September 13, 2005
Gouging, SchmougingAmerica is a great country, but would be greater if people understood economics. That starts with ignorant and pandering politicians and reporters and is relevant now due to the rhetoric we hear about "gouging." Let me explain: there's no such thing.
Prices and quantities of goods or services in a market are set by supply and demand. Government can impact prices and quantities through various means, such as tax and regulatory policies, and the extent to which it encourages litigation. But in a market with multiple players who are not colluding, suppliers cannot set prices above the market-clearing price (i.e. there can be no "gouging").
For example, if a gas station chose to take advantage of a disaster by hiking prices, it would lose out to competitors who would undercut the gas station's prices to take its customers. Only if they colluded (which is already illegal) could sellers of a good or service set above-market prices.
Economic illiteracy is a plague on the country and, because the laws of economics are as immutable as the laws of physics, Americans must learn how the world works. For example, on the "O'Reilly Factor" last night, a letter writer complained that her husband's employer was selling its product for a higher price than it cost them to make and that he was considering quitting in protest. As anyone with half a brain knows, that increment is called a profit and profits drive economic growth.
So when you see stories about gouging, what they really are illustrating is the extent to which people do not know how economies function.
Posted by Jonathan R. on September 13, 2005 04:08 PM
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In general, I admire Bill O'Reilly. But when it comes to the economics of gasoline sales, he has no clue. For instance, he supports the ridiculous notion of a "national buy no gas Sunday" to hurt the oil companies.
The problem with this (for those of you in Palm County) is that, if people continue to use as much gas, then the same amount of gas is sold Monday-Saturday as would normally be sold Monday-Sunday. If everyone stopped buying gas on Sundays, gas stations would close on Sundays, redcuing overhead by 1/7, while maintaining the same net sales! Result: more profit for gas companies and less convenience for consumers!
Duh!
Posted by: Gullyborg ![[TypeKey Profile Page]](http://www.gopbloggers.org/nav-commenters.gif)
at September 13, 2005 06:56 PM
In general, I admire Bill O'Reilly.
I can't imagine why.
Posted by: Reverend Scaramonga at September 14, 2005 09:21 AM
Bill O'Reilly's OK...if you don't indulge in too much thinking.
But in my experience, he goes for "populist over-simplifying," seizing on a popular "talking point" and boiling it down to some over-simplified concept, and then using it to browbeat his point home. He calls it "The No-Spin Zone." In formal philosophical terms, I think it would be a combination of reductio ad absurdam, and "straw man."
The world isn't as simple as Bill O'Reilly wants to make it, and for people who think it's a lot more complicated, they get little satisfaction watching or listening to him.
Posted by: Deacon Dan at September 14, 2005 12:58 PM
The world isn't as simple as Bill O'Reilly wants to make it
O'Reilly simply must have it that simple so that he can then claim to have all the answers. Which he does nightly. He's an arrogant blowhard who has little to be arrogant about.
Posted by: Reverend Scaramonga at September 14, 2005 01:55 PM
Let's forget O'Reilly for the moment and reflect on the sad truth that so many ARE illiterate about basic economics. That is why liberals can accuse W of "providing tax cuts for the rich" and why so many buy into the theory that raising taxes automatically generates revenue for the government. Also, a lot of people want to believe that all business owners are rich and get that way by cheating somehow.
Posted by: DebateRight at September 14, 2005 03:15 PM
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