Tags
commodities, demand, economic revitalization, greed, household expenditures, household incomes, inflation, natural disasters, price gouging, profit maximization, profiteering, supply
With arguments like this:
“It’s time to start filling out the “Fill-in-the-Blank Price Gouging Form” for Hurricane Harvey”
it becomes easier to understand why any substantive economic revival will never return.
Price gouging – and the defending of price gouging – in the wake of a natural disaster highlights why the US will never enjoy a functioning economy again. It serves as a microcosm of the larger economy: If any substantive, real demand would ever materialize in the wake of an economic revitalization, profiteers would quickly raise prices for any and all goods, causing inflation to soar, and negating any real gains in wages.
This would effectively shut down any nascent economic growth as a result.
We can witness this phenomena simply by watching commodity exchanges. As soon as traders get a half a whiff of a commodity shortage, that commodity jumps in price.
The only reason we have been largely sheltered from an onslaught in inflation has been the tepid economic performance from around the globe. A jump in a commodity price cannot be sustained for long before reality sets in, anticipated supply constrictions never materialize, and the price drops again.
But if real demand ever returned, it would be every trader for himself.
And households would bear the brunt of the subsequent inflation onslaught.
Until they couldn’t.
And then our economic doldrums return.
See also Profit Maximization is Self Annihilation.
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