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Comment by phailhaus | Hacker News Reader

Okay, what's one? How do you defend price gouging water and airline seats during an emergency?

I don't see how it's defensible...

Let's say airline X jacks rates during a crisis. The "free market" reaction would be that people would be outraged by airline X, and would then during the crisis and in the future not use them - thereby hurting their business/brand. A competitor, airline Y who didn't jack rates would then get current & future business based on their noble actions during the crisis. The free market would solve the problem by itself ... right?

Except wait... the people in the current crisis, aren't helped at all. And of course, there's no guarantee that airline Y doesn't jack rates during the next crisis.

Anyone else have a reasonable counter-argument?

Edit: Meant for my reply to be for rhapsodic - sorry.

Increased prices would mean that it's then profitable to "stop" normal flights in other regions. Then divert all those planes to the disaster-area so that you can "take advantage" of those horrible prices. E.g. By letting the price increase, you're also incentivizing private entities into aiding in the relief effort.

The other moral argument for it is that this increase in "supply" at a higher price, also reduces the load on free/volunteer/government-provided relief and evacuation efforts. E.g. Rich/Wealthy/Middle-class people pay more so they don't have to worry about being evacuated and because they want to spend more money on mitigating risk. Those people then won't need to be transported out on the congested freeways and such.

Letting the price increase to incentivize companies only makes sense if the government subsidizes the difference. Otherwise, more people that need the help suddenly can't pay for a resource that used to be affordable, right when they need it most.

No, the free market reaction is that all the airlines notice airline seats from the Caribbean are way more valuable right now, so they divert resources from nonemergency areas to put on extra flights out of the Caribbean, as many as the airports can take, so more people are helped. If there's a law against price gouging, the airlines won't bother doing any such thing, because they have no incentive.

LOL. So you're saying a for-profit company, who's sole purpose is to increase revenue/stock value is going to do the right thing, and divert flights, leave their gouging money on the table, just to serve those in need? Don't hold you breath.

Er, you've got it the wrong way around. Failure to divert flights would leave money on the table - there's no profit in potential customers who would have been willing to pay you for a service that you don't deliver. It's diverting flights that lets you actually charge the 'gouging' money and increase profits and stock value. This is the principle of how capitalism works. It's the reason why capitalism turned out to work better than communism. We shouldn't ignore our knowledge of basic economics in a disaster area, because that's where it's most badly needed of all.

Really? A disaster is where we need capitalism the most? All you've said is how much of a profit companies can make via price gouging, but you've made absolutely no mention about the people that need the help. Great, companies make a killing in profit, but fewer people than ever can afford the help that they need.

How are you going to look someone in the face and tell them that they should be glad that they can no longer pay for a service that used to be affordable, right when they need it most?

My claims have been all about the people that need the help. Stop, take a deep breath, go back and actually read my last few posts.

How are you going to look someone in the face and tell them that they should be glad that the service they need is now not available for any price, right when they need it most?

Not really, you only suggested that companies will send more flights to disaster areas which somehow means more people will be helped even though they can't afford it anymore.

Your suggestion that flights will somehow "run out" doesn't make sense. If demand is huge for flights during a disaster, airlines don't need to increase the profit margin exorbitantly to make more money. They already will.

> I don't see how it's defensible...

I'm trying to answer for the sake of debating - not necessarily my point of view.

First, regardless of how much the airline charges, there will be a fixed number of people that will get a seat.

Now, suppose the price is kept low, like $99. Maybe some people that don't want the seat that much will get it. They may have other options and wouldn't pay $200 for the seat, but think $99 is ok. Conversely, some people who value the seat much more (to the point they would pay $4000 for it) may not be able to get it. So you can argue that the seats will be attributed randomly, which is worse than basing the allocation on who wants the seats the most (well, then there's the issue that $5000 is peanuts for some people, and a lot for others, not sure how to answer to that).

Also, with the seats getting so expensive, the airlines may try to sell extra seats (re-routing planes for instance).

Finally, this happens all the time in different contexts. People go to all sorts of trouble because they don't have access to the best lawyers, doctors or can't afford their medication. It's not really an argument but if we are consistent, we shouldn't be shocked by one and not the other.

It seems like the ideal solution scales the price increase to an individual's income. A flat $200 increase does not impose the same burden on everyone, and only helps out company profits.

Suppose I'm in an area where all of the dialysis clinics have been shut down by a hurricane and floods, and I have a family member who needs dialysis within the next 48 hours. My only hope is to fly them to an area where they can get dialysis. I'm much more concerned with whether or not there is a seat available, than the amount it will cost me. A $350 seat is of no use to me if someone else has already bought it.

Conversely, suppose my whole family is healthy and able bodied, but we just don't feel like living in a temporary shelter set up in a high school gymnasium for the next week. I'm on the ball, and I check flights to my brother's city, and because I'm in early enough and the flights are normal price, I spring for tickets for the entire family. Other people who need the seats far more than I do are out of luck. I realize this, but I figure someone else will snap up the seats, regardless of whether they need them as little as I do.

> I'm much more concerned with whether or not there is a seat available, than the amount it will cost me.

You're in a very privileged position to not care about the cost, but you're talking like everyone can do this. Many people don't have that option. Your solution favors the wealthy with zero recourse for those less fortunate.

It increase total supply and increases availability of free supplies for the poor and needy.

It increase total supply by encouraging people to come and sell goods at the increased price. If you can load up your care with water bottles, drive 5 hours, and make $5k that is tempting and some people will do it that would not do it if there is no price increase.

It increases the availability of free supplies for the poor and needy because those that are needy and not poor will pay more to get the more water. This of course presumes that those selling water provide a better service than those giving water for free. Which I think is a justified assumption because if they were not, they would not be able to sell anything.

The unicorn case of a couple bad actors working to profit off the increased demand is hardly a reason to justify price gouging on everyone. If you're actually afraid of people taking advantage of reasonable prices, just institute a cap on the amount that people can buy at once.

Plus, the argument doesn't work on a service like airplane flights. Nobody can buy tickets and scalp them for profit.

If water is excluded from market forces and artificially stays at the same price, then one overcautious person could buy it all. Leaving nothing for the others.

Sounds like that's pretty easily fixed by having a maximum amount someone can buy.

Higher prices encourage supplying more emergency supplies either through transporting them into the area or storing them in preparation for a disaster. Airlines are more likely to make heroic efforts to fly people out if they can charge more for it.

Oh that's great that companies can make a greater profit, but higher prices mean that more people that need the help can't afford it. I really don't empathize with corporations here.

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