Lawyer supports price gouging in time of crisis

Despite complaints about paying extra for gas after Katrina, many people — not just gas station owners — believe the illegal action of price gouging following a time of disaster is necessary and should be protected.

According to Florida-based civil litigation and criminal justice attorney Rex Curry, price gouging generally refers to increasing the original price of a good a certain percentage in a time of emergency.

Curry formed the Pro Price Gouging Legal Defense Fund (PPGLDF) to provide people who are harassed or charged under anti-gouging laws.

He said that conservation of available materials and diversion of products from unaffected to affected areas are his primary reasons for supporting gouging.

“People will hoard as much as they want, even if they don’t need a product, if it is not gouged,” Curry said. “If you are able to gouge, people will divert lumber, food, and other necessary goods from non-disaster areas to help the affected areas.”

Economist Walter Williams wrote in Capitalism Magazine (March 24, 2004), “Whenever a major disaster strikes, the public is confronted with all sorts of unpleasantness ... The immediate demand for many goods and services exceeds their immediate supply. What to do? The typical response is for prices to rise dramatically. While buyers are not thrilled by rising prices, rising prices are one of the ameliorative responses to changes in scarcity conditions.”

Proponents of gouging say that gouging saves lives.

“Because of anti-gouging acts, consumers are deprived of the opportunity to buy goods which, in some cases, could save their lives,” Curry said.

He gave the example of diabetics that must have ice to keep their insulin cool. Curry said that a person is willing to pay the extra price for a bag of ice after a disaster because his or her life may depend upon it. Curry explained that if the store owner was not allowed to price gouge, the ice would not be provided as easily, and the consumer could die.

Auburn economics professor Randy Beard from Baton Rouge, La., is well acquainted with the havoc that hurricanes create. He said that price gouging is necessary because it rations the limited quantities to their most highly valued use.

“Suppose that after hurricane, ice goes from $1 to $10. Only a small number of people will be able to afford the ice — Like a person who will lose $500 worth of food. If the price is regulated to $1 like before the hurricane, there would be a severe shortage,” he said. “It is a necessary bit of discomfort.”

According to Curry, many consumers believe that gouging is just a form of profiteering where the rich make a profit at the expense of the victims of disaster, “but you can’t forget about the guy in the pick-up truck selling generators, making money for his family to survive,” he said. “It (gouging) is not just about rich people making a buck.”

Ashton Smith, a sophomore in business administration, agrees that businesses should be allowed to price gouge.

“Price gouging necessarily raises the prices in order to keep a specific amount of commodity available to the public,” Smith said. “The goods (being gouged) are only items we would use no matter what the price.”

However, many people adamantly oppose gouging and believe that individuals should not take advantage of supply problems.

In an interview on ABC’s “Good Morning America” on Sept. 1, President George Bush addressed the gouging issue.

"I think there ought to be zero tolerance of people breaking the law during an emergency such as this, whether it be looting or price-gouging at the gasoline pump or taking advantage of charitable giving or insurance fraud.”

Jeff Cullen, a sophomore in political science, also defends the anti-price gouging argument. He believes that gouging allows people to profit from other peoples’ loss.

“Price gouging hurts the public that businesses are supposedly helping by providing the good. They are doing them a disservice by taking money away from the victims of disaster, for what ... monetary gain? I believe that is ethically wrong,” Cullen said.

September 22, 2005