money.
Apart from time value of money arguments, I can't see how you can argue against this logic.