CT’s anti-price gouging law takes effect for Irene

WTNH

As Hurricane Irene approaches, state lawmakers are reminding consumers that Connecticut’s anti-price-gouging laws took effect after Gov. Dannel P. Malloy declared a state of emergency earlier this week.

Under state law, no one is allowed to increase the price of any retail item during a state of emergency. The rule does not apply to usual price fluctuations that occur during the normal course of business.

State lawmakers in an attempt to protect consumers had passed this law to prevent local business retailers from taking advantage of citizens in times of emergency by inflating prices on a captive audience.

I actually oppose this legislation for a couple of reasons.  First, even though I realize that taking advantage of people is wrong — especially in times of crisis or emergency — businesses are in business to make money.  That is the sole reason for their existence.  The laws of supply and demand do not take a vacation because of weather or hardship.  It is one of the unfortunities of living in a free society.

But perhaps more importantly, anti-gouging laws have the potential to cause more harm than good.  For example, say a blizzard was projected to hit the area in a few days.  There are some (a lot of) people who would race to the store and buy up enough milk, bread, water, and batteries for five families to survive for two weeks.  Some people panic.  With anti-gouging laws all those items remain at normal condition supply and demand pricing.  But this is not the case, a blizzard or hurricane is not a normal market condition.

It allows the potential for a small group of consumers to clear the shelves of retailers leaving others without supplies.  Inflating prices to reflect the actual supply and demand prevents this from happening.  If milk, bread, water, and batteries were to sell at 3, 4, or 5 times normal condition prices; families who were locked out of the opportunity to buy the supplies they need by others who might panic and over purchase, now have access to those items.  One might buy 4 gallons of milk for $3.50, but maybe not for $8.50.  Even though prices are what under normal conditions would seem obscene, it allows more people access to them.  To be sure, the shelves will inevitably empty, but shelves with high-demand items at low and normal prices clear out more quickly, and to less people.

The inflated prices are definitely hard to swallow, and we might not like the hit on our wallet.  But I’d rather pay $8.50 for milk, bread, or eggs than have none at all because they sold out like Lady GaGa tickets.

Comments

  1. Marshall Art says:

    It’s also helpful to understand that in an emergency situation, the supply and demand factor is in an emergency state also. The business in question is as affected by the situation as is the consumer. If a store sells out of a product simply because they cannot get more of it during a storm, does that not affect the supply/demand equation? The storm, let’s say, affects the ability of the store to meet the demand for what they sell, just as a low crop output might, or an abnormally early frost might affect growers of certain produce. A storm like Irene might be abnormal, but it is entirely natural and thus to elevate prices because it has affected supply is not unlike any other factor that does as well.

    At the same time, and on the other hand, there is something to the notion that raising prices does take advantage of the situation. The storm, and its affects afterward, are temporary and any business that does not take precautions for the possibility of such things, especially given they are located in an area that experiences such things, must accept the consequences of such shortsightedness.

    Finally, I think the most reasonable solution for the business and the community is for the business to realize the sentiment of the consumer during such times and limit the consumer to only a certain amount of any item, such as, only three gallons of milk or only three loaves of bread or whatever, per customer, just as they do when running sales.

    • Limitations might work in some places, but it wont prevent people from walking the food to their car and walking back in. Unless you’re going to have some kind of register with ID checks, bu I don’t see that happening.

      On a sadder note, im looking at a week without power.

  2. I love the last paragraph – that’s an excellent comparison.

    Tricky subject though – there’s nothing stopping the prices remaining the same and limits of quantity – no more than 1 milk, 2 bread, etc per family to ensure the most number of people have access to the resources

    that way, the business makes the same profit without gouging and more people get foodstuffs –

    the Japan disaster didn’t have panic and hoarding, everyone took just enough to make sure everyone got some.

    it’s all about being civilized and orderly – and not fall victim to the me at the expense of everyone else.

    disasters are best weathered by pulling together, not tearing each other apart.

    that said, I have been stalked in the grocery store when I got the last single loaf of bread by women who feel more entitled to the bread that I got to first – and that’s just during the regular christmas grocery shopping, no disaster looming. Well, public disaster, anyway.

    • But how do you prevent families with each individual buying the max, then going out to the car and walking back in doing it all again?

      • some things you cannot police – and that’s when social conventions and public/private morals kick in

        in a society where the attitude is me at the expense of you, there will be people who would feel no shame in taking more than they need and depriving others of basic necessities. Even if that means making several trips in and out of the store – but at least, there are other people in line between their trips and at some point, there is no more for anyone to buy, but at least the greedy and selfish people weren’t able to get everything the first time – and that ensures more people had access to the goods than if there were no limits in the first place

        it’s not the role of the state or business to police people in this way

        but by putting these limitations and forcing people to have to choose to go against the limitations, will make some people feel shame and they will police themselves

        I think that this is a good example of where matters are not black or white, but all kinds of grey shades come into effect

        it comes down to a matter of trust – and your position is that you don’t trust people so either want over regulation to prevent trust breaches or no regulation to avoid the expectation to be dashed that people will behave in a fair manner

        there are better ways for businesses to balance out panic hoarding than profiting from said panic by gouging.

        emergency measures can mean stores step up security and enforce limits to maximize the spread of resources to lower the overall panic – this means that people get calmer and are less likely to simply rampage and loot resources – better for business to not have to be damaged – such as the coffee shop in Vancouver during the coffee riot that had to shut down for a few months for renovations.

        when people see that controls are in place and that resources are being distributed fairly, they will calm down – this gives people the opportunity to follow Japan’s example of taking just enough so that everyone gets some. No one is cheating or line jumping or getting too much and depriving others.

        Stores can close their doors and limit how many people come in at a time – they can demand to see ID for purchases – the line up to get back in after a trip to the car will discourage people from making extra trips in to thwart the limitations. At the least, they would have to go to several stores – and since everyone is lined up – it means that the resources are still more evenly distributed.

        and still priced in a way that means that they are affordable and food is not distributed on the I got their first and grabbed the most or are willing to pay more than other people who can’t afford to.

        I think that this is an excellent topic to really demonstrate the difference between right and left thinking.

        emergency measures means the usual rules of society have to adjust to the conditions, but it doesn’t have to be so right wing dog eat dog, we can choose to be people pulling together in a crisis, even if that means having to enforce peoplehood

  3. Terrance H. says:

    John,

    How did I know you would oppose a law that doesn’t allow business to screw people?

    I like you, John, but I’m losing sight of you. You’re so far to the Right.

    • That’s not it at all T, as I explained, shelves clear off faster because of panic when prices are at normal. I understand that everyone needs to get supplies, and sometimes the only way to do that os discouraging mass purchases. If you were fifth or sixth in line and watch the people ahead of you buy up everything ahead of you, you’re telling me you’d be happier about that than being able to begrudgingly pay more for something you need?

      C’mon, this isn’t about business, its about consumers.

      • Terrance H. says:

        John,

        In that instance, you have a legitmate argument. But I’m from Michigan. We had a serious problem a few years back with gas stations charging as high as $6 a gallon, gouging the hell out of consumers. Granholm, as Attorney General, put a stop to it. You cannot tell me in that instance it was unwarranted government intrustion.

        There are two sides to every coin. Some good things and some bad things about the law. Perhaps it should be more specific. I don’t know. But I do know that we had a seriously problem that would have been prevented if we had something like your law on the books at the time.

        • Let me see if I can’t get us on the same page,T. I am not suggesting that businesses should inflate prices. I am saying that not everyone who does is doing so for selfish gain through crisis. There may be legitimate reasons for the inflation that are not driven by greed.

          Whether a business does inflate prices is up to them, and if they don’t mind selling all their product to a very limited number of people is their prerogative.

          All im saying is not every business that inflates is taking advantage of a captive audience is all. Are we at least somewhat agreed on this?

        • Terrance H. says:

          I can agree with that. Not all businesses are inflating prices for selfish reasons. But like I said, we had a major problem with that in some parts of Michigan, particularly the less affluent areas. There was no justifiable cause for gas prices topping $6 a gallon. The government put a stop to it. One of the few times government actually intervenes for GOOD reason.

Trackbacks

  1. […] Over on Sifting Reality, John Barron raises an interesting topic – the role of business in society and the role of that business in emergency situations. […]

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