Sometimes, price gouging can be a good thing. If there is a sudden surge in demand for something, say face masks or hand sanitizer, is it better to keep prices low and encourage hoarding that can result in complete outages, or is it better to let prices go up as the market demand allows to discourage hoarding and encourage rapid increases in production? Why would businesses pay for overtime, or expedited shipping, or other higher costs to quickly increase supplies if they are not allowed to increase prices? There are certainly extreme situations where price gouging would be considered by most people to be immoral. (For example, it would clearly be immoral to charge $1,000 for a glass of water to a person dying of thirst when you have plenty of it.) But there are many other situations where allowing prices to go up significantly and quickly helps to make vital products available for important purposes to more people more quickly. Private efforts to keep prices low and to prevent hoarding in an emergency are to be commended, but be careful before you call for laws or regulations to prevent price gouging.
It is true that in many cases, our providing of charity to the developing world undercuts the development of local providers. When we provide food, it undercuts local farmers. When we provide shoes, it undercuts local shoe sellers. When we provide eye glasses, it under cuts local eye glass sellers. We must be very mindful about the unintended consequences of our charity. Yes, we need to provide temporary, life-saving disaster help, but we must be very careful about what we provide beyond that.
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The idea of raising the minimum wage – in Polk County, Iowa, or anywhere, is an emotional issue. Wouldn’t it be nice if everyone earned a “living wage”? On the logical side, just remember that raising the minimum wage will result in more people not being able to find work – especially the least skilled workers. Also know that it will put upward pressure on prices that will further raise the cost of living – which will put more political pressure to further raise the minimum wage. Increasing the Earned Income Tax Credit (EITC) is a better idea. It is paid for by all income tax payers and targets those who have real need, without putting further upward pressure on prices.