ColdwaterHotrod Posted July 7, 2006 Report Share Posted July 7, 2006 I found this & it pretty much somes it up..... Real World Economics by Ed Lotterman What is "price gouging" and do we need pricing laws? The term "price gouging" is suddenly in vogue among politicians and news announcers because of the recent run-up in gasoline prices in the Midwest. But what exactly constitutes "gouging?" Consider the following cases: Paying $12 for two thin slices of cold greasy pizza and two small Cokes in an airport departure concourse. My neighbors selling a house for eight times what they had paid for it years ago. Twin Cities apartments renting for $150 more per month than a year ago. Me charging $200 per hour as an consulting expert in a legal case when I get less than $50 per hour teaching at Metro State University. In a market economy, prices frequently seem unfair to buyers. But whenever anyone has something to sell, they try to get as much for it as possible, whether it is their labor, a used car, a house or items on a garage sale. That is human nature. Would society be better off if we enacted laws requiring anyone selling a good or service to have their prices approved for fairness by some government commission? Or laws allowing consumers to challenge any seller who seems to be gouging, with significant penalties for those caught selling well above their cost? I think not. While we may not like it when a particular set of sellers charge what we think is a high price for a product we want, requiring government approval of a fair price for any particular transaction opens up a Pandora’s box of complications. Price controls lead to wasted resources and even greater unfairness than the market. Punishing price "gouging," defined after the fact, introduces greater uncertainty into business that can only be overcome with average higher costs to consumers. If potential producers know that their prices may be lowered arbitrarily at times in a certain sector such as oil, they will be less inclined to enter that sector. Greater risk in business, like greater risk in investments, can only be overcome with greater rewards. Thus the cures that some are proposing to deal with current gas price "gouging" are ultimately far more harmful than the problem. "But gas prices are different," you protest. "When an old couple sells a house for much more than they paid, it is because the house is worth that much in today’s market. They are not colluding with anyone else to fix the price of houses." No, the old couple is not colluding with anyone. But despite popular belief to the contrary, there is little evidence of collusion in setting gasoline prices either. In the popular mythology of U.S. economic culture, there are two bogeymen: grain companies that collude to keep prices low and oil companies that collude to keep prices high. But repeated investigations of both industries by government commissions and private researchers fail to turn up concrete evidence of price fixing. The existence of collusion is not supported by the long periods of low gasoline prices such as the one that ended in the last year. If big oil companies have such market power, why do they tolerate periods of low prices and squeezed profits such as 1996 to 1999? It is not a myth that the wave of mergers within the oil industry, such as British Petroleum’s buyout of Amoco, was largely driven by the need to cut costs in the face of successive years of low profits. Nor is it a myth that profits in petroleum refining in the United States are so low that the major oil companies have largely pulled out of that activity. It is human nature to get as much as we can when we have something to sell. It may also be human nature to resent it when someone else does the same with a product that we want to buy. But if we are wise, we should avoid the temptation to enact price controls or impose ex post facto punishment for actions, such as noncollusive price setting, that are not against the law. Link to comment Share on other sites More sharing options...
ratnacage Posted July 7, 2006 Report Share Posted July 7, 2006 outstanding. Link to comment Share on other sites More sharing options...
SC2004arispe Posted July 7, 2006 Report Share Posted July 7, 2006 now can you explain it to me in spanish Link to comment Share on other sites More sharing options...
ColdwaterHotrod Posted July 7, 2006 Author Report Share Posted July 7, 2006 now can you explain it to me in spanish Only if you are lowering your Shelby all the way to the ground, adding 22" rims & tires with hydraulic shocks on all four corners to make it hop like a mexican jumping bean! Link to comment Share on other sites More sharing options...
RUFDRAFT Posted July 8, 2006 Report Share Posted July 8, 2006 Coldwater - you're off your meds again. It's time for another intervention. Link to comment Share on other sites More sharing options...
ColdwaterHotrod Posted July 8, 2006 Author Report Share Posted July 8, 2006 Coldwater - you're off your meds again. It's time for another intervention. I'm better now...I got more beer! :beerchug: Link to comment Share on other sites More sharing options...
Five Oh B Posted July 8, 2006 Report Share Posted July 8, 2006 now can you explain it to me in spanish precios bajos son mal. precios altos son muy bien. quieres un GT500? no hay una problema si tienes mucho dinero! Link to comment Share on other sites More sharing options...
ColdwaterHotrod Posted July 8, 2006 Author Report Share Posted July 8, 2006 B)--> QUOTE(Five Oh B @ Jul 8 2006, 04:56 PM) 25398[/snapback] precios bajos son mal. precios altos son muy bien. quieres un GT500? no hay una problema si tienes mucho dinero! Now can you explain that to me in english? :wacko: Link to comment Share on other sites More sharing options...
SC2004arispe Posted July 8, 2006 Report Share Posted July 8, 2006 B)--> QUOTE(Five Oh B @ Jul 8 2006, 01:56 PM) 25398[/snapback] precios bajos son mal. precios altos son muy bien. quieres un GT500? no hay una problema si tienes mucho dinero! Yo no nesesito mucho dinero, a mi me va costar $45,000 por un convertible, pero muchas gracias por esplicar.... Miguel Link to comment Share on other sites More sharing options...
ColdwaterHotrod Posted July 8, 2006 Author Report Share Posted July 8, 2006 B)--><div class='quotetop'>QUOTE(Five Oh B @ Jul 8 2006, 01:56 PM) 25398[/snapback]</div><div class='quotemain'><!--quotec--> precios bajos son mal. precios altos son muy bien. quieres un GT500? no hay una problema si tienes mucho dinero! Yo no nesesito mucho dinero, a mi me va costar $45,000 por un convertible, pero muchas gracias por esplicar.... Miguel DAMIT! Don't make me buy a Spanish Dictionary! I have enough problems as it is today! Link to comment Share on other sites More sharing options...
SC2004arispe Posted July 8, 2006 Report Share Posted July 8, 2006 DAMIT! Don't make me buy a Spanish Dictionary! I have enough problems as it is today! Sorry bro, but I thought maybe you were trying to brush-up Link to comment Share on other sites More sharing options...
RUFDRAFT Posted July 8, 2006 Report Share Posted July 8, 2006 I need more beer. I think I have the El Mustang Grande thread here... Link to comment Share on other sites More sharing options...
Five Oh B Posted July 8, 2006 Report Share Posted July 8, 2006 B)--><div class='quotetop'>QUOTE(Five Oh B @ Jul 8 2006, 01:56 PM) 25398[/snapback]</div><div class='quotemain'><!--quotec--> precios bajos son mal. precios altos son muy bien. quieres un GT500? no hay una problema si tienes mucho dinero! Yo no nesesito mucho dinero, a mi me va costar $45,000 por un convertible, pero muchas gracias por esplicar.... Miguel Translation for the linguistically challenged.... I said: low prices are bad. high prices are very good. want a GT500? no problem if you have a lot of money! Miguel said: I don't need lots of money, mine is going to cost $45K for a convertible, but thank you very much for explaining.... Link to comment Share on other sites More sharing options...
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