Your Legislature at Work
January 10th, 2007 | by Craig |Solving problems that don’t exist.
This bill is to prevent price gouging in a state of emergency “occurring within or outside the affected area.”
Inside or outside the affected area, huh? That’s pretty far-reaching.
Can anyone recall the last disaster we had when there was “price gouging?”
Anyone? Anyone? Bueller?
The only price gouging I remember was when a couple of gas stations in Billings were accused of raising the price to $5/gallon in response to the invasion of Iraq, which lasted a couple of hours at most.
I’m sure that there are people much smarter than I can analyze this better, but it seems to me to be fraught with things that will produce unintended consequences:
(3) If a person did not offer for sale an essential good or service, at retail or wholesale, within an affected area during the 30 days before the declaration of the state of emergency or the finding of an abnormal market disruption, it is a prima facie violation of subsection (1) to charge a price that represents a gross disparity from the price at which the good or service was readily obtainable in the affected area during the 30 days immediately before the declaration or finding.
So, if I have a truck, and haul butt over to, say, Spokane and buy a whole load of, say, plywood, and then re-sell it (at a profit, of course), I could be in deep trouble if I find a price that people are willing to pay, and it’s higher than when demand for the plywood was lower. So, just to be safe, I think I’ll just stay home, rather than provide a service.
Plus, if I had a truck capable of hauling a load of plywood from Spokane, would it be considered hoarding under Section 1.3?
“Hoarding” means withholding, obstructing, interfering with, or placing unreasonable restrictions or conditions on the prompt delivery, transportation, or sale, at retail or wholesale, of an essential product or service during a declaration of a state of emergency or a finding of an abnormal market disruption in the affected area covered by the declaration or finding.
Let’s have a list of things that are considered essential goods or services by this bill:
- food
- water
- fuel
- shelter
- transportation
- medical supplies
If I have, say, 100 gallons of water that I’ve stored from my own well, in my own containers, is that hoarding an essential good?
If I have an above-ground diesel tank (as many farmers do), would it be considered hoarding if they didn’t make it available for sale? Hell, I know a guy who has a diesel genny that he keeps stocked with a month’s worth of fuel. What about him? Will he be punished for being prepared?
If I have a couple of spare bedrooms, and rent them out, does that constitute price-gouging, since I didn’t offer the service 30 days prior? Just to be safe, I don’t think I’ll let anyone stay at my home, and ask them to defray the cost of my preparedness.
This bill seems to me to be a knee-jerk reaction to a non-event, based on what we saw during hurricane season in 2005.
Folks, it’s Montana. Take some time and initiative and prepare yourselves. If you want the government to do it for you, well, just look at what happened in New Orleans.
20 Responses to “Your Legislature at Work”
By ajtooley on Jan 10, 2007 | Reply
Surprisingly, I don’t have a huge problem with this in concept; after all, a reaction to prior events, knee-jerk or not, is sometimes called prevention. The question is whether there was a lot of gouging after Katrina or the Colorado snowstorms. If not, then yes, this is an over-reaction. If so, it’s sensible to want something in place before a disaster.
But as always, the devil is in the details. I’m troubled by the language, just as you appear to be, that suggests that individuals who have laid in their own supplies in preparation for disaster can be held responsible for not giving it away to people who didn’t prepare. Maybe that’s not the intention of the bill, but the wording appears to make it the reality. And how does it help people in need to set an arbitrary cap on profits that’s low enough to make it hard to recoup fuel costs, and thus discourage the able from helping to start with? Finally, I don’t like the provision that defines the means by which the accused can prove his innocence; so this bill dispenses with pesky due process and simply presumes guilt? How about the accusers prove the guy really gouged, like they’re supposed to?
I think this bill could be reasonable, but in its current form, it isn’t.
By Walter Greenspan on Jan 10, 2007 | Reply
Price gouging is a political, not an economic, term, and efforts to “prevent” so-called “price gouging” serve to reduce the supply of critical goods, rather than make them available when needed. Stupid, stupid, stupid, as only lawyers can be, stupid, stuopid, stupid.
By Gman on Jan 10, 2007 | Reply
Damn stupid. Craig, please send your post as testimony to the committee that will be hearing this monstrosity!
By The Polish Wolf on Jan 10, 2007 | Reply
Walter, you seem to have a weird view of human nature. You assume that people, in time of need, will accept prices being gauged if only the government would butt out, at which point they could get supplies and the gougers could get some quick cash. Alas, experience shows otherwise. In the event of a large-scale emergency, like Katrina, the response you get is looting, which is a time-tested way of dealing with percieved overpricing of goods. The only reason anyone gets away with price gouging is that they are backed up by the government (remember, that evil government?) that, when private ownership looks threatened, is not ashamed to implement ’shoot on sight’ tactics to stop looting, as happened during Katrina. To protect owners and not the needy is for the government to throw the natural order of human relations off balance.
By Craig on Jan 10, 2007 | Reply
Being a capitalist society, private property is (or at least used to be) sacrosanct.
Were I an owner, and someone was threating to loot me, you’re damn right I’d shoot on sight.
As Walter says, “price gouging” is a political term.
Price is a rationing mechanism. Pure and simple. Preparation in the preceding weeks would have mitigated a lot of what happened during Katrina and Rita.
To loot from the prepared and give to the unprepared is the natural order? Didn’t your mother read you The Ant and The Grasshopper when you were a kid?
Sheesh.
By Walter Greenspan on Jan 10, 2007 | Reply
Polish Wolf, you may have a better understanding of the issue after reading “In praise of price gouging“, by John Stossel.
Stossel explains, in an easy to follow manner, why price gouging is good and anti-price gouging law are bad.
By Dani on Jan 10, 2007 | Reply
Polish Wolf, I perceive to be looting as a crime of opportunity. After Katrina, I vividly remember seeing people carrying out large amounts of things quite unessential to survival, like electronics and designer clothing. Maybe it was because all the essentials were already gone well before the storm struck, but it seemed like people stole the things they would have liked to own before or after the disaster, not during it. As if the disaster would simply pass quickly or someone else would provide the essentials.
The only natural disaster I could envision looting for essentials would be an earthquake- because there’s no warning.
Another laudable aspect of price gouging is at least the goods get to the people, and fast. No way the government is going to get it done faster than a greedy entrepreneur.
By Gman on Jan 11, 2007 | Reply
Helena IR’s spineless editorial today…
The truth…
By Shane C. Mason on Jan 11, 2007 | Reply
I don’t see a huge problem with foresight.
By Craig on Jan 11, 2007 | Reply
Foresight is good. Let me know if you see any.
By isaac on Jan 11, 2007 | Reply
so, if a disaster causes water to become a tightly limited commodity in an isolated area, this law would prevent someone who has it from jacking up the price, but wouldn’t provide any self-interest based motivation for the person to conserve or fairly distribute the water? No “self-interest based” incentive to get it to people in desperate need (who may also be willing to pay a lot for it) instead of, say, just using it for regular irrigation?
By isaac on Jan 12, 2007 | Reply
“Wolf” makes an interesting point about looting, in these situations, being “natural” in the absence of government. Yes… but it’s also natural in such a state for certain well organized individuals or groups to raise private security forces or outright militias, who might then really “shoot on sight” at anyone they have suspicions of. And, heck, maybe they’d even do some looting themselves.
Hopefully the government can prevent such excesses by any player in a disaster scenario.
By Dani on Jan 12, 2007 | Reply
isaac-
Not for the first 24-48 hours, they can’t.
By Mark T on Jan 12, 2007 | Reply
Why would you store 100 gallons of water if you had a well? Huh? Huh? Speculator.
By Craig on Jan 12, 2007 | Reply
How is it speculation if you’re not going to sell it?
By Walter Greenspan on Jan 13, 2007 | Reply
Actually, Craig, it is speculation if you’re taking an action to protect your immediate supply of water in case there might be a power failure that interupts the operation of your well.
And, Mark T, what exactly is your problem with speculation. Without speculation there would probably be higher overall retail prices as the retaill-whoesale price spread would be greater than it is when there is active speculation.
By Craig on Jan 13, 2007 | Reply
Not really, Walter. It’s only speculation if you do it with the intent of making a profit.
If I do it to have it stored in case of a prolonged power outage (most wells don’t work so hot with no power, Mark), that’s preparation, not speculation.
By Walter Greenspan on Jan 13, 2007 | Reply
Craig, if you do it because it will save you money by not having to purchase water if there is a power outage, then that is speculation.
By isaac on Jan 14, 2007 | Reply
i thought maybe i should just leave #12 standing on its own if i wanted an answer to it. hope it’s not a dumb question. but i guess it’s easiest just to respond to the latest posting. so… i’ll just try it one more time, at risk of obnoxification:
so, if a disaster causes water to become a tightly limited commodity in an isolated area, this law would prevent someone who has it from jacking up the price, but wouldn’t provide any self-interest based motivation for the person to conserve or fairly distribute the water? No “self-interest based†incentive to get it to people in desperate need (who may also be willing to pay a lot for it) instead of, say, just using it for regular irrigation?