Could price gouging during a crisis actually be moral?
Price gouging is prohibited in 34 US states and Washington D.C. But two scholars ask whether that's the way it should be.
- Paper products, hand sanitizer, masks, and cleaning wipes—all are in high demand and short supply during the COVID-19 crisis.
- Price gougers are viewed as villains in this crisis—but two scholars argue that price gouging is, in most cases, morally permissible.
- Increased prices prevent unnecessary hoarding. Buyers purchase only what they need when they need it. Also, producers are incentivized to make more. When the supply rises, prices will fall.
At the Safeway grocery store in Southwest Washington, D.C., the toilet paper and paper towels section has been empty for most of the last two months. When the store does restock, supplies don't last long on the shelves. "Do you know if they have paper towels?" a pedestrian outside the store asked a stranger exiting the Safeway in late April. The answer was no: "Still out."
Paper products, hand sanitizer, masks, and cleaning wipes—all are in high demand and short supply during the COVID-19 crisis. Shoppers across the country are facing empty shelves and out-of-stock signs.
But any seller who reacts to current crisis conditions by increasing prices on in-demand products may be committing a crime. Thirty-four states have laws against price gouging. In March, a bipartisan group of state attorneys general wrote a letter urging online marketplaces to crack down on price spikes.
"[W]hile we appreciate reports of the efforts made by platforms and online retailers to crack down on price gouging as the American community faces an unprecedented public health crisis, we are calling on you to do more at a time that requires national unity," the letter said.
A price gouger makes a good temporary boogeyman. One could look at high prices during an emergency and think: They're trying to profit off of my desperation.
What exactly is price gouging, and what distinguishes it from a normal price increase? New York Attorney General Letitia James told NPR that "there's no definitive answer" but "you know it when you see it—[it's] when individuals are taking advantage of the market, particularly when a neighboring store is selling the same product for much less." New York's price gouging complaint form, which consumers can use to report retailers, defines it as "unconscionably excessive pricing of necessary consumer goods and services during any abnormal disruption of the market." However different states might define it, price gouging is widely understood to be exploitative, sleazy, and heartless. Laws against it are popular.
But Michael Munger, professor of political science at Duke University, says that high prices are a crucial part of dealing with scarcity during an emergency.
"If you use the police to keep prices artificially low, it makes the problem of scarcity much worse," Munger says in a short Institute for Humane Studies video on price gouging. Price gouging during an emergency allows more people to get what they need as soon as possible. "And that's true even for those who can't afford the gouger's prices," Munger explains.
How? Increased prices prevent unnecessary hoarding. Buyers purchase only what they need when they need it. Also, producers are incentivized to make more. When the supply rises, prices will fall.
"Price gouging laws keep the shelves empty longer," Munger says.
Matt Zwolinski, professor of philosophy at the University of San Diego, argues in his paper "The Ethics of Price Gouging" that "most, though not all, cases of price gouging are at least morally permissible, if not morally praise-worthy."
"Relative to the baseline of no exchange at all, the gouger's proposal stands to improve the lot of the buyer, not to worsen it," Zwolinski writes. If a buyer purchases a product at an exceptionally high price during an emergency, the buyer has decided that their emergency need justifies the high price. As Zwolinski puts it: "[W]hile the price of generators might rise dramatically in the wake of a disaster which knocks out power to a certain population, so too does the need people have for generators." A seller who raises prices did not create the buyer's increased need; he or she is merely reacting to it.
This doesn't mean, of course, that the price gouger is motivated by altruism. "[T]he fact that there are good arguments to be made for the moral permissibility of price gouging in certain cases does not mean that those who actually engage in the practice are motivated by these considerations," Zwolinski writes. But that's also true of normal market activity: As Adam Smith says in The Wealth of Nations, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." A price gouger makes a good temporary boogeyman. One could look at high prices during an emergency and think: They're trying to profit off of my desperation.
But if we heed the work of scholars like Michael Munger and Matt Zwolinski, we might begin to see price gouging as a rational and necessary part of emergency response. During normal times, a pack of hand sanitizer might cost the same as a bottle of red wine. But right now, during the COVID-19 pandemic, does anyone place nearly the same value on a bottle of wine as on a pack of hand sanitizer? By using the law to forcefully keep prices below what people would pay in an emergency, states enable hoarding. For Americans who would like to buy hand sanitizer—or paper towels, toilet paper, cleaning wipes, or masks—and can't find any, price gouging laws are a cold comfort. Most would rather have the option of paying increased prices than no options at all.
"Our mission is to completely replace the use of animals as a food technology by 2035," said Patrick O. Brown at the 2020 Web Summit.
- Impossible Foods is a company that makes plant-based meat alternative products.
- At the 2020 Web Summit, CEO Patrick O. Brown spoke about the impacts of meat production on the environment, and his company's long-term goal of phasing out the industry.
- Livestock currently contribute about 14.5 percent of global emissions.
Impossible Foods' plant-based beef
Impossible Foods<p>If getting nations to set and stick to emissions policies is tough, try asking billions of people to stop eating meat. What's the solution?</p><p>For Impossible Foods, it's to appeal primarily to consumers' taste buds, not their inner environmentalist. The company is aiming to make its meat alternatives more delicious, healthier and cheaper than the real thing.</p><p style="margin-left: 20px;">"By next year, I think our mainstream product will actually, if we do a side-by-side comparison with nothing by meat eaters, will be preferred by a majority of them," Brown said.</p><p>The ultimate goal is to phase out the meat industry.</p><p style="margin-left: 20px;">"Our mission is to completely replace the use of animals as a food technology by 2035," Brown said. "We're dead serious about it. We totally believe it's doable."</p>
Land deforested to make room for cattle pasture
Imago Photo via AdobeStock<p>That may seem like a quixotic goal. After all, meat alternative companies like Impossible Foods and Beyond Meat have been around for about a decade. And while both have been undeniably successful, <a href="https://www.forbes.com/sites/hankcardello/2019/09/30/why-the-beef-and-dairy-industries-are-on-a-cow-path-to-oblivion/?sh=4e4f376174e9" target="_blank">meat consumption in North America hasn't changed much in recent years</a> (although people are eating slightly less beef).</p><p>Still, mainstream meat-alternative options — like <a href="https://bigthink.com/technology-innovation/impossible-whopper" target="_self">Burger King's Impossible Whopper</a>, added to menus last year — are a relatively new phenomenon to most consumers. And as people become increasingly familiar with these products, and as meat-alternative companies <a href="https://news.yahoo.com/beyond-meat-founder-plantbased-meat-is-on-its-way-to-being-cheaper-than-animal-protein-140141254.html#:~:text=Sozzi%3A%20You%20actually%20think%20you,Brown%3A%20Absolutely.&text=And%20we're%20going%20right,is%20as%20simple%20as%20scale." target="_blank">scale up to make plant-based products cheaper than meat</a>, preferences could start to tilt.</p><p>One industry that's betting on that happening: big meat. In 2019, leading meat companies like Tyson, Smithfield and Perdue all began rolling out their own alternative meat products.</p><p style="margin-left: 20px;">"There is a growing demand out there," John Pauley, the chief commercial officer for Smithfield, told <a href="https://www.nytimes.com/2019/10/14/business/the-new-makers-of-plant-based-meat-big-meat-companies.html" target="_blank" rel="noopener noreferrer"><em>The New York Times</em></a>. "We'd be foolish not to pay attention."</p><p>Brown might advise these companies to invest even more heavily in plant-based foods.</p><p style="margin-left: 20px;">"It's game over for the incumbent industry, they just don't realize it yet," he said.</p><p>If Brown's right, phasing out the meat industry could measurably reduce climate change, considering livestock currently contribute about <a href="https://academic.oup.com/af/article/9/1/69/5173494" target="_blank" rel="noopener noreferrer">14.5 percent of global emissions</a>.</p>
Italian meatballs recipe from Impossible Foods
Impossible Foods<p style="margin-left: 20px;">"By replacing animals as our technology for making meat, we can <a href="https://medium.com/impossible-foods/meatisheat-and-plantsarecool-wecandothis-turnbacktheclock-5a63176ebe8c" target="_blank">turn back the clock on global warming</a> and restore native ecosystems," Impossible Foods wrote in a <a href="https://science.impossiblefoods.com/" target="_blank">blog post</a>. "The recovery of biomass on land currently devoted to livestock would remove enough CO2 from the atmosphere to offset 20 years of emissions at current levels, and once livestock methane emissions stop, rapid decay of atmospheric methane would effectively negate another 10 years of total GHG emissions at current rate."</p><p>Still, even if alternative-meat companies destroy the beef industry by 2035, that wouldn't solve the problem of climate change. It's also worth mentioning that some methods of raising livestock and producing meat are worse than others. </p><p>A <a href="https://www.frontiersin.org/articles/10.3389/fsufs.2020.00128/full" target="_blank">2020 study published in the journal <em>Frontiers in Sustainable Food Systems</em></a> notes that the "carbon footprint of meat alternatives is likely lower than the majority of beef consumed" in the U.S., but that the:</p><p style="margin-left: 20px;">"...ecological impacts of human diets are not as simple as plant vs. meat discussions might suggest. The global food system is far too diverse and contingent on unique environmental and socioeconomic circumstances to allow for one-size-fits-all policy recommendations."</p>
The future of meat alternatives<p><br></p><p>For Impossible Foods, the main goal has always been to keep tweaking their plant-based meat alternatives until they taste better than the real thing. Assuming the company solves that problem and displaces the meat industry, what might it do next?</p><p>I asked Brown whether Impossible Foods would ever consider developing entirely new forms of plant-based foods, instead of products that mimic familiar meat flavors.</p><p style="margin-left: 20px;">"Oh absolutely, and this is something internally, and in our [research and development] team, we love to think about," Brown said. "Once we've completely replaced animals as a food technology, then the gloves come off. There's all sorts of novel meat flavors and textures we could create and we're super eager to do it."</p><p>Traci Des Jardins, a chef and restaurateur in the San Francisco area who also participated in the 2020 Web Summit presentation, said creating new types of plant-based "meats" might not be as strange as it sounds. </p><p>After all, we already have strange foods that have "become their own thing" simply because we give names to them. Case in point: the hot dog. </p><p style="margin-left: 20px;">"I can imagine products that we could create at Impossible that would be amazing things that could become as iconic as the hot dog," Jardins said. "Because a hot dog really means nothing. It's just a name that's been attributed to this thing that goes in this bun. And so, I think there are many, many possibilities, and that we could create all kinds of delicious things that don't have the environmental impact that animal-produced meats have."</p>
First picture of worldwide bee distribution fills knowledge gaps and may help protect species
Bee diversity<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDg2NzM0My9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzNTY3NzgyMH0.sdzn0MenrQ85gIvjYM4rm-7oOVd3dO9gx7nqcm9QMwM/img.jpg?width=980" id="fe916" class="rm-shortcode" data-rm-shortcode-id="2961b6dac8da97fa083cb568b19bab10" data-rm-shortcode-name="rebelmouse-image" alt="\u200bTwelve different species of bees swarming a flowery meadow. Etching by J. Bishop, after J. Stewart." />
Twelve different species of bees swarming a flowery meadow. Etching by J. Bishop, after J. Stewart.
Credit: Wellcome Collection, CC BY 4.0<p>How many bee species are there? Wait a minute: honeybee, bumble bee, erhm… five? Five hundred? Five thousand? Not even close: the total is well over 20,000 – which means there are more species of bees than of birds and mammals combined. </p><p><span></span>There's no shame (nor surprise) for bee civilians like you or me in not knowing that. What is surprising, is that even those scientists who specialise in bees didn't quite know how those species are distributed all over the world. Until now. </p><p><span></span>By combining and filtering more than 5.8 million public records of bee occurrences, a team of researchers from China, the U.S. and Singapore have built up the very first comprehensive picture of bee diversity worldwide. And that picture presents a few surprises, both for laypersons and specialists.</p><p>Bee ignoramuses will be surprised to learn that the United States is the throbbing heart of bee diversity. The U.S. has far more bee species than any other region on earth. And by the fact that large tracts of Africa and the Middle East remain <em>terra incognita</em>, in terms of apiary diversity. <br></p>
Counter-intuitive distribution<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDg2NzM0NS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYzNzQ3NTMwMX0.poqkJqPj6CPWWN9u_FOt7nBu1lrOc2aSnv1vRO4yOHY/img.png?width=980" id="2acb0" class="rm-shortcode" data-rm-shortcode-id="407b1e60d42246f6cdfd91cfc6ef7839" data-rm-shortcode-name="rebelmouse-image" alt="\u200bRelative bee species richness in the New World. Note the low density in the Amazon Basin." />
Relative bee species richness in the New World. Note the low density in the Amazon Basin.
Credit: Current Biology, open access<p>In general, there are more bee species in the Northern Hemisphere than the Southern and – confirming previous hypotheses – more in arid and temperate climates than in the tropics.</p><p>That goes against the common pattern in biology known as the 'latitudinal gradient', which predicts that species diversity (of most plants and animals) increases towards the tropics and decreases towards the poles. Bees are an exception, with a higher species concentration away from the poles (in what scientists call a 'bimodal latitudinal gradient').</p><p>To give that difference some visual immediacy, imagine a graph with one hump in the middle (i.e. the latitudinal gradient) versus one with two humps, one on either side of the middle (i.e. the bimodal latitudinal gradient). In other words: dromedary (one-hump) versus camel (two-hump). </p><p>It seems counter-intuitive that bees would thrive better in arid deserts than in lush tropical jungles; but that's because trees – the dominant vegetation type in the tropics – provide less bee food than the plants and flowers that grow elsewhere. <span></span></p>
Much-needed baseline<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDg2NzM0Ni9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY1MzY5ODU4MX0.0B0Ixka9uJpMFDozhQ9YcJAX0a6LFuy1HZ0rWWvEA3A/img.png?width=980" id="c7b8b" class="rm-shortcode" data-rm-shortcode-id="5d8f1e55aeeda42ef836931ad0095101" data-rm-shortcode-name="rebelmouse-image" alt="Three ways of measuring species richness in the Americas: (A) richness of polygons, (B) sPCA and (c ) turnover. All suggest a large, distinct bee fauna in the southwestern U.S." />
Three ways of measuring species richness in the Americas: (A) richness of polygons, (B) sPCA and (c ) turnover. All suggest a large, distinct bee fauna in the southwestern U.S.
Credit: Current Biology, open access<p>Also, bees don't like it too wet, unlike their cousins the ants, whose populations peak in the humid tropics. The researchers think humidity may play a role in limiting bee distribution by spoiling pollen resources.</p><p><span></span>The relative absence of bees from the tropics has consequences for pollination, which in those regions is performed by a wide variety of alternative species: wasps, moths and even cockroaches.</p><p><span></span>Previous datasets of global bee distribution were either inaccurate, incomplete or difficult to interpret. This world map clearly establishes that bees prefer dry and temperate zones to wet and tropical ones. For bee scientists, it provides a much-needed baseline to predict the geographic distribution of bees and interpret the relative richness of species. </p><p><span></span>While much work needs to be done to fill additional knowledge gaps, this baseline is an excellent starting point, not just for greater understanding, also for better conservation. Because bees are not just for making honey. In many countries, they're the top pollinator species. And they typically visit 90% of the leading crop types. </p>
Carpenter bee (Xylocopa latipes) pollinating a flower in the Indian state of Kerala.
Is Bitcoin akin to 'digital gold'?
- In October, PayPal announced that it would begin allowing users to buy, sell, and hold cryptocurrencies.
- Other major fintech companies—Square, Fidelity, SoFi—have also recently begun investing heavily in cryptocurrencies.
- While prices are volatile, many investors believe cryptocurrencies are a relatively safe bet because blockchain technology will prove itself over the long term.
Presentation slide from Sanja Kon's presentation on the evolution of money at 2020 Web Summit
Credit: Sanja Kon<p>The move came shortly after the payments company Square invested $50 million into Bitcoin, and after Fidelity announced that it was opening a Bitcoin fund into which qualified purchasers could invest <a href="https://www.bloomberg.com/news/articles/2020-08-26/fidelity-launches-inaugural-bitcoin-fund-for-wealthy-investors" target="_blank">(minimum investment: $100,000)</a>. Together, this institutional backing might have something to do with Bitcoin's recent surge back to near its 2017 price peak of $19,783. (Bitcoin is listed at 19,384.30 as of Dec. 3.)<br></p>
Presentation slide from Sanja Kon's presentation on the evolution of money at 2020 Web Summit
Credit: Sanja Kon<p>But more importantly, it suggests cryptocurrencies might soon have the opportunity to prove themselves in real-world use cases. After all, skeptics have long doubted the ability of cryptocurrencies to go mainstream as a form of everyday payment. But people seem increasingly comfortable with digital payment systems.</p><p style="margin-left: 20px;">"The entire world is going to come into digital first," Schulman said at Web Summit, adding that PayPal's services already go hand-in-hand with cryptocurrencies. "As we thought about it, digital wallets are a natural complement to digital currencies. We've got over 360 million digital wallets and we need to embrace cryptocurrencies."</p><p>Sanja Kon, vice president of global partnerships at the cryptocurrency payments processor company UTRUST, also spoke at Web Summit about the increasing adoption of digital payments:</p><p style="margin-left: 20px;">"Physical cash is becoming more and more obsolete. And the next step in the evolution is digital currency."</p><p>Kon noted some of the inherent advantages of cryptocurrencies, namely ownership. </p><p style="margin-left: 20px;">"For many people, this is really the main benefit of cryptocurrency: Users owning cryptocurrencies are able to control how they spend their money without dealing with any intermediary authority like a bank or a government, for example," Kon said, adding that there are no bank fees associated with cryptocurrencies, and that international transaction fees are significantly lower than wire transfers of fiat currency.</p><p>Kon said cryptocurrencies have unique growth opportunities in areas where people aren't integrated into modern banking systems:</p><p style="margin-left: 20px;">"With cryptocurrencies and blockchain, with the use of just a smartphone and access to internet, Bitcoin and cryptocurrencies can be available to populations of people and users without access to the traditional banking system."</p>
Bitcoin as 'digital gold'<p>Still, it could take years for people to start using cryptocurrencies for everyday purchases on a large scale. Despite this, many cryptocurrency advocates see digital currencies, particularly Bitcoin, as a way to store value—digital gold, essentially.</p><p style="margin-left: 20px;">"I don't think Bitcoin is going to be used as a transactional currency anytime in the next five years," billionaire investor Mike Novogratz recently told <a href="https://www.bloomberg.com/news/articles/2020-10-23/novogratz-says-bitcoin-is-digital-gold-not-a-currency-for-now?srnd=markets-vp" target="_blank">Bloomberg</a>. "Bitcoin is being used as a store of value. [...] "Bitcoin as a gold, as digital gold, is just going to keep going higher. More and more people are going to want it as some portion of their portfolio."</p><p>There are obvious parallels between gold and Bitcoin: Both are mined, do not degrade over time, are finite in supply, and aren't directly tied to the value of fiat currency, making them <a href="https://www.reuters.com/article/us-gold-inflation/gold-as-an-inflation-hedge-well-sort-of-idUSKCN1GD516" target="_blank" rel="noopener noreferrer">relatively invulnerable to inflation</a>. The obvious objection is that the price of Bitcoin, and cryptocurrencies in general, is far more volatile than gold.</p><p>But for investors who believe the inherent value of cryptocurrency technology will prove itself over the long term, these price fluctuations are just bumps on the long road to the future of currency. </p><p style="margin-left: 20px;">"It's no longer a debate if crypto is a thing, if Bitcoin is an asset, if the blockchain is going to be part of the financial infrastructure," Novogratz said. "It's not if, it's when, and so every single company has to have a plan now."</p>
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