Price Gougers and Sign City: Anecdotes From a Big Easy Exile
by Manuel Lora
wife and I recently returned to New Orleans after being displaced
by Hurricane Katrina. Though our visit lasted barely three days,
I was able to get a glimpse into what has been happening since the
storm hit over a month ago. The pace is slow but not entirely discouraging.
That said, however, the long-term impact is hard to predict. There
have been major changes in infrastructure as well as population
and demographics. To add insult to injury, one has to also consider
the presence of the National Guard, socialist central planners,
fascist regulators and other blood-sucking parasitic critters.
me start by saying that, yes, every street is covered in trash.
There are claims that it will take months and even perhaps more
than a year to pick up all the junk. The amount is staggering. From
rotting fridges to wet carpets to moldy plywood, the contents of
homes have been placed on street corners. Those looking for new
visual and olfactory experiences, it's prime time in the crescent
could also believe it's election time judging from the amount of
signs. A closer examination reveals that they're anything but campaign
propaganda. From what I could see, pretty much every business that
is already open or planning to open is hiring. Jobs are available
left and right and the competition for jobs is staggering yet healthy.
is the demand for labor that, for example, Burger King is offering
a $6000 bonus for those who sign a contract to work for a year.
Similarly, several other fast food chains have increased their hourly
wages to attract employees.
there are also signs for house reconstruction and tree removal.
I have an anecdote to share on the latter. I had the radio set to
a local talk station. The host and caller were talking about how
much people had paid to cut and remove trees from their roofs. As
expected, price gouging was mentioned. The caller seemed very upset
to hear that people had paid too much and were "ripped off"
by companies who had charged, he claimed, too much for something
that should cost less. (I wish I had a "record" button
on my car radio so I can share this and re-live this pleasurable
listening experience). The host of the show had also invited a local
government agent who was reassuring people that he would investigate
and even prosecute companies who were not being fair and were *gasp*
tinkering with the free market. There was even a phone number where
the public could call to report companies who were behaving unethically.
The government agent also said that they would check every complaint
to make sure companies were properly licensed and complying with
me go back to the example of the fast food chains. They have increased
their wages because there is a greater demand for workers. The higher
the demand, the more people are willing to pay. Burger King is going
to spend $6000 more per employee because the demand for employees
is higher now than what it was before Katrina. Similarly, there
is a higher demand for tree removal and prices rise accordingly.
In both cases, however, prices are checked by competition. Since
there is more than one company that is offering tree removal, those
who offer the best service at the best prices will be rewarded with
customers. The same happens with the labor market. People looking
for work will go to whoever pays best. So, naturally, the price
of labor increases. Thus, in times of need, it is not only necessary
but normal for prices of both good and services and labor
wait. The company that increases prices hurts the customer!"
would say the statist. As a free marketer, the reply is simple and
obvious. "But wait." I would say, "the employee who
accepts a $6000 bonus from Burger King is hurting the company; the
employee is gouging too!" Indeed, if one accepts the government
claim that an "unfair" price increase constitutes gouging,
then why is this not the case for the employee who has also increased
the price of his labor? Thus, the government's silly war on gouging
is illogical, illicit and counter-productive. Just as a homeowner
is free to accept or deny temporarily higher prices for goods and
services, the same freedom exists for employees to accept or deny
higher wages for their labor.
the caller who was concerned about being "ripped off,"
I say "don't pay." If you feel that the price to remove
a tree is too high, then simply do not offer your money to that
company and look for another one. In a free market environment,
there will be other options. Those who cannot compete will be eliminated.
Right now, there are hundreds of businesses offering their services.
No one is forcing you to open your wallet and pay what you consider
to be an excessive amount. When you go to your local grocery store,
if the price for a pound of apples is too high, you don't call city
hall and cry your eyes out. Why do so now? Also, ever heard of haggling?
Many companies will very often particularly when they are
hurting for customers, such as in New Orleans today accept
a lower bid. They do so because they are very aware that if they
are not flexible, there are many other companies willing to do the
job for less.
is often both amusing and exasperating to watch local officials
dealing with non-issues. Mayor Nagin has asked employers to pay
an extra 50% in wages to attract workers. Why would it be just fine
and dandy for employers to increase the price of labor (paying employees
more), but not for companies to increase the price to remove a fallen
tree? The conclusion is unmistakable: Mayor Nagin is aiding and
abetting gouging. He is in effect calling for potential employees
to gouge companies by requesting too high of a wage. Shocking. Is
this a criminal offense in Louisiana?
most dangerous of politician, other than that who calls for warfare,
is that whose level of economic illiteracy is so great that it would
cause me to start needing Pepto Bismol by the gallon.
Lora [send him mail]
is a freelance TV producer and multimedia specialist in New Orleans.
© 2005 LewRockwell.com