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Reminder: I’ll be speaking at the JFK Lancer Conference in Dallas, which is being held on November 22-24 at the Dallas Marriott Downtown. I hope to see you there!
I recently read that a Motel 6 in Scottsdale, Arizona, is charging $699 a night for next year’s Super Bowl. Is that legal? It sure sounds like a bad case of price-gouging to me. I did a quick search of how much a Motel 6 in Scottsdale costs right now and it came out to around $100 a night.
That’s one super-sized price increase! Where are the anti-price-gougers when we need them? How come they aren’t screaming against “unjust profiteering”? Maybe it’s because they see nothing but rich people attending the Super Bowl and figure that there is nothing wrong with price-gouging rich people.
But that price increase in actually no different from any other big, temporary price increases in society, such as price increases during emergencies like hurricanes. That’s because of the principle of private property. An owner of anything has the right to charge whatever he wants for his product or service. That’s because it belongs to him. If people don’t like it, they don’t have to buy it.
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Consider Motel 6. It realizes that the Super Bowl has, not surprisingly, increased demand for hotels and motels on that particular weekend. It has every right in the world to capitalize on that increase in demand. That’s because Motel 6 is a private company. As such, it has the right to charge whatever it wants for its motel rooms. If people don’t like it, they don’t have to stay there.
The principle is no different in a hurricane or other emergency. Bottled water is suddenly in short supply. Store owners who sell bottled water have the right to sell their bottled water for any price they want, even if the price goes from $2 to $20. That’s because it’s their bottled water. It doesn’t belong to the state, to society, or to others. It’s private property. If people don’t like it, they don’t have to buy it.
Private-property rights are the foundation of a free society. Whenever you see the state issuing orders, edicts, commands, and laws that set a maximum price on goods and services, that’s how you know that that’s not a genuinely free society. It shouldn’t surprise anyone that in countries like Cuba, North Korea, Venezuela, Russia, China, and Vietnam, prices are under the control of the state.
Another aspect of this involves the economic law of supply and demand. A system in which people are free to charge whatever they want for their goods and services is one that efficiently allocates scarce resources.
For example, accommodations in Scottsdale are suddenly in short supply on Super Bowl Sunday. Motel 6 and other hotels and motels increase their prices. That induces other suppliers of accommodations to enter the market. No, not in terms of new hotels and motels. That wouldn’t make much sense given that we are talking about only one weekend. But seeing an opportunity to make some quick money, private homeowners begin renting out bedrooms in their homes. That increase in supply causes prices to start coming down.
It’s the same thing in the case of hurricanes. With soaring prices for bottled water, private entrepreneurs see an opportunity to make some quick money. They take the risk of getting bottled water into the affected areas and making a big profit. That increases the supply of bottled water in the affected area, which causes prices to start coming down.
When the state enters this process with a “price-gouging” law with the aim of “helping” consumers, it perverts the price system that is critically important to the efficient allocation of resources. More important, it destroys private-property rights, which are the foundation of a genuinely free society.
Reminder: Our online Zoom conference on open borders kicks off on Monday, September 30, at 7 p.m.-8 p.m. Eastern Time. Register here.
Reminder: I’ll be speaking at the JFK Lancer Conference in Dallas, which is being held on November 22-24 at the Dallas Marriott Downtown. I hope to see you there!