-Is price gouging evil?
Everyone agrees, that if a seller greedily doubles prices
after say a hurricane, that’s not only bad, it’s immoral.
People say that when gas prices are raised.
-They’ve taken advantage of us. -I think we're being ripped off.
-We are being hosed here
and the oil fat cats are lapping up the dollar.
-Gouging at its best.
-But what exactly is gouging?
People say, it’s raising prices too much,
but who exactly gets to decide what’s too much?
-For people to take advantage of those in need
violates every biblical standard of morals that I’m aware of.
-Mississippi’s Attorney General
announced a crackdown on gougers after Hurricane Katrina.
-Massive destruction everywhere.
-One gouger, who was arrested, was John Sheperson.
He and his family live in Kentucky.
They watched news reports about Katrina and learned
people desperately needed things.
-My wife just got out of the hospital
and she’s very sick and we need a generator.
-John thought he could help and make some money too.
So he bought 19 generators
and he and his family then rented a u-haul and drove it 600 miles
to this part of Mississippi which had no power at the time.
-5 million people in this region are without power.
-John offered to sell his generators
for twice what he paid for them them and people were eager to buy.
-People were excited that we had a product they needed.
-But instead police confiscated his generators
and John was locked up in this jail for price gouging.
-They arrested me
and I just could not believe that I was being arrested.
-Authorities held him 4 days,
and his generators are still in police custody.
-And then nobody got any use out of them, they were useless.
-So did the public benefit?
The real question is,
what’s the best way to deal with shortages after a disaster?
-Anybody, what do we need? Come on guys. Generators, food.
-Anytime there’s a natural disaster - a hurricane, an earthquake -
the price of things that people desperately want to have -
batteries, flashlights, generators, water, milk -
they go up or they disappear.
-Economist Russ Roberts points out that after the disaster,
if sellers don’t raise prices, supplies vanish.
Anxious buyers line up
and often buy more than they need just in case.
Those not at the front of the line, they get nothing.
-More people want to buy it then there is stuff available.
So what do you do? How do you solve that problem?
How do you find out who should get those scarce items?
-A major energy crisis.
-During the last energy crisis,
the politicians' solution was to cap prices.
But that didn’t fix the problem. It made it worse.
-It was a disaster. It led to long lines
and you couldn’t get gasoline.
-That’s why today’s high oil profits, as Roberts, are a good thing,
because they’re a huge incentive to oil companies
to look for more oil.
-You want them to make these monster profits?
-I do. -Higher prices are hard on consumers.
Harder for consumers today, good for consumers tomorrow
when those high prices give energy companies the incentive
to go discover and refine more energy in the future.
-Which is why what the politicians call gouging, is actually good.
Now I know you don’t believe that.
-That’s absurd, that’s absurd. -Prove it. I mean... prove it.
-I don’t know what Mr. Stossel is thinking.
-Okay, you probably won’t believe me, or economist Roberts,
but would believe 3 Nobel prize-winning economists?
All of whom say, gouging is good
and the best way to get supplies to people who need them most.
-That is the best way to do that. -And that’s a good thing.
-The gougers deserve a medal.
-Because the higher prices bring in the goods
that people desperately need.
-If we don’t let the price rise,
there aren’t going to be enough generators to go around.
If we let the price rise we give people incentive to bring them in.
-Somebody needs to bring these products to people
when there are disasters and emergencies,
and this is going to be one person
that’s not going to be there that they took out of the equation.
-Economists we talk to say, he’s a hero.
-You’re the one who’s immoral for saying he can’t sell generators
to people who want, willingly, to pay for them.
-Look, my job is to enforce the law.
Our laws state that you cannot increase your profits
once a state of emergency has been declared.
-People want to live in a world
where love is what motivates people to help others.
And love does that. But there isn’t enough love to go around.
Love for strangers isn’t going to motivate enough people
to get in their trucks, load them up with generators
and take them down to help people who are cold and hungry.