In “When demand soars, prices should too” (Opinion, March 18), Jeff Jacoby presents a distinction between “price gougers” and “price gaugers.” It seems a gouger raises prices “brazenly” and a gauger raises prices “sensibly,” a distinction that can be difficult to discern.
Jacoby argues that a store should be not be pressured by the government “to keep prices artificially low,” and that it’s better “to let businesses use their own judgment to gauge the right price for their products.” So, how much should the price of, say, Prell shampoo increase? Does Jacoby think raising the price from $1.25 to $1.75 would reduce hoarding? Most people have no idea what Prell costs and wouldn’t notice the increase. Anyway, panic buyers don’t care about the price of low-cost items. A far better way to avoid hoarding would be to limit quantities per customer.
Jacoby, more typically a strong proponent of markets, here argues that, rather than relying on the market’s so-called invisible hand, retailers should take the lead in setting the price. The “invisible hand” theory posits that price increases due to increased demand will encourage new producers to enter a market and increase supply until supply and demand reach a new equilibrium. In the current situation, no price increase is needed for potential new producers to notice there’s a temporary increase in demand. All they have to do is look at the empty shelves. Then they’ll decide if it’s worth the investment to produce additional Prell substitutes, taking into account whether they think the demand will continue.
Ever fearful of government intervention (in this case, to protect consumers), Jacoby here argues that retailers should intervene to set prices. Good luck with that model.
Jeff Jacoby could not be more wrong in suggesting that it is appropriate for retailers to increase the prices on high-demand products in light of the coronavirus pandemic. At best, inflated prices signal to the public that the product is so sought after that they had better just grab what they can. At worst, it prices a significant portion of the public out of being able to afford the product, should it be available. Jacoby’s attitude seems to be to punish all for the actions of a few.
It would be preferable to see retailers taking some lead in setting the tone for the public, as I witnessed on Wednesday at Trader Joe’s in Allston, where shoppers were greeted by a sign that encouraged us, in an upbeat way, to buy what we needed and nothing more.
We desperately need leadership and kindness in this time of crisis. Price “gauging,” as Jacoby put it, goes against what should be our better angels.
Jeff Jacoby’s column seems to ignore a glaring issue. He suggests that price gauging, as opposed to price gouging, is acceptable as long as there are “prudent price hikes.” He feels that this would address hoarding, sales on the black market, etc. He does not seem to factor in the impact of such price hikes on those who depend on food stamps or live paycheck to paycheck. Food stamps would end up buying less food. Those living paycheck to paycheck are more likely to have been laid off or have had their hours cut back.
Prudent price hikes would financially punish those least able to survive such punishment. Keeping prices the same, or even lowering them, in conjunction with some sort of rationing, might be a better approach.