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Hurricane Michael: Should Businesses Be Allowed to Price Gouge?

by Countable | Updated on 10.10.18

What’s the story?

  • As Hurricane Michael makes landfall in Florida, Sunshine State officials are warning businesses against price gouging.
  • Florida, Georgia, and Alabama have laws against increasing prices during federal emergencies. But should they? If you support a free-market system, why shouldn’t businesses be allowed to charge whatever price consumers are willing to pay?

What are the laws?

  • Florida state law prohibits “an unconscionable increase in the price of essential commodities, such as food, water, hotels, ice, gasoline, lumber and equipment, needed as a direct result of an officially declared emergency.” Governor Rick Scott (R) declared a state of emergency of 35 counties in the path of Hurricane Michael.
  • Under Georgia law, businesses may not sell, or offer to sell at retail, any goods or services identified by the governor at a price higher than the price at which the goods or services were sold or offered for sale before the declaration of the State of Emergency.
  • Alabama makes it unlawful for anyone to raise prices on commodities or lodging by more than 25 percent during the declared state of emergency.

Critics of price gouging

  • Alabama Attorney General Steve Marshall warned against those seeking to illegally profit from bad weather, saying “Alabamians should be cautious of those who would seek to prey upon them through crimes such as price gouging and home repair fraud.”
  • Georgia Attorney General Chris Carr issued a similar sentiment, stating: “With pending inclement weather, we want to remind Georgia consumers that our Consumer Protection Division is at work to protect them from scammers and price gougers."

Supporters of price gouging

  • When Hurricane Florence hit last month, Art Carden, an Associate Professor of Economics at Samford University in Birmingham, Alabama, wrote in Forbes that “preventing price gouging will” make hurricane damage worse.
  • Carden argued that while it may seem like officials are protecting the vulnerable from “vultures who would exploit them,” they’re
“actually making matters worse by shutting down the mechanism - rising prices - that efficiently and effectively dispatches knowledge and information around the world and calls desperately-needed resources to the areas that are likely to be most affected by the storm.”
  • And in a Harvard Business Review piece titled "The Problem with Price Gouging Laws," Rafi Mohammed said the question of price gouging in not a moral question, but an economic one.
"Doubling the price will make customers think twice about buying another gallon of milk, for example, thus leaving supply for those who didn’t arrive at dawn," Mohammed wrote.
  • Mohammed also warned that laws against price gouging discourage “businesses from boosting supplies.” If prices are capped, he wrote, “there’s little incentive for businesses to hustle to increase supplies.”

What do you think?

Is price gouging “unconscionable”? Or is it the free market at work? Should states relax their price-gouging laws? Hurricane Michael is making landfall: take action above and tell your reps what to do, then comment below.

—Josh Herman


What can you do if you experience price gouging?

  • Floridians who suspect price gouging can call 1-866-9-NO-SCAM or visit MyFloridaLegal.com
  • Georgians can contact the Office of the Attorney General’s Consumer Protection Unit at 1-800-869-1123 or lodge complaints here.
  • Alabamians can report possible unfair prices by calling toll free to 1-800-392-5658 or visiting https://ago.alabama.gov/ConsumerComplaint.


(Photo Credit: iStockphoto.com / hsun337)

Countable

Written by Countable

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(219)
  • Scott
    10/10/2018
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    Price gouging ensures that one customer won’t buy all of a given supply. Let’s say a 24 pack of water usually goes for $4 by me. If the hurricane comes here and I have $100, I may go ahead and buy the last 10 cases even though I may not need it. Now if those cases were $30 each, I can’t afford to buy all, nor would I want to spend $300 on all the water.

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  • SneakyPete
    10/10/2018
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    NO ..... NO ..... NO ..... NO ...... NO AND HECK NO. NO Way should ANY price gouging be permitted or condoned for any national emergency by anyone for any reason. 10*10*18 ..... SneakyPete.....

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  • Melissa
    10/10/2018
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    Taking advantage of people who are in a desperate situation is pretty much as un-American as it gets.

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  • Henry
    10/10/2018
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    Market data for non crisis events can justify price fluctuations but increasing during a crisis is plain cruel. What happened to taking care of each other.

    Like (13)
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  • Andrea
    10/10/2018
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    No words but no.

    Like (12)
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  • operaman
    10/10/2018
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    Only Socialists would hike prices during National Emergency Situations. They love to gouge the poor or rich. Fairness is for the elites not the poor.

    Like (11)
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  • burrkitty
    10/11/2018
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    You ask this every time and the answer is still no. NO MEANS NO.

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  • J. scott
    10/11/2018
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    It’s already against the law but it happens every time everywhere. It simmers down after local law enforcement cracks down — takes about a week or two and the water needs to go down. Generators, Chain Saws, fuel of any sort, and plastic sheeting are generally most in demand — along with industrial fans to dry things out and mitigate mold — enerally the larger stores the Walmart’s and National hardware chains are generally decent. Also, as soon as the water is down goods flow back into the area quickly depending upon the level of damage to infrastructure.

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  • Awilda
    10/10/2018
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    What happened to compassionate capitalism? Or is everything about the dollar? You can tell that Trump is in office kick people when their down then call it compassion.

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  • Lorraine
    10/10/2018
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    It’s Terrible taking advantage of other peoples misfortune!

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  • JTJ
    10/10/2018
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    It’s disgusting to price gouge, but a business should be free to set their prices as they see fit. If they go out of business because of boycott, so be it.

    Like (10)
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  • Randall
    10/11/2018
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    There's a difference between supply and demand, and holding people's health and safety hostage to greed. Nuff said.

    Like (9)
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  • Elizabeth
    10/10/2018
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    Of course not! It is highly unethical!

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  • TuckerWantsLiberty
    10/11/2018
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    The first rule of economics is that all goods and services are scarce. That is much more the case when there are disasters that disrupt normal supply chains. Scarce goods require rationing, which can happen one of two ways - voluntary rationing (prices adjust and consumers in the market self-limit by reducing consumption, which itself then provides a natural downward pressure on prices, to counteract the upward pressure from reduced supply), or involuntary rationing (someone from the government arbitrarily decides what sounds like a "fair" amount for everyone to get). I choose "price gouging" over government oversight, and would choose that every single time. Additionally, the higher prices (and hence the higher profit opportunities) provide incentive for suppliers outside the affected area to undertake the expense of figuring out how to get goods in there and make sales, thereby increasing the supply available to those affected by the disaster (and, of course, that drives prices back down as well). At this point anyone against the natural movements of prices is basically against helping people.

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  • Judith
    10/11/2018
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    No. Why is this question wasting my time?

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  • Steven
    10/10/2018
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    It’s immoral to rise prices for people who are in the middle of a crisis.

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  • Kevin
    10/11/2018
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    Only if I can punch the dealer in the face TWICE!

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  • Trey
    10/11/2018
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    No ... Prices should not increase due to a disaster since people will be in need. However to prevent one person from clearing out the inventory it should be rationed so everyone has equal opportunity to purchase necessary commodities. This should only be implemented on food and water commodities, the nice to haves like TVs, tobacco, wine, etc should be exempt from this protection. As they are necessities for survival.

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  • Lynn
    10/11/2018
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    I think that is immoral. I wasn’t raised to take advantage of others when they need help.

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  • Carol
    10/11/2018
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    In our area when there are conditions that will result in a shortage of necessities our local suppliers limit what they will sell to any one shopper. That seems to have worked well for our community.

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