Can We Find Compassion In ‘Price Gouging?’ – The Lowdown on Liberty
When it comes to charitable giving, it’s hard to overlook the overall generous nature of the American people. Even in what could be the most polarized political atmosphere in the last one hundred years, the outpouring of donations to help hurricane Harvey victims has set a new precedent for our ability to work together through a crisis. And with hurricane Irma hitting this weekend, I’m sure that bar is about to rise once more.
Witnessing America’s ability to find compassion through crises, we should ask ourselves “is it also possible to find compassion in what has been referred to lately as ‘price gouging?’” Between the numerous stories written recently, both condoning and condemning the practice, we’ve come to find quite a chasm separating the public and their feelings on the matter.
While emotions will play an integral role in this discussion, let’s set them aside for just a moment as we break down the concept.
Price gouging is often used to describe a situation where a good that usually incurs small, steady price fluctuations instead sees a surge, usually more than doubling or tripling all at once. It’s caused by an abrupt demand shock, where consumers suddenly find themselves in need of much larger quantities. Therefore, we often see this happening while people prepare for natural disasters and other atypical occurrences.
Now, leaving emotion aside, we can observe that there are two things that must happen following this situation. Obviously, supply will need to increase to match demand, but in the meantime, there must also be an attempt to conserve the current supply until that happens. With that in mind, and continuing through our objective lens, we can see there is only one option that accomplishes both things: raising the price.
While many would argue that we could mandate price levels to counteract this phenomenon, that would only hurt those we wish to help. Keeping prices at pre-demand shock levels only opens the flood gates to the opportunists, and in short order your store shelves would be empty. Thus, leaving people to buy from those who came first and most likely now sit in the parking lot selling the supplies out of a pickup truck bed, possibly even for more than what the store would’ve charged had they not been restricted by price controls.
Worse yet, the prices the store would’ve charged also serves the purpose of sending information to suppliers from other areas, signaling them to bring more supplies in, if not out of kindness, at least for the increased profit. Due to the price mandate and the subsequent black market though, those signals are lost, leaving shortages in the affected area and no added incentive to refill supply except out of the goodness of one’s heart.
Without replenishment, the unmet demand keeps black-market prices high and ultimately gives the reverse incentive for looting and violence, thereby hurting those affected.
So, if we accept that we need prices to go up, at least somewhat in order to help, what can those of us who are unaffected do to mitigate the anguish from the increase? (i.e. ensure prices don’t rise more than what’s necessary)
Here’s where emotion comes back into play. With the internet at all our fingertips, it’s never been easier to donate to those in need without even leaving your home. Social media platforms, as well as a number of smartphone apps – such as DonorSee – allow you to send aid to a plethora of places, groups, and even individuals.
For those whose concern lies with price gouging, technology has created new ways for you to help far more than any old, ineffective government ‘solutions.’ One way would be to create apps like ShopSavvy, BuyVia, and PurchX that allow you to compare prices in different environments, but instead tailor it so those in areas hit with disaster can compare local prices. Combined with an interactive social media aspect, where those affected were the ones submitting and updating the prices from around the area, it could quickly become a self-sustaining platform, giving consumers the ability to hold suppliers accountable for their prices.
Not only that, but through its ease of use and instant access, this increase in the flow of information would ultimately decrease the amount of time prices remain high, as the process of bidding down prices would be sped up dramatically. It would also help those bringing in new supplies to monitor and choose the highest price point, thereby helping those who need it most first, while also reducing the highest prices first.
Unfortunately, in times of catastrophe there will almost always be some level of grief suffered by those affected, and for those of us whose goal it is to help, that means having to accept difficult truths. Let’s accept that price fluctuation will be a natural and necessary response to the demand seen in an emergency, and instead, let’s find ways of alleviating the pain by focusing on things we can control.
I’ve only given you one idea out of an infinite number of possibilities, whereby we can all use our emotion and innovation to help those in need, rather than allow it to cloud our economic judgement, ultimately hurting those we mean to help. So, if helping the destitute is your passion, there’s never been a better time to put your heart and imagination to good use then right now.
Featured image: ABC News