What do they teach in journalism school? Better yet, what do they teach in high school? If this story is anything to go by, it is apparent that they do not teach economics, which is why so many people do not understand how the free market works.
The latest example occurs in Texas, a state that is being ravaged by Hurricane Harvey.
A KXAN news crew booked a room at the Best Western Plus in Robstown, just outside of Corpus Christi. The hotel usually charges between $120 and $149 a night for one room with two queen beds. However, the news team was shocked – SHOCKED – that the they were charged $321.89.
According to video released by the television network, the reporters were outraged, started to hassle the employees and became uncouth with the staff – “So, $119 is a lot different than $289, right?”
Because of their complaining and paucity of economic knowledge, Deputy Attorney General Jim Davis uncovered that 39 other hotel guests were charged higher rates. In other words, some price gouging was occurring, and the reporters and the state heads were not pleased.
Best Western Hotels & Resorts issued a statement:
“In advance of the storm, we proactively advised hotels on prohibitions against price-gouging and communicated our position as a brand that compassion be exercised during this time of crisis.
“[The chain] is dedicated to providing the highest level of customer care. We take reports of price-gouging very seriously and immediately contacted the property in question when we learned of this report. The hotel advised they would be reimbursing guests on Aug. 28 all amounts charged in excess of their average daily rate for this time period.”
But why should price gouging be apologized for or even illegal? Price gouging is a necessary tool in a marketplace, especially when a natural disaster strikes a city, state or nation. As we have seen in the past, price gouging saves lives when a hurricane hits land.
The government should never restrict pricing mechanisms. Prices send signals to the rest of the market: when there is surging demand and the supply has yet to adjust, then prices spike. When these prices do surge, the invisible hand responds by flooding the market with goods and services to take advantage of higher prices, which is a good thing: more supplies for more people.
If prices don’t rise then there is very little incentive for anyone to be socially or economically responsible.
Price gouging also encourages conservation. In the case of the hotel and the crew’s dismay over increased costs, if prices had stayed the same then a group of four, six or eight would likely get two or three rooms rather than deciding to stay in a single hotel room, which means there is at least one less available room for another family or group when disaster strikes.
When price ceilings are installed by governments, or an outraged social media public, then shortages happen, making everyone more miserable and less safe. They may have good intentions, but it usually creates unintended consequences: fewer hotel rooms for victims to seek shelter.
Why do the media and the state hate the public so much?
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