OPINION: If Price Gouging is a Crime, Then Lock Me Up!
If the one roll of toilet paper left on these supermarket shelves costs $100, that's okay. That's how the free market works! (Wikimedia Commons)
Some call it “price gouging.” I call it the free market. That’s right: Any firm should be able to charge whatever prices they want. If people can’t afford essential goods during this pandemic, that’s just the way the world works!
Let me be clear: I don’t hate people who can’t afford things. They just never learned how to pull themselves up in life. If anything, this virus is finally teaching people financial literacy. (This was a tough lesson I had to learn when I got to New York City with nothing but a college degree and an entry-level financial consultant job at my dad’s friend’s firm.) So just work a little harder and save more during these trying times. It’s that easy!
I hear “essential” workers—outside of my personal trainer, I wouldn’t know any—have to stay out on the front lines. As long as they can keep the stock market running, I hope they stay safe in these trying times! They might even earn enough for a bottle of hand sanitizer.
It’s not like people are being laid off en masse, right?
The Facebook warriors complaining that the price of hand sanitizer is getting way too high remind me of my delusional second cousin, Matt. He and his fiancé, both of whom obviously slept through Econ 101, complained about their student debt being too high. Basic logic proves that people who can’t afford college shouldn’t go to college, but they disinvited me from their wedding when I pointed out the obvious. I guess some people can’t handle the truth. Think of how much money is wasted on hiring him and other adjunct philosophy professors instead of real scientists like Milton Friedman.
Listen: it is a proven fact that, when demand for a good goes up, of course prices will rise. I cover that relationship in episode 47 of my podcast. I had a demand for hand sanitizer, so I bought it.
Actually, I bought a lot of it. In fact, a lot of my friends did the same thing. Are we going to lock people up for wanting to be healthy? It’s no surprise that the shelves on Costco are looking empty.
If the invisible hand forces me to barge into grocery stores, sweep all the hand sanitizer into my arms, and flee—who am I to say no? Doing what we think is best for ourselves as individuals, time and time again, has always achieved the best possible outcome for society as a whole.
Am I driving the price of hand sanitizer up by buying out whole inventories? Yes, but that’s how the market works! Better to be safe than sorry and get more than I will ever use. Why conserve and take only what I need when I have the money to afford whatever I want? I earned this lifestyle. After all, as Adam Smith said in The Wealth of Nations, “We say of a rich man that he is worth a great deal, and of a poor man that he is worth very little money.” As an American, I’m allowed to waste resources that would be better used elsewhere.
Besides, the market says that people who want something will pay more for it. People who need something also need to want it, which means they should work hard and earn more money to get it. It’s basic economics: prices are determined by who wants things, not who needs things.
Let’s ignore the fact that my friends and I have already stockpiled (which some people have ridiculously labeled “hoarding”) most of Costco’s supply of hand sanitizer, reduced its availability to other people, and raised its price. Higher prices prevent people from hoarding the rest! Higher prices are a signal to consumers that hoarding is obviously more expensive!
If hand sanitizer is so valuable, maybe more people will start making it themselves. It’s called entrepreneurship! This country’s industrial power was founded on pioneers who made things themselves and didn’t steal it from others or complain about how expensive it was.
So, if you want to make hand sanitizer yourself, here’s a free guide. It requires going outside during a public health crisis and buying resources you could be using to get food. Keep in mind that you probably won’t be able to scale up production in any meaningful way to lower the price of hand sanitizer on the market. Oh, did you want to? Well, you can’t gather people to work together during this health crisis—but sometimes entrepreneurship is about being bold. You can always build an industrial bottling plant with your own two hands if you work hard enough!
At the end of the day, this whole “price gouging is a crime” nonsense is about trying to stop the hardworking American from making a profit off of things that other people need. Would you jail a farmer for charging $10 for an apple? The entrepreneur should sell to whomever wants something most, someone who will pay the highest price for it.
A lot of people who need things don’t have the money to afford those things. But just because they demand a world where everyone’s needs are met doesn’t mean it should be supplied. Just look at the investors. They know best, and they haven’t backed it, so why should I?
Indeed, to give the hand sanitizer I’ve rightfully earned through my stock market successes to people who might not be able to get any—not only does it violate the rules of the invisible hand, but it lends a visible hand to people who need it. We can’t have that in this country!
People need to relax. Things always look bad in the news. When has this system ever failed us?