Tuesday, January 8, 2013

In Defense Of The Firearm Price Gougers

With recent shootings and even more political drama over the use of firearms everyone has been in a frenzy of buying anything and everything they can get their hands on. I myself have been guilty of buying bulk amounts of ammo when I could find some in stock. It's not a rare sight to see people buy everything on the shelves.

With a basic understanding of your Economics 101 class it should be obvious that demand has sky rocketed and supply has plummeted. With this comes a new supply and demand curve leading to a higher equilibrium price for anything firearms related.

I'm not here to talk about these obvious actions of the market, but of something more prevalent right now. That's those pesky price gougers that have marked up ammo, firearms, and magazines by up to 100% if not more. Those that are fans of firearms tend to lean more to the right. They tend to believe, more or less, in competitive free markets. They tend to yell at those on the left for using emotional arguments that are in favor of gun control instead of facts and logical arguments.

With the current shortage and price gouging they don't realize they're using emotional arguments against those companies that are price gouging.

I'd like to offer the logical argument in favor of price gouging so that we can get away from useless emotional arguments that we all hate to hear. I intend to defend the price gougers for their essential role in a free market.

First we must quickly bring up the facts about acting man and his role in the market. It should suffice to merely say that in any transaction, two actors in order to fulfill their wants rate what they are willing to sell and buy at that certain moment in time. This lists of rated wants is not constant and actually changes depending on the ever changing situations of life.

So what does this have to do with price gougers? Why are they pricing their goods so ridiculously high? It must be noted that prices aren't set by production costs or even distributor costs. Prices are set by what sellers believe buyers are willing to pay for any good. Right now these price gougers believe that people are going to be willing to pay their outrageous prices and that's why they do it. It has nothing to do with greed and everything to do with the consumers.

Price gouging obviously does not originate with firearms crisis. Natural disasters are another time when price gouging becomes the norm. And bringing up government intervention of price ceilings, price gouging is very important here as well.

I believe this analogy to be of importance-

A hurricane hits and people are left without power to their homes. People are now in need of, let's say, ice in order to keep their food from going bad. Some have a good amount of canned food that doesn't need ice while others haven't prepared and have only food that can stay good cold.

So everyone starts going to their local grocery stores. One situation exists where the government has set a price ceiling and the other where no price ceiling exists. Where price ceilings exists and companies are not allowed to set higher prices for their goods people are hurt. If the price ceiling is set at 3.00$ than the first people to arrive at the store are going to quickly buy the ice regardless of their situation at home. It won't matter if they have more canned goods than frozen because at that price they believe they can take it home and use it. Those that arrive later to the store for the ice will quickly find that all the ice is gone, and they might need it because they don't have canned goods but only frozen.

The other situation is where price ceilings are not enforced. Groceries see it fit to price their very limited stock of ice at a price of 15.00$ which is a tremendous mark up from what it was before. Aren't the grocery stores greedy now for price gouging when people are in times of need? Not at all, in fact they are helping people by price gouging. This is because as everyone races to the groceries to stock up on ice not everyone is now willing to pay 15.00$ over the 3.00$ for the bag of ice. Those people who have a stockpile of canned goods see no reason to pay such a high price for ice when they can suffice off what they have, so they forego the ice. Those that have little to no stockpile of canned goods and are actually in a great need of ice ARE willing to pay the 15.00$ so that they can save the food they do have. It no longer becomes a race to the grocery store where if you show up late you're left out. It now becomes a matter of need, a matter of who is willing to forego the extra price in order to get what they want. Now those who actually need ice have a higher probability of getting it instead of losing it to those who might not.

What does this have to do with firearm price gouging? The lesson is exactly the same.

Someone like me, where I have a comfortable amount of ammo, magazines, and already have an AR15 I'd be willing to start buying more ammo, magazines, and another AR15 or AK47 at prices that we are accustomed to seeing. But now that the prices have skyrocketed by the price gougers I'm not willing to forego the extra money for more of something I already have. By not being willing to pay the extra cost I'm leaving the available stock to those who might not have a comfortable amount of ammo, magazines, and an AR15 already. Those who now realize they might want to buy them now and are willing to pay the extra price are going to be able to pick up these goods when they wouldn't be available had the prices been left to what we are used to seeing.

Price gougers help those people that are in actual need of goods, there's no such greed involved.

You either support capitalism or you don't and price gouging has an essential role in the intricate gears of a free market.

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