I’m never sure if people do not see the logical case for price control in a crisis, or if they see it but believe it doesn’t apply.
In any case it’s probably worth it to share what I think is the (rationalized, sanewashed) reasoning against price gouging. The central example to keep in mind while reading this is a peasant during a famine in 15th-century France.
Survival is at stake. There is not enough survival goods for everyone.
Rich and powerful people shouldn’t have an excessively easier time surviving than others. Whether or not one thinks that makes sense at society level, it would not be accepted by the poorer majority during the crisis.
Depending on the amount of stuff available and the level of wealth inequality, survival goods might be bid up entirely out of poorer people’s ability to pay. There is no inherent reason why you couldn’t end up with rich people eating their full while a poorer majority starve.
Goods coming from outside the disaster area might or might not help. If the price required to incentivize bringing these goods is higher than the already inflated price of local goods, it won’t help at all. If the price is lower, it will help lower prices, but then it will act as a lower floor on the price of survival goods. There might not be enough outside goods coming in to reach this lower floor, and there is no inherent reason why this lower floor could not be too high for a majority to pay anyway.
Violence is the historical tool to incentivize richer people to accept some hardship they could pay their way out of, in order to let others survive : reduced comfort is less dangerous than the threat of an angry mob.
While the threat of violence makes it less worthwhile (because more risky) to bring relief from outside the disaster area, without it this relief might not benefit the poorer majority at all, so they have no reason to care.
Laws against price gouging, and other form of market interference by the state in a crisis, are deemed less disruptive than riots, so they are used as substitute when possible.
I think the above reasoning mostly holds for the central example it’s meant for. It seems obvious that all the differences between 15th century France and 21st century America push in the direction of making it less likely to be correct. But it’s not obvious (to me) that these differences are enough to invalidate the argument entirely—I haven’t really try to model it properly, so I don’t have a strong opinion one way or another.
But I’m not sure it matters politically, since it’s not like this is what price control enthusiasts think when they argue against price gouging, the logic has been baked into cultural expectations of ‘fairness’.
Back to your proposition, I think if anything it would make things worse. From the point of view of someone on the streets during a disaster, the state would just be another rich and powerful actor driving up the cost of basic goods.
I’m never sure if people do not see the logical case for price control in a crisis, or if they see it but believe it doesn’t apply.
In any case it’s probably worth it to share what I think is the (rationalized, sanewashed) reasoning against price gouging. The central example to keep in mind while reading this is a peasant during a famine in 15th-century France.
Survival is at stake. There is not enough survival goods for everyone.
Rich and powerful people shouldn’t have an excessively easier time surviving than others. Whether or not one thinks that makes sense at society level, it would not be accepted by the poorer majority during the crisis.
Depending on the amount of stuff available and the level of wealth inequality, survival goods might be bid up entirely out of poorer people’s ability to pay. There is no inherent reason why you couldn’t end up with rich people eating their full while a poorer majority starve.
Goods coming from outside the disaster area might or might not help. If the price required to incentivize bringing these goods is higher than the already inflated price of local goods, it won’t help at all. If the price is lower, it will help lower prices, but then it will act as a lower floor on the price of survival goods. There might not be enough outside goods coming in to reach this lower floor, and there is no inherent reason why this lower floor could not be too high for a majority to pay anyway.
Violence is the historical tool to incentivize richer people to accept some hardship they could pay their way out of, in order to let others survive : reduced comfort is less dangerous than the threat of an angry mob.
While the threat of violence makes it less worthwhile (because more risky) to bring relief from outside the disaster area, without it this relief might not benefit the poorer majority at all, so they have no reason to care.
Laws against price gouging, and other form of market interference by the state in a crisis, are deemed less disruptive than riots, so they are used as substitute when possible.
I think the above reasoning mostly holds for the central example it’s meant for. It seems obvious that all the differences between 15th century France and 21st century America push in the direction of making it less likely to be correct. But it’s not obvious (to me) that these differences are enough to invalidate the argument entirely—I haven’t really try to model it properly, so I don’t have a strong opinion one way or another.
But I’m not sure it matters politically, since it’s not like this is what price control enthusiasts think when they argue against price gouging, the logic has been baked into cultural expectations of ‘fairness’.
Back to your proposition, I think if anything it would make things worse. From the point of view of someone on the streets during a disaster, the state would just be another rich and powerful actor driving up the cost of basic goods.