Thursday, June 22, 2006

Bizarre Counterfeiting / "Price Gouging"

Division of Labour asks what could almost be a Zen Koan on the stupidity of state agents: "Is it counterfeiting when there’s no real dollar bill in that denomination?" Turns out the US Secret Service has accused a ministry of counterfeiting... million dollar bills. Of course, no such bills actually exist. Your tax money at work, ladies and gents. tells us what Walter E. Williams has to say about so-called "price gouging". This is a great article.

Let's start off with an example. Say you owned a small 10-pound inventory of coffee that you purchased for $3 a pound. Each week you'd sell me a pound for $3.25. Suppose a freeze in Brazil destroyed half of its coffee crop, causing the world price of coffee to immediately rise to $5 a pound. You still have coffee that you purchased before the jump in prices. When I stop by to buy another pound of coffee from you, how much will you charge me? I'm betting that you're going to charge me at least $5 a pound. Why? Because that's today's cost to replace your inventory.
If you were really enthusiastic about not being a "price-gouger," I'd have another proposition. You might own a house that you purchased for $55,000 in 1960 that you put on the market for a half-million dollars. I'd simply accuse you of price-gouging and demand that you sell me the house for what you paid for it, maybe adding on a bit for inflation since 1960. I'm betting you'd say, "Williams, if I sold you my house for what I paid for it in 1960, how will I be able to pay today's prices for a house to live in?


doinkicarus said...

those are two very good posts. I've always found accounts of price-gouging to be specious, at best. What business is it of anyone to assert that the price of my gasoline is too high? It's my fucking gasoline, isn't it. I don't have to sell it to anyone. You're not doing me a favor when you buy my gasoline, I'm doing you a favor by selling it.


Francois Tremblay said...

The same Greenies who whine about pollution are cursing at the pump with their big SUVs.

Not owning a car, I have the right to feel inherently superior.

Mark said...

I want to buy a $100 item with that million dollar bill and get $999,900 in change, all in Franklins.