Michael Giberson
The Associated Press carried the following news item on efforts to prohibit gasoline price gouging:
Northwest Senators Aim To Prohibit Gasoline Price Gouging
POSTED: 1:30 pm PDT
September 21, 2005WASHINGTON -- Two Northwest senators, Republican Gordon Smith of Oregon and Democrat Maria Cantwell of Washington, have introduced legislation to prohibit gasoline price gouging during national emergencies.
Cantwell is concerned oil companies are taking advantage of Hurricane Katrina to raise prices far beyond additional costs....
Of course, last year in her role as co-chairwoman of Kerry's campaign in Washington, Cantwell had no problem charging $1000 for a meal at Seattle's Westin Hotel. (See: The Seattle Times.) Either meals at the Westin in Seattle are very, very costly, or Cantwell was raising prices far beyond costs.
Let's see, here is the menu at the Westin's Coldwater Bar and Grill. If I order the single most expensive entree I can find -- grilled venison loin with pinot noir sauce, wenatchee apple and lacinato kale -- toss in the dungeness crab cake with shichimi celery root puree for a starter and add a bottle of wine -- it would cost me no more than $100 per person not including tip.
Gouging?
I shouldn't focus only on Cantwell. Smith also is willing to price far above cost, if the circumstances permit.
The Hill reports that the Oregon Republican charged $3,000 to $5,000 per person for a golf tournament in June to raise money for his Impact America political action committee. The Hill further reports:
I'm thinking that even at $3,000, Smith was charging a price far above costs.
I hate to be a literalist, but you two are absolutely wrong. The market here is not in meals or golf tournaments, it's in politicians. These are the prevailing area rates for politicians. Heck, these might even be a little low. I hope it's an attempt to create an artificial monopoly so they can drive the price up later. If it isn't, and this is a sign of a falling market in politicians, next thing you know poor people will all be able to afford them, the market will be flooded, and then we'll all be in a pickle.
"Insanely great" commentary, Eric H!
I don't mind seeing you pick on Cantwell, Mike, as she has been outrageous for some time on similar issues concerning the Western Energy Crisis of 2000-2001. And that brings up the whole concept of market power, which has been largely absent from these discussions on so-called gouging.
Sequeing to a slightly off-thread subject: In another post I asked lightly, "Don'tcha have to have somebody over a barrel before you can gouge'em?" But that's the same as "Don'tcha have to have market power before you can exercise it?" If anything, gouging is an exercise of market power. But it makes no sense to talk about gouging in the absence of market power. This begs at the definition of market power, of course, and the extent to which it applies to a fleeting condition [e.g., suddenly becoming "pivotal" (price-setting), whether you know you are or not].
Eric is right on. You are not paying that ammount for the meal. rather, you are paying
that ammount to gain political access and the prices being discussed seem to be fairly close to the going market clearing price. so if they are at the market clearing price it is not gouging.
If the $1,000 is not the price of the meal (is not the amount paid to the restaurant), the auditors might want to check into the disposition of the difference between the restaurant tab (including tip) and the $1,000.
Perhaps one of the more idiotic posts I have read in the last couple of months, for obvious reasons. Thats isn't the price of a meal, and no one goes to one of those things to eat. It is the price to support the politician (and maybe for access).
As you know.
Okay Eric...if you are so willing to reinterpret the "product" the Senator is selling, in terms of access, then why not the same for gas? It seems the Senator likely sells access much more cheaply, if done through the Senators office. In fact, I'm pretty sure one could get her a letter for $.37, or possibly even a meeting for nothing but the price of a phone call. I once called my Senator Russ Feingold...he answered then called me back.
So why not reinterpret the gas as buying a time and place, where there happens to be gas, as opposed to a specific quantity. Cost is empty concept when talking about price if you do not also talk about demand. Its like a one sided scissors.
So if we can pay $1000/plate to support a politician, why can't we pay $5/gal to support a gas station owner?
After all, if it's truly gouging, someone else somewhere will be selling for $4/gal, and the gas station will "only" get business from "supporters". Just like how non-supporters of politicians can easily get McDonald's.
And if no one can get gas at less than $5/gal, is it really gouging?
Wait a minute.
You have spent your last several post
arguing that gouging does not exist.
Why the change?
Are you trying to completely destroy your credibility?
I know, in private markets or for republicans gouging does not exist.
Only democrats can gouge.
Right?
Spencer,
The technique is called irony. And may I also point out that Rep. Smith from Oregon is a Republican and Sen. Cantwell is a Democrat. We practice equal opportunity irony here at KP.