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NY Attorney General Subpoenas Craigslist For Post-Sandy Price Gougers
TheSync writes "In the wake of Hurricane Sandy, the New York State Attorney General has subpoenaed Craigslist, demanding that the site identify more than 100 sellers whose prices on post-Sandy gas, generators and other supplies were of an 'unconscionably excessive price' during an emergency. AG Eric Schneiderman said: 'Our office has zero tolerance for price gouging [and] will do everything we can to stop unscrupulous individuals from taking advantage of New Yorkers trying to rebuild their lives.'"
Price controls have exactly the same effect in an emergency that they have at any other time. If you prohibit higher gas prices, you guarantee shortages.
or just pandering bluster for the nit wits?
A private seller should be able to put any price they want on something. $100000 for a bubble gum wrapper if they want.
Looking for gasoline, post-refinery-fire that is excessively expensive, and consists of price gouging....
90% of the people in CA would loveit.
General Relativity: Space-time tells matter where to go; Matter tells space-time what shape to be.
Why aren't they subpoena'ing Bloomberg, who set up much-needed generators for a marathon rather than to help the people who needed it?
-- Ethanol-fueled
How horrible that all those people were forced to buy from Craigslist sellers at excessively high prices...
"Anyone who [rips a CD] is probably engaging in copyright infringement." - David O. Carson
Why is this story on slashdot?
There's not tech aspects or any geek relevance whatsoever.
Isn't this simply capitalism ?
And what's wrong with that ? Unless someone is saying they desparately need a certain type of medicine to survive and the seller is saying "OK, $1million"
Because I'm 99.9999% sure that WiiU and such will be hard to find on the shelves but the asshole 'price gougers' will have plenty of 2-3x MSRP units on eBay and Craigslist for us.
The power companies have monopolies and don't upgrade their power lines and infrastructure. Areas where people pay enormous taxes and utility bills are approaching two weeks without power. But the power companies are doing things slowly and cheaply because they have geographic monopolies. The government has no ability to refuel gas stations after nearly two weeks of no new gas truck deliveries to stations. Staten Island, Long Island, and New Jersey are devastated.
But Manhattan is fine and the city government wanted to run the marathon. Now they are worried about 100 Craigslist postings, many of them are fake like the "will trade blowjobs for gas" posts that are clearly there for laughs, instead of the hundreds of thousands being fucked with by the monopolistic power companies.
Doesn't anybody check the articles for grammar anymore?
Does Craigslist hold a monopoly on advertising emergency supplies for consumers? The last I heard, sellers can charge whatever price they want to, so long as (1) they're not preventing their competitors from selling in the same market and (2) they're not colluding with their competitors to raise the price.
The N.Y. AG knows this. This is nothing but a political stunt.
If I remember the first thing we learned in Macro 101 correctly, if supply goes down, price remains the same and demand remains the same or increases, you run out of supply pretty quickly.
If you increase prices, you can afford to resell more expensive gas, trucking it in from further out of state.
What would you rather have: expensive gas, or cheap but non-existent gas?
My Other Computer Is A Data General Nova III.
Idiots.
Price rises in time of shortage cause limited supplies to be distributed to those who really actually do REALLY need them, because those with lesser needs just won't pay the inflated prices.
Adam Smith wrote about this in Wealth of Nations - back in the late 1700s! he spoke abouy grain prices rising in time of shortage, and the complaints the government made about it - when in fact by rising prices, they caused consumption to decline *gradually*, rather than keeping prices the same such that consumption remains unchanged and then after six months there's NOTHING LEFT.
What about Ebay auctions? Are they going to come after me when buyers overpay for the stuff I'm selling?
Perhaps the government should set prices on everything to keep things simple.
If this is a private transaction between two individuals, how is the government even involved? I can see if it is a regulated or licensed company like a hotel, but just 2 people on Craigslist?
Wow, a 7 digit ID - let that be a lesson in the perils of procrastination.
NOT PRICE GOUGING
Someone needs a medical service and is charged $20,000/day from the local tax payer subsidized hospital which has the protection of the local criminal syndicate (city/county/state) that passes 'regulations' allowing them to sustain this exponentially inflated non-market price by operating without competition.
PRICE GOUGING
A private individual sets a price to sell his own goods or services that will only be paid by people willing to freely pay it, (a/k/a fair market value) but the local criminal syndicate (city/county/state) decide they don't like this price, probably because they are not getting a big enough cut.
This is exactly what was wrong with Romney et al's stance on FEMA. If there's a profit motive, then you're going to get the highest possible cost for the least possible value of goods and services. Where there's reasonable infrastructure, competition can reduce that, but a post-hurricane disaster zone is more likely to resemble turf-based economies (drugs, prostitution) than it is to resemble truly competitive markets (e.g. bazaars).
If your kid is at home coughing up a lung due to a flu and there's no heat in the house, and if phone lines and emergency services are basically unavailable because of the greater circumstance, you're going to buy that last can of chicken soup from your corner market rather than shopping around for a better deal further away. Call it supply and demand if you will, but shopkeepers who engaged in price gouging are profiteering off of others' misery, plain and simple, and there should be consequences.
On the other hand, there are stories of great generosity, like the pizzeria that kept making pies throughout the peak of the crisis, and gave away something on the order of 1000 pizzas to hungry families and emergency workers. That business deserves to prosper. I hope that some anonymous millionaire hands them an envelope containing ten times the profit they would have made had they sold all those pizzas. Hell, maybe FEMA should cut them a check for helping out. At the very least, they should be able to write those costs off for tax purposes.
The CB App. What's your 20?
Perhaps the government should set prices on everything to keep things simple.
Give them a chance. They are working towards that end and they'll get to it. These things take time!
Or is that asking too much? I'm sure it's a lot easier to crack down on a few dozen individuals looking to gouge a quick buck than well-connected corporations scamming billions.
The price of textbooks, in any weather.
As a criminal offense, Florida's law is typical. Price gouging may be charged when a supplier of essential goods or services sharply raises the prices asked in anticipation of or during a civil emergency, or when it cancels or dishonors contracts in order to take advantage of an increase in prices related to such an emergency. The model case is a retailer who increases the price of existing stocks of milk and bread when a hurricane is imminent. It is a defense to show that the price increase mostly reflects increased costs, such as running an emergency generator, or hazard pay for workers.
I can't say I agree with the people out there doing this kind of thing, but... I also think there should be fair warning that gouging behavior in a stricken area like this will be prosecuted. Kind of like Marshal law but not. There will always be those out there to take advantage of the situation and if you put them on notice and the do it anyway rather than doing the right thing, go get 'em...
If these were ads from storefront businesses then the AG should get involved, but if it was private individuals reselling items at a market price then I don't see a real case here for prosecution. I own a hardware store and we have been crazy busy these past two weeks trying to keep up with demand for batteries, gas cans, generators, extension cords, and other storm goods. Our prices are the same today as they were a month ago, and in fact some of our batteries are on sale and we kept them on sale. I know of a few stores that did raise their prices on generators and some other goods, seems like a poor decision as the customer will likely find out later (or already knew) and will remember that price gouge when choosing where to shop during "normal" times.
"We make our world significant by the courage of our questions and by the depth of our answers." Carl Sagan
Oh wait... Never mind.
"Flyin' in just a sweet place,
Never been known to fail..."
And how about pharmaceutical companies that charge $1000s for pills that cost less than the plastic bottle they come in? Want real price gauging?
* Carthago Delenda Est *
If you sell cheaper than everyone else, you're accused of dumping.
If you sell at the same price as everyone else, you're accused of price fixing.
If you sell more expensively than everyone else, you're price gouging.
It's how the Socialists condemn Capitalism no matter what Capitalists do.
I live in Canada. There is gouging on gasoline 365 days a year here. Price of oil goes up, gas price goes up. Price of oil goes down, price of gas goes up.
Now I understand. Those $1000s for pills that cost less than the plastic bottle isn't price gouging, even if people die because they can't afford them. If they had been selling for "only" $500s for those pills, then double after a disaster, then that's price gouging...even though there is no difference in the end price or profit.
Price controls have exactly the same effect in an emergency that they have at any other time. If you prohibit higher gas prices, you guarantee shortages.
The NY AG is a politician. He just wants to be on record, and in the news, as "doing something" about price gouging. Whether that "something" is helpful, useless or counter productive does not really matter to voters. Politicians in the US seem to be graded on their stated intentions not their actual results.
I think all of you are missing the point.
This is not an economics issue. When a natural disaster is killing people and leaving others stranded from the basic necessities of life, that is not the time to make a quick buck and in turn screw over the poor. Heaven forbid the working class guy left without a home be able to afford gas to get his family to a relative's house with heat, food, and shelter. I would hate for you junior economists to have to suspend your theories on how the markets work so as many people as possible can be given a chance to survive another day.
Is it all that shocking to see us get fucked over by corporations when people seem to value being a good business man over being a good person.
"essential", "sharply", "emergency"
Yea, nothing vague there.
It's the masses voting to take what isn't theirs, plain and simple.
t
Most of us must know the old aphorism brought to us by Laffernomics: To a man with a compass and straightedge, every gradient is a straight line, where one end is labeled "stupid" and the other end is labeled "what we were going to do anyway".
The willingness-to-pay utility curve is ugly on both sides. On one side the clueless and unprepared grouse far more than any person with self-respect ought to be caught dead doing. On the other side, one must proceed anecdotally.
You are alone in a dark, inner city alley and you feel cold hard steel pressed against your temple. Your willingness-to-pay lands on A) zero, it's just a bluff; B) contents of wallet, but not what you've also got hidden in your shoe; C) a quick net-present-value calculation factoring in the boundary condition "you can't take it with you".
You are crossing between two tall buildings through a walkway tunnel when global warming causes a floor tile to pop out--your reactions are quick and now you are hanging there by both hands, twenty floors up in the air, without the strength to pull yourself back in through the hole. A quick-thinking lawyer happens to walk past just then. He immediately whips out a pen and a title deed, which he proffers first to your white-knuckled right hand and then to your wobbly left hand in a gesture of good-will and Samaritanism, fine print attached, which you presume will terminate your mortgage.
You are among the huddles coping with the failure of major public infrastructure and you haven't tasted a sip of fresh water for more than two days. Furio Giunta saunters past with a gym bag, offering 1 liter bottles of Evian for $1000 a pop, cold cash only. Elite huddlers in tattered alligator shoes coalesce into cliques pooling cash resources for some sliver of sustenance. Furio conducts a roaring business, clearing 50 big ones in an afternoon. The trucker who was assigned the task of bringing Evian to the masses awakes in the gutter with only a small concussion and not very much pneumonia.
A block away a young computer whiz sells water for $500 a bottle after prudently stockpiling supplies. How could this people be so stupid! Such a simple matter to hack the department of meteorology, fix a few glaring errors in the weather system model, then fire off a covert day-long simulation until the accounting flag for doubly nested black-op (so secretive that nobody who can admit he exists will ever see the expense report). He makes enough cash to pay four years of tuition at state college (where most of this will go to the football coach and the director of athletics). Unfortunately, a day later he takes a "bad fall" in front of Satriale's Pork Store (as he reports his condition to police). Despite being unable to explain to the IRS where his windfall has gone to, he's awarded a national medal of honour for saving more lives at less cost than Soliris.
Enough anecdotes? By the time that the pimps and mobsters and hustlers and assholes amount to a larger share of the relief effort than the police, the firemen, the coast guard, and the reserve there's a case to be made for quelling the entrepreneurial straightedge.
... then sell the same stuff that people are being gouged on at a lower price.
File under 'M' for 'Manic ranting'
You do know that during the American Revolution, there were merchants who attempted price gouging...and laws to prevent it, right?
Maybe you should take your tricorn hat and check out Colonial Williamsburg.
Everybody who solves a problem takes advantage of the fact that the problem exists. If the private merchants solved the problem that NY state could not, the state owes them a thank you -- not a subpoena. Oh, and what an ass hole.
Any guest worker system is indistinguishable from indentured servitude.
The AG knows full well he is morally wrong to charge people who provided solutions which the state could not provide. Otherwise, he would have subpoenaed these records before the election.
Any guest worker system is indistinguishable from indentured servitude.
"You mean an epiphany, Smee?"
No, I mean the Slashdot editors really need to get their shit together, captain. Yo ho!
"essential", "sharply", "emergency"
Yea, nothing vague there.
It's the masses voting to take what isn't theirs, plain and simple.
That's why we have some crazy thing called a judicial system instead of masses of asshattery on the Internet decidering the law.
If you don't like the "price gouging" simply offer the gas and generators at a much lower price in an emergency? If you weren't prepared with an abundance of gas and generators in an emergency then buy them from the gougers and sell them at a "fair price". If the emergency were sufficiently severe it warranted stealing gas and generators from individuals (a shift from enforcing ownership of physical goods not by law but by force will have a radical effect on supply and demand equilibria) then fair enough but in such an extreme situation I expect a total lack of fucks to be given on what "local authorities" want.
And in many cases that is correct. It's the good old American tradition of hitting people when they are desperate and will pay anything, right up there with claim salting and medicine shows.
That free fuel would be in limited amounts per person if the disaster workers had the common sense to survive to adulthood. Assuming that they do not is a pointless distraction and really tells us more about yourself than anything to do with the discussion.
Bob Murphy does a good job in this video explaining how the market would work better than the price controls the AG is enforcing.
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
And focus on this all is good. Now's a good time for Mayor Bloomberg to enact a new law restricting something. Like the amount of caffeine in coffee or the calories of muffins. But whatever you do DON'T fix anything.
WTF?
Get real.
People are greedy. If it was online sales, it means they weren't in a store in NY, so the NYAG has no say or buy in. Nobody *had* to buy them.
Retail outlets do the same thing during crisis.... Supply and demand... The supply didn't magically go up due to the crisis, in fact, it slumped due to all the demand, hence the prices went up, and yes, some people did raise them tremendously, because some people would pay anything to be able to watch Oprah. (j/k).
Look at online sales of other "fad" items - yes, it was an emergency, but it was also a short-lived *fad* item - you think people will be so hot to buy them when the power is back on? Nope. People have paid $200.00 for an empty box on e-bay - the list seemed like it was for the item, but the fine print said box only. Talk about gouging, and you think those people got their money back? Nope.
Just remember the old saying. Buyer beware. (Works for price gouging as well as the oldest profession on earth)
Yeah, its about time. You know what happened in NJ? a day or two so before the storm, guys with a pickup truck or van went and bought several generators each from HD, Lowes, etc. It was not any coordinated attack or such, but such scum do know how to do these and together. Others (say, folks with day jobs, working in NYC, etc) when they went to buy one generator for their family, there were none in HD, Lowes, etc. craigs list was the *only * place where you could get them pretty much.
Many a-holes were selling them at double the price, some triple. I saw ppl selling them from backs of trucks etc. What's unsold, these guys will simply return to HD if needed. Several even posted in CG showing their hoard.
So, my free market morons, the authorities are perfectly right in going after these a-holes. these guys caused the shortages in the first place, and had the option of returning what's unsold after the storm. In other countries, 'freemarket consumers' will take care of them and may be some of them would end up with a broken leg or arm. In the cultured US you cannot do that, right? So let the law pursue them. If this happens in NJ, I would be happy to pass on the names and emails and phone numbers of several who responded to my mails with high prices.
First, outlaw large sodas. Then, outlaw the immutable laws of supply and demand. For the final trick, I expect them to take on the laws of Thermodynamics!
"Price gouging" (lol, must be defined like obscenity, I guess you know it when you see it?) is a means of controlling demand and allows supply to be more stable and normalize.
Furthermore, especially with private individuals, let's say the options are that A) they offer 10 gallons for $500 on Craigslist or B) they don't offer any gas. Please explain how having option A and option B is worse than only having option B? You can't. There is no possible logical defense for them going after these people.
Really, if it was so cheap to have essential goods or services available during a time of emergency why doesn't the state try doing it themselves, ans providing such goods throughout any such disaster at regular costs.
Oh, that's right... they can't. Because IT'S TOO EXPENSIVE.
The defense rests.
File under 'M' for 'Manic ranting'
Unregulated markets are OK as long as I decide so. An example of the finest capitalist mind...
free enterprise.
this is what made america great right?
right??
controls on supply, demand and pricing... well thats just socialism isnt it.
and socialism's bad, right?
right??
.
I'm from Alabama, and just after hurricane Katrina, gas prices tripled. This lasted for about a month, maybe 6 weeks. Also, the price of generators tripled, as well as the price of anything useful.
I think the idea that the GP had in mind is that a major problem in many disaster situations is that market liquidity (haha) breaks down, and so there's a huge incentive to hoard, and then use the relative paucity of suppliers to massively increase profit margins. Since illiquid markets are inefficient markets, the usual rules of supply and demand fail to hold -- the problem in the north east is that Sandy knocked out much of the oil importation infrastructure (as well as causing local refineries to shut down), which combined with fairly low inventory levels to pad the shock, means there isn't enough infrastructure for vendors to divert sufficient oil through at any price.
To mitigate this type of supply shock and restore liquidity, you need to ration (to reduce hoarding, and increase the cost of driving, thereby lowering demand), discourage gouging by introducing price controls (also mitigates hoarding.. but requires rationing) and temporarily subsidize supply both directly (ie. put it on national guard fuel trucks and sell it to the gas stations under cost), and indirectly (say by suspending regulations that might limit supply like the Jones Act, or low-sulfur fuel oil requirements.. to name two examples of what's been done). Letting the prices spike is only going to increase misery and give people incentives to do really stupid things, like the idiot who got caught with 120 gallons of fuel in home depot buckets (great, until his SUV explodes and closes a route for the real fuel trucks).
Prices aren't just made up. Prices are important market signals reflecting the relative scarcity conditions of any good. Rising prices imply an increase in the scarcity, or expected scarcity, of a good. In other words, if a good becomes scarcer or is expected to become scarcer, it's price will rise. The opposite is true when a good becomes abundant or is expected to become abundant.
When a good becomes scarce, there are several socially optimal responses: consumers should economize on its usage and search for cheaper substitutes. Producers should increase production of the good and search for substitutes. Rising prices provide both consumers and producers with incentives to behave in socially optimal ways. Plus, they do so voluntarily
http://econfaculty.gmu.edu/wew/articles/03/wonders.html
As a criminal offense, Florida's law is typical. Price gouging may be charged when a supplier of essential goods or services sharply raises the prices asked in anticipation of or during a civil emergency, or when it cancels or dishonors contracts in order to take advantage of an increase in prices related to such an emergency. The model case is a retailer who increases the price of existing stocks of milk and bread when a hurricane is imminent. It is a defense to show that the price increase mostly reflects increased costs, such as running an emergency generator, or hazard pay for workers.
Well guess what? I'm not a "supplier" or "retailer" of any goods...hence why I'm selling it on craigslist!
(I didn't actually sell anything, but I don't quite like the idea of the state being able to come to my garage sale and arrest me for my prices being to high)
Anybody remember the prosecutions for 'unconscionably excessive price' for wireless? Oh right, there weren't any.
So the lesson is: Don't gouge people one at a time; instead, think big!
What these people did was profiteering and immoral, but not illegal. And their acts have no consequence on society at large, which might have justified making an example of them. AG is just trying to score some easy points. What will be the cost of these proceedings to the public and to the targets of this investigation and is this in any way justified by the damage done by the actions under investigation?
Funny how it's price gouging when only a few individuals do it but it's supply and demand when corporations do it.
Wtf is "price gouging" and why do I need to stand 7 hours at the pump (not kidding, actual lines in New York City as of a few days ago stretched ~10 city blocks) when all that is needed is raise the price by a few bucks per gallon?
They're talking about $4/gallon gas. NJ's 'price gouging' laws stipulate a limit of 10% increases over 'normal' prices.
"New Jersey law prohibits excessive price increases during a declared state of emergency and for 30 days after the termination of the state of emergency. An excessive price increase is defined as more than 10% higher than the price at which merchandise was sold during the normal course of business prior to the state of emergency"
Or are you implying that hurricane conditions are unlikely to increase availability costs by more than 10%? This is a *stupid* law, which is unsurprising because generally politicians have no training in math or economics.
Construction workers use generators with long cords all the time, how would this be any worse?
I was speaking of the general case, but now that you mention it, that expensive gas was most likely drawn from existing stock already in a station's tank or a truck that was there before the storm, so the only additional cost would be using a hand pump rather than electric to fill a can (which was also likely there before the storm.