Does Limiting Price Gouging Work Against the Market?

A question I came up with in discussion from my MBA work. :)  If you're into supply and demand, I'd appreciate some discussion. :)

After reviewing issue #9 in Taking Sides by Newton, Englehardt and Pritchard, please give your opinion on this discussion question.

(
For reference if you do not have the book, you can find Zwolinski's argument here:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1337654
and Snyder's Here:
http://connection.ebscohost.com/c/articles/37353308/whats-matter-price-gouging
See also:
http://knowledgeproblem.com/2009/05/13/price-gouging-is-it-wrong-should-it-be-against-the-law/
)


Taking into account both Snyder's view and Zwolinski's views on price gouging and supply and demand in the wake of a natural disaster, does regulation on essential goods actually create a market disparity?  For example, let's consider generators and beer.  Snyder used generators as an example of something that merits price regulation because it is an essential good.  He also referred to beer as a non-essential good that does not need to be regulated.  There is no moral wrong with charging higher prices for it, because its lack does not hurt anyone, and those who purchase it should be only those who can afford the higher prices.  Understood.  Now, let's take a look at Zwolinski's discussion on signalling in supply and demand.  Let's say that generators are selling at a 30% profit, and the price is limited to that profit range.  Beer, however, is selling at a 150% profit, because of no price limitations.  If a vendor has limited space on his next supply truck, will he a) fill it with generators, or b) fill it with beer?

In this instance, Zwolinski's argument can be clearly seen.  It appears, in fact, that limiting price gouging creates incentive to NOT supply the needs that are most important.  If there were no price limitations on the generators, they would command a premium price, and vendors would be more likely to attempt to secure a greater supply.  If the essentials are regulated, and the non-essentials are not, the market actually creates incentives for vendors to focus on the non-essentials.

What are your thoughts?

Communism vs. Capitalism

Just read part of the 1848 Communist Manifesto and Adam Smith's Wealth of Nations for my Business Ethics class. Below is part of my essay in response.  I didn't have time to write as much as I wanted. :)

"Newton, Englehardt, and Prichard (2012) stated, “Adam Smith was absolutely correct if he is taken to be describing capital formation; but when it comes to the distribution of the wealth the free market has created, his mechanisms have no way of ensuring justice” (p. 3). So capitalism is indeed an excellent way to create capital. So why doesn't a society adopt a Marxist approach to the distribution of the wealth that capitalism has created? There is a significant problem with the communistic approach to re-distribution of wealth. The re-distribution methods espoused in communism undermine the motivating forces behind capitalism. In other words, while in the process of re-distributing wealth, communism eliminates the very mechanism that is creating wealth. The result is that capital creation will diminish, eventually dropping the standard of living of everyone in the economy, but most often the poor, who are the very people communism claimed to be trying to help.

When working with theories and models, it is of crucial importance to know if the model accurately represents reality. Capitalism and communism are both models for the handling of economy. Which represents reality best? Capitalism is based on the observation that humans are generally self-seeking. Self-interest motivates a willingness to work in people who otherwise would be unwilling to work. Hyeonseo Lee is a woman who escaped from North Korea. She described an incident that had a profound impact on her. She saw people dying from lack of basic needs, and everyone else just passed by them. “Nobody helped them, because they were so focused on taking care of themselves and their families” (Hyeonseo, 2013). Sometimes, those of us who live in a very prosperous society where taking care of others seems like second nature can forget about what happens when everyone is suffering. The model of capitalism fits what we observe of basic humanity. People are willing to work to better themselves. In the Bible, Proverbs 16:26 observes, “The appetite of laborers works for them; their hunger drives them on”. But if others will take care of them, their motivation for work lessens. The Bible warns against handouts. Thessalonians 3:10 says, “The one who is unwilling to work shall not eat.”

Communism, on the other hand, argues that people are willing to work for a common good, even at a relative loss to themselves. “True communism depends on human nature being basically altruistic” (Communism vs. Capitalism, 2013). There may be some truth observable in this to a point. But as I studied in other textbooks, people assign value to their altruistic work, thereby actually gaining personal value in exchange for what they give away. What happens when this personal value is gone? One can observe that people are generally unwilling to make sacrifices that hurt themselves unless they can see some gain from it. For example, if everyone in a society works an 8-hour job each day, and all are taken care of by the government with an equal “wage”, it is likely that everyone will continue happily. However, would someone in this situation be willing to work a 12-hour day while everyone else works only an 8-hour day? Not unless he can see a benefit from doing so? That benefit may be personal betterment, (such as overtime in capitalism), betterment of another, avoidance of punishment, etc. But if he cannot see any result from it, and if he is given a choice, human nature indicates that he will avoid it. However, capitalism appeals to this specific element of human nature. A person is willing to make a sacrifice for the betterment of himself or the betterment of another from which he derives personal value.

Therefore, the model of capitalism best matches reality and human nature. It may not be the perfect model, and it certainly does not solve all the ills of mankind. But capitalism meets the reality of human nature. It understands human nature, and builds upon it a system proven to generate wealth.

I would add however, that the best implementation I am aware of is capitalism guided by Biblical / Christian morality. Capitalism alone certainly allows for certain groups of people to take advantage of other groups of people (communism also allows for this). Capitalism guided by moral principles may be the best approach. The best examples of the implementation of capitalism that I am aware of are where capitalism operates inside a set of cultural expectations that are distinctly Biblical / Christian morals. People may not realize the origin of the values they hold, but they happen to match. These values help to keep the selfish tendencies of mankind in check. For example, the United States has a highly-developed business ethics system which brings capitalism and biblical morality together into a society and economy that has been one of the strongest on earth."

Quoted block from Module 1, Completed Assignments. David Lorimer. 560 – Business Ethics. Aspen University. Professor Sherrie Campbell. Submitted 03/23/2013.

References:

 Newton, Englehardt, Prichard. (2012). Taking Sides: Clashing Views in Business Ethics and Society, 12th/E. McGraw-Hill ISBN: 9780073527352 .

 Lee, Hyeonseo. (2013). My escape from North Korea. Retrieved March 22, 2013 from http://www.ted.com/talks/hyeonseo_lee_my_escape_from_north_korea.html .

9 Quick Tips for Writing a Convincing News Article

9 Quick Tips for Writing a Convincing News Article

… and other stories

We've all seen them – compelling news articles proving things that may not be true. Here are some quick tips to write your own top-selling news articles about anything!

1. Make a Bold Statement in the Teaser Headline

It doesn't have to be true. In fact, it's probably most effective if it's not. This is the headline that everyone is going to see, so make it good. Most people aren't going to click on your article anyway, so make sure the teaser headline says exactly what you want them to believe.

Example: “Curiosity Rover: Water on Mars!”

2. Write a Compelling Article Title

Your article title needs to be true, at least technically. But since most people won't read the article, be sure that your title makes them believe what you want them to.

Example: “NASA's New Findings Prove Water on Mars?”

The question mark is your friend. Use it a lot, especially in the beginning paragraph.

3. Prove it in the Subtitle

If a reader likes your headline, chances are, he'll read the subtitle next. Again, this may be all he or she is reading, so be convincing, and use that question mark!

Examples: “Curiosity's latest samples indicate something many earthlings have long thought impossible. Have we found water on Mars at last?”
or

“The latest studies indicate a strong link between population growth and disease.”

4. The First Paragraph is your Argument

The majority of people who have read this far won't read past the first paragraph. Be sure that the first paragraph implies your conclusion. You want people to believe your statements in the first paragraph, assuming you prove them later in the article. (Please note: Proof is not necessary, see below)

5. Use Words Like “Linked” and “Indicates” a Lot

Research indicates the use of special words is correlated with an increased percentage of people who believe what is implied. In 98% of cases, language is linked with people's specific beliefs.

Example: * clears throat *

Bonus: “May have” also sounds like proof. “Early reports indicate that the man may have embezzled as much as $1 Million dollars.” (Even if the guy is innocent, this kind of language convicts him in the readers' minds.)

6. More Then 90% of Effective Articles Use Statistics

You must have statistics. A full 87% of people surveyed indicated that they are more likely to believe a claim if it is backed up by statistics. Don't worry. You can prove whatever you want with statistics, even the opposite of what the statistics originally indicated (remember that word?). You don't have to pay thousands of dollars to commission a survey. All you need is some carefully spun words.

7. Eyewitness Interviews Tell the Story

Be sure you include quotes. If you have relevant statements from an authority, use them. But for most news articles, a quote from any eyewitness will win your audience. Your witness can be an authority, a passerby, or a drunk – it doesn't matter. Your advantage? You get to chose what words show up in your article.

Examples:  Susan Thomas, one of the first people to witness the scene, cried, “It was terrible, just terrible.”
or

“I was drinking a cold pop, and all of a sudden, I had sharp chest pains.” (The soda might be irrelevant to the story, but by using the quote this way, one can indicate the pop may have caused the chest pains).

8. Always Tell the Truth

But save it for the very last paragraph or second-to-last paragraph. Most people won't read it anyway, so this is where you can be honest to preserve your integrity. Don't counteract your previous words. Just clarify them. Remember all those “linked”, “indicates”, and “may have”s you used earlier? Here is where you clarify them. Oh, but you can always throw in a statement like “at this time” to make your readers believe your statements will be proven true in the future.

Example: “As of the time of writing, NASA has not confirmed these statements. But scientists are enthusiastically awaiting Thursday's press conference. A NASA spokesperson promised that NASA has “some really exciting news to share.”

9. The Comments

Ignore them. Haters Gonna Hate.

For a full example that I wrote just to illustrate, read:

http://dlorimer.blogspot.com/2013/02/research-finds-link-between-high.html

For more great examples, check out Yahoo! News

This one is particularly good:

http://news.yahoo.com/dark-matter-finally-found-big-news-coming-soon-144840916.html

http://news.yahoo.com/rare-star-explosion-creates-galaxys-youngest-black-hole-115516887.html

I wanted you to read this one (it's part of what my previous blog was based on), but it appears that yahoo has removed it.  (Yahoo's story was just like what I describe above, unlike the news story their story was based on).  Here is their title:

Mars Curiosity rover finds water, simple carbon compounds

Research Finds Link Between High-Fructose Corn Syrup and Hurricane Katrina; Other Natural Disasters

Is the taste worth the risk? More people are abandoning soft drinks and other unhealthy foods once they discover what it is truly doing to them. Is death the latest to be added to the list, including diabetes and obesity?

High-fructose corn syrup is on the chopping block again today, after recent reports found links to Hurricane Katrina. A study released yesterday by Anheuser Busch called attention to the high death rate among HFCS users. This follows an independent study, commissioned in the wake of Hurricane Sandy, which suggests that victims of natural disasters are often HFCS consumers. “The public needs to be aware of the danger”, said the New York City Commissioner. “They should have had earlier warning.”

But perhaps the most shocking findings relate to Hurricane Katrina. Katrina claimed the lives of over 1800 people in 2005. When asked about their deceased loved ones' lifestyles, many survivors admitted the victims consumed HFCS. “The last time I saw him, he was out on the porch,” Mary Jenkins managed, between sobs. “He was just relaxing with his drink. He had no idea that would be the last thing he ever did.”

But in fact, research now indicates that as many as 87% of the hurricane victims had used HFCS within the last week. And when that's added to the fact that HFCS is linked to obesity, diabetes, poor grades, low self-image, depression, and fatigue, many people are beginning to wonder why it isn't already illegal.

It may be too early to know for sure. The FDA has not yet reviewed any of the most recent claims, and HFCS remains on the list of approved ingredients for large-scale consumption in the United States. One advocacy group says that may change, however. They plan to take HFCS to task with an FDA panel this June.

Source:
Baloney Network - "All the news that isn't true."

The Pursuit of God by A.W. Tozer

The Pursuit of God by A.W. Tozer

A book review

Short review: Read this book! It is a tremendous presentation on Christian thought, life, and living by A.W. Tozer. It was so good I had to read it again!

Long review: I really don't even know to explain this book, except that it is excellent. So i'll just share some significant things. This book is a tremendous presentation on Christian thought, life, and living by A.W. Tozer. He deals with a proper understanding of God and our relationship to Him. He presents a complete view of what it means to be a Christian; a holy person in such open and honest detail. He confronts many common areas of struggle that Christians face today. Not only was this book challenging to me personally, I sent it to a few friends who were in situations that Tozer deals with exactly! Also in this book, Tozer has one of the best explanations of the Old Testament Law in relation to New Testament revelation that I have ever heard. It's so good that I read the first part twice before I ever finished the rest of it the first time! Make this one high on your to-read list!

Confessions by Saint Augustine

Confessions by Saint Augustine

A book review

Short review: I recommend reading the first book (it's divided into short "books"), but don't waste your time with the rest of it. Augustine's presentation of who God is in the first book is astounding, and brought me into worship and praise of God.

Long review: In my opinion, this book starts out great and gets progressively worse until an absolutely miserable ending. (Just being honest). Augustine's presentation of who God is in the first book is well worth the read. It is powerful. However, as the books continue, Augustine seems to deal with issues about which he is less and less unsure. It's a classic, so I read the whole thing. But other than the beginning, It really wasn't all that fantastic. Augustine reveals that his early philosophy was unorthodox, and it seems to have continuing effects on some of his ideas. He shares his testimony, struggles, and challenging growth in philisophical context, and it is interesting. My impression of about the last third of this work is that he was exploring ideas that he really didn't have any idea what he was talking about. Read the first "book" for sure, and maybe about half of the total work. But save yourself the time, and go read something else after that.

When Knights Were Bold (A Book Review)

When Knights Were Bold, by Eva March Tappan

Short Review:

First, I want to clarify a misunderstanding that I held from the book's title. It is not an adventure book. It is more simply an easy-to-read Medieval history. If you have an interest in the Middle Ages, I recommend this book as some light reading to broaden your understanding of the era.

I thoroughly enjoyed this book. It is neither boring, nor adventurous, and it found it to be the perfect book to read a chapter before bed. It broadened my understanding of the Middle Ages, and corrected some "fairy-tale" misperceptions.

Free Text and Pictures:

http://www.mainlesson.com/display.php?author=tappan&book=bold&story=_contents

Free Audio Book:

http://librivox.org/when-knights-were-bold-by-eva-march-tappan/