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March 26th, 2004
04:26 pm
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They DEFEND this stuff?!
Our paper is running Walter Williams' syndicated column in defense of price gouging on Sunday. As a recent ex-Libertarian, I still have sympathy for several of their basic economic arguments. This, however, is not one of them.

Williams argues that the Virginia legislature's new "post-disaster anti-gouging" law is immoral (well, okay, maybe not; I'm not sure why he's arguing it's bad, other than it's against libertarian "invisible-hand-solves-all" principles) because ... ready for this? ... not as many people will be willing to provide disaster relief services if they can't make gross profits off of it. Not just profit, but huge windfall profits of the sort created by naked opportunism.


Williams even acknowledges that the law specifically allows raising prices to cover the additional costs of disaster response, and still argues against it and in favor of gouging. In doing so, he displays a breathtaking ignorance of the, y'know, actual purpose of disaster relief.

When someone's life has just been devastated by a hurricane, for example, the immediate priority is basic survival. It's generally recognized that the purpose of a civil society is to facilitate basic survival, not impose additional costs on it; this is why, for instance, hospitals are legally required to provide emergency service with no prior regard for the patient's ability to pay; and why there isn't a fee for calling 911. To try to charge someone, essentially, a "continue living tax" is flatly extortion, and absolutely criminal (or at least must be to prevent anarchy). It erodes the very purpose of civilization in the first place.

The next priority is for the victims to recover a sense of stability. They've just been knocked down by events behind their control and need to pick themselves up and start moving forward again. They are suffering from fear and trauma and need to reclaim a sense of control over their own life. They are seriously off-balance.

Reasonable people can disagree about the appropriate level of government intervention in the free market -- but the free market is about rational people making informed choices to suit their self-interest. Freshly traumatized victims are frequently not rational -- nor should they be expected to be! And they hardly have the facilities to make informed choices; are you going to go comparison-shopping for tents if your home's just been blown down and it's raining outside?

And -- not even touching on the ethical side of this yet! -- that's a problem. A Libertarian defense of this sort of naked capitalism ignores that price gougers are exploiting capitalism to make a profit. The invisible hand works when supply and demand are equally mobile. When one side is artifically restricted and the other is given free reign, the latter will exploit the former to the best of their ability, and that brings us back to the very thing that civilization is supposed to help us avoid.

(Yes, this can cut both ways -- when prices are capped to below profitability but demand remains high, the resource will become scarce because it's not to anyone's advantage to produce the product. You hear Libertarians complain about this all the time, but folks like Williams won't acknowledge that the reverse is damaging too. Why?)

Then, of course, there's the ethics. If a man with a gun tries to mug you in the subway, and the only witness pulls out a cell phone and offers to call 911 for the contents of your wallet minus $1, is he acting ethically? Like natural-disaster price gougers, he's merely reacting to a sudden increased demand for a service he can provide -- and his offer is rational, because if you take that option you save yourself a dollar. But rational or not, I sure wouldn't want to live in a society like that!

Broadly speaking, people tend to contribute to a society based on what we feel we get back from it. If someone is victimized and gets a helping hand, they get some faith back in the essential goodness of humanity, and may pass that on when in better circumstances. If someone is victimized and then further shafted by someone chasing after the mighty dollar, it sends a blunt message to them: People are assholes. Why try to make the world a better place when everyone's just out to take advantage of you?

So allowing price gouging makes people a little more comfortable in the short term by providing the merchandise and services that the gouger sells -- at the expense of creating wedges of distrust and cynicism around the victims. I don't think rebuilding houses but fracturing societies works out to a net positive in the long run.


... And I just have to leave one closing thought: Walter Williams, I hate you. I'm a social liberal, damn it. I never thought I'd have to seriously play the "breakdown of society" card. I feel all unclean now.

Current Mood: cynicaldisgusted
Current Music: STM 200, "PARANOiA Eternal"
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From:noitaroproc
Date:March 26th, 2004 08:27 pm (UTC)
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Wow.

One of the few times where a staunch social liberal and I can laugh at the same thing.
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From:baphnedia
Date:March 26th, 2004 08:36 pm (UTC)
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Hmm. They do, and thankfully, I have no one to hate; as I don't associate with any particular political group.

The nasty part of this is one of the problems with capitalism. I'm not saying that the whole thing is flawed and should be scrapped; but, there should be some controls made. I don't know the best solution; but, money is a motivator in disaster relief; as it is a business, not a charity.

I personally think that many things should be considered to protect the victims' well being; but at the same time keep the fiscal motivation for the business that make up the industry. I don't like the idea of having yet another big government program built to solve this problem, as the more we can handle on our own, the less we have to pay in taxes. However, putting something together within the insurance industry (or somewhere else), to facilitate payment to provide basic services would be nice; or to adopt regulated prices for such services (plus costs for travel).

In the end, someone will have to pay for the damages caused by natural and man-made disasters, (wouldn't want Three Mile Island to pull a Chernobyl), and I personally feel that it should be the insurance companies. Generalized and enforceable standards for insurance; so that people's property is fiscally protected; to include costs for services rendered during the 'time of crisis'. How the time of crisis might be determined, though, will be another nightmare that I'll let someone else address, as I've rambled enough already.
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From:mithent
Date:March 27th, 2004 03:52 am (UTC)
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*nods* That's not libertarianism, that's just anarchism really... 'hey, let anyone do whatever they want' should not be applied to situations where people could quite literally be dying.
From:tropism
Date:March 28th, 2004 06:11 pm (UTC)
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Strict libertarianism -is- anarchy, but with a government force to prevent people from actually directly physically attacking eachother. It's perfectly okay to actively destroy someone economically, though, or let them die through inaction, or because they can't afford to not take a job that, say, requires them to handle liquid mercury with their bare hands.
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From:r_caton
Date:March 27th, 2004 04:52 am (UTC)
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Hmmm. The question is, who pays for the disaster relief? Someone has to, and it won't be the insurance companies if they can find a small smudged paragraph that says they might not have to....
I reckon in the case of didaster #1 priority has to be dealing with the problem, saving as many as can and rendering the situation stable (ie a wall of a house collapses #1 is to get props under the roof and remaining floors to stop any more coming down!).
Perhaps a national contingency fund? Hard to keep politicos from skimming such things (look at Blairs mob with the "good causes fund" of our National Lottery). But once the situation is stabilised, a national body to look at profits made AND TO CAP THEM TO AN AGREED LEVEL.
No one wants big buisiness to act like a charity, it doesn't work but no one wants blatant profiteering either.
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