Stossel: Price gouging ensures that scarce resources go only "to those who really need it"September 8, 2005 2:52 PM EDT ››› MEDIA MATTERS STAFF
In his September 7 syndicated column, ABC News 20/20 co-anchor John Stossel defended price gougers, writing that by charging $20 for a bottle of water to a person whose baby needed it to live, "the price gouger makes sure his water goes to those who really need it." Stossel added: "It was the price gouger's 'exploitation' that saved your child." He justified this claim because price gougers -- people and companies that charge exorbitant prices for scarce and necessary resources (such as water or oil) -- "save lives" because they dependably provide those necessary goods or services to those who need them, motivated by their own self-interest to make money.
A September 7 Wall Street Journal editorial (subscription required), titled "In Praise of 'Gouging,'" also defended high oil prices and criticized anti-gouging laws.
From Stossel's September 7 column:
Consider this scenario: You are thirsty -- worried that your baby is going to become dehydrated. You find a store that's open, and the storeowner thinks it's immoral to take advantage of your distress, so he won't charge you a dime more than he charged last week. But you can't buy water from him. It's sold out.
You continue on your quest, and finally find that dreaded monster, the price gouger. He offers a bottle of water that cost $1 last week at an "outrageous" price -- say $20. You pay it to survive the disaster.
You resent the price gouger. But if he hadn't demanded $20, he'd have been out of water. It was the price gouger's "exploitation" that saved your child.
It saved her because people look out for their own interests. Before you got to the water seller, other people did. At $1 a bottle, they stocked up. At $20 a bottle, they bought more cautiously. By charging $20, the price gouger makes sure his water goes to those who really need it.
The people the softheaded politicians think are cruelest are doing the most to help. Assuming the demand for bottled water was going to go up, they bought a lot of it, planning to resell it at a steep profit. If they hadn't done that, that water would not have been available for the people who need it the most.
It's the price "gougers" who bring the water, ship the gasoline, fix the roof, and rebuild the cities. The price "gougers" save lives.