Price Gougers vs. Economics 101.

While perusing an internet firearms-related site recently, I came across a thread pertaining to the alleged “gouging” by a dealer at a gun show who was hawking something that the poster fancied (I think it was cartridge primers). In any event, the guy was incensed at the price that was being asked by the seller and vehemently denounced him as a “price gouger.” Several respondents joined in and bemoaned such “unseemly” behavior while others who commented had a more balanced approach to the subject at hand.

I figuratively scratched my head and tried to see the complainant’s point but, frankly, I had no sympathy whatsoever for his plight. Very basically, the potential buyer wanted to purchase something at a price less than the seller was willing to accept. OK, I’m sure we’ve all been in that situation many times before. In such cases, we normally go our merry way and seek out other sellers who may have item we’re looking for a price we’re willing to pay. If we can’t find anyone agreeing to sell this item for the price we want to pay, it should be assumed that we have an unrealistically low expectation of what the true market value is for said item. This is the beauty of Capitalism. Maybe we should keep this on the hush-hush as capitalism is a dirty word in high political circles these days… but I digress. In any event, if the demand for an item exceeds the supply, the price will go up. If the supply exceeds the demand, the price will drop. This isn’t rocket science.

To apply this to the issue mentioned above, if the seller has an absurdly high price on his primers (or whatever he was trying to sell), he won’t sell much, if any, of his stuff and will go home empty-handed (especially if he bought some of the typically atrocious “food” at the gun show). If he is asking an absurdly low price, and assuming there was even a modicum of demand, he would quickly sell out and probably kick himself for leaving a lot of money on the table. Again, basic Economics 101. Was this seller “price gouging?” I think not. Price gouging is when a seller has a product that the buyer absolutely must have and then jacks the price up well beyond its normal market value. Note I said “absolutely must have,” not “would like to have.” There is a huge difference. A good example is when fuel supplies or basic food and water needs are disrupted because of a pending hurricane or other potential calamity and the sellers of this stuff mark it up substantially higher than normal because, in this instance, the buyers have no choice if the seller is the “only game in town.” After the perceived dire situation passes, the price returns to normal. That is “price gouging” and is reprehensible. Personally, I would be hard-pressed to ever again be a patron of an establishment that acted in such a manner. This is entirely different than the person who fancies something but wants to buy it at a lower price than the seller is willing to take. This might be primers, automobiles, houses or a myriad of other things. In a normal world, a seller wishes to maximize his profit and a buyer wishes to minimize his spending. That’s how it should be. Just because a seller doesn’t want to lose money on a transaction doesn’t mean he’s evil. The tables can be reversed and one might say that the whiny buyer who complains about “price gouging” is actually too cheap or too spoiled to pay a fair market value and believes he is being taken advantage of or that society in general and the seller in particular “owe” him something. Gee, that sounds like a typical liberal democrat.

In conclusion, let’s try an experiment. Let’s all walk into our local BMW dealer’s showroom and offer to buy a brand-new Z4 Roadster for $1,000. When the salesman looks at you like you just fell out of a tree, holler and accuse him of price gouging. If you raise too much of a ruckus, you can complain about the dealer’s “price gouging” to the policeman who comes to arrest you for disturbing the peace I’m sure he’ll be totally sympathetic. After all, the evil capitalist dealer shouldn’t be denying you the pleasure of driving an automobile that you really, really want at a price you want to pay. What this country coming to? Oh wait, with the current administration in Washington and their lackeys in Congress, that question may be answering itself.