Price Gouging?

Price Gouging?

Think about the people starving and standing outside a fully stocked Walmart in New Orleans. Why is the Walmart not open? Simple: no power, no personnel.

Why no personnel? There is no way a person is going to risk their life to work at a friggin' Walmart for minimum wage. Why minimum wage? Because raising Walmart's price to deal with the new risks and headaches of a shellshocked New Orleans would be treated as price gouging. Because newly-found homeless persons don't have enough cash or credit cards to pay.

What if we decided that it would be perfectly acceptable to allow prices to increase 1000%? Walmart might be able to afford to pay managers, stockboys, and head cashiers premium wages of $50 maybe $75 per hour. Walmart might be able to afford to pay for special shipments of dry goods and water to there stores. Walmart might be able to afford semi-trucks bearing generators and cellphone towers/satellite dishes to run their stores and maybe serve as new communication hubs for their old neighborhoods. Walmart might make enough money to afford to allow pastors and priests, nuns, Salvation Army colonels to take the materials they need at pre-hurricane prices. Walmart could charge FEMA inflated prices. This would discourage FEMA from controlling the distribution of all food and water and allow the re-establishment of private means of distribution, thereby allieviating suffering at an exponential rate.

What about customers? If they have the money, they can afford to get water that they think they need. They can buy the food they think they need. They will hoard food, but Walmart will make so much profit so fast that they will send extra trucks.

What if the store is damaged? There might be enough profit to bring in a bulldozer to clear the parking lot and throw up tents to serve as temporary stores. A history of allowing these huge profits would encourage Walmart not to build cheap buildings like warehouses in hurricane country or earthquake country but fortresses that are designed to withstand the elements. They know that bad events are boons to their bottom line so it is a good investment in durable and resilient stores. These stores could even become shelters if the toy department is emptied as children are entertained and replacement supplies are focused on food & water, clothing, shelter (e.g., tents), etc.

The Red Cross is wonderful, but it should try to be a competitor to the world's best designed and run distribution center -- which happens to be based near hurrican country.

Let the free market run rampant. Where have 100,000's people ever starved to death for lack of food availability when the free market is allowed to work? Starvation largely occurs when distribution systems are interrupted or prevented from working. Price gouging laws fit the bill.

In SEC securities law there is rule against fraudulent statements called 12b-5. Most companies sued for securities fraud are hit with these fraud counts.

The problem with "price gouging" is that the focus is on the pricing -- the result. There is never a question as to why the prices are high. What if lawyers were likely to use existing fraud law from the common law to pursue people who start rumors of gas supplies ending? What if defrauding parties were pursued not for good economics of raising prices but spreading fraudulent rumors to generate panic?

What if stores would stair-step pricing: 5 liters of water per visit per person at 200% price, the next 5 at 500% price, and every other bottle at 2000% price? This would be easy with pre-programmed cash registers for catastrophe pricing.

What if churches all had several Red Cross trained members with prior cross-training from the Red Cross, Wal-mart, FEMA, and local authorities.? What if churches had reserve sheriff deputies assigned to the church to be the government's liaison to the respective churches? What if Kiwanis Clubs, Boy Scout troops, etc. all hade training on the catastrophe "phone tree" that is run by foot or cell phone or walkie-talkie?

What if these groups had pre-arranged payment systems with Walmart or other big box stores so that they could buy using purchase orders rather than cash? What if the churches had mini-satellite receivers that could communicate with the semi-truck satellite at the Wal-mart parking lot?

Just a bit of profit for Wal-mart will slow unnecessary demand and encourage social benefits that better serve their communities.