Caught on Tape
As a libertarian I get to debate some interesting ideas. I recently debated my pastor during dinner on why price gouging was, with no government involvement, a good thing. One thing to remember is that nothing is free. If you've received something at no price to yourself, it only means that someone somewhere had to spend either time, money, or both to create it.
Take for instance the hurricane that came close to my area this summer. Everyone was buying gas, but the stations couldn't raise their prices even though demand had greatly increased; so much so that they were running out of gas. At that moment gas was worth a great deal more than was reflected in the price. Indeed, people were filling up so much that there was practically none left when I got there. However, if the station manager had been able to raise the price according to demand then people would have bought less which would have enabled other to buy as well. (I only filled up on what I needed so that others could have some too, regardless of the price, something which many others did not do unfortunately.)
After talking to the manager, while he watched his tanks slowly drain to nothing, I asked if there was more gas on the way. He said that there was supposed to have been a truck that day, but it never came. Now if the trucker had been able to raise his price there was a much greater chance and incentive for him to bring that truck, but what was in it for him? He wouldn't make anything extra and the time he spent on the road would be worthless, at least from an economic point of view. In fact, in may have cost him more to bring it through the traffic during the hurricane exodus.
So it shouldn't come as a surprise that I would have agreed to some price gouging during the "West Coast Power crisis". Hospitals would be able to maintain their systems because others would have turned off their TVs and computers. Instead, the government intervened and paid the difference.
Of course, they had allowed the problem to happen anyway. By not allowing others to start producing electricity they put a lot of "power" into the hands of several individuals who could price with competition.
From CBS news:
CBS News Correspondent Vince Gonzales reports on the Enron scheme, as caught on new audio tape. The traders and plant operator laugh and plot in a display that seems to prove the theory those years before the energy crisis, Enron manipulated markets.
"They had to do a rolling blackout through the town and there was a red light there he didn't see," one Enron trader says on tape.
"That's beautiful," a second voice responds.
"I'm like, this is causing animosity throughout the state now," the first says. "Cars are blowing up."
The new tapes — routinely recorded by Enron to protect their own deals and later obtained by this small utility in Washington state — confirm what CBS News has been reporting for four years: That Enron secretly shut power plants down so they could cause, and then cash in on, the crisis.
In a free market, meaning no government, almost anyone could create and sell electricity thus eliminating the crisis.
My pastor and the other present were aghast that I could propose price gouging, but after my explanation they could see the truth. Indeed, to a Christian price gouging seems, on the surface, to be a greedy and manipulative prospect, but only if you ignore everything else.
Now, without government, what could have stopped the station owner from keeping the prices at their levels before the hurricane - absolutely nothing? Instead of the government mandating a perceived evil, he could lose money but help people out of his own heart.
E-mail Sean at 99blogger@ninetyandnine.com
