"I’m concerned about higher gasoline prices. The government has the responsibility to make sure that we watch very carefully and investigate possible price-gouging, and we will do just that." — George W. Bush, 4/17/2006
Congress is vowing to take actions that it believes will reverse runaway crude and gasoline prices. Oil rose above $136 a barrel on Monday – more than double what it cost a year ago – and gas hovered around $4.07 a gallon.” – CNN, 6/24/2008
Whenever the price of gas spikes the call goes out from Washington to investigate price gouging. Unfortunately, this leads to one of the great intellectual challenges of capitalism: Defining price gouging. Problem is no one can separate “taking advantage of consumers for short-term gain” from what is usually called profit taking.
To quote Collateral Damage Sr.: "In a society that has a free market fetish, if not a religion, what is price gouging? Is nine percent profit gouging the price? Or 15 or 50 percent? At what price point does profit change into gouged profit?"
Well, here are a few samples from people who have tried to split that particular hair.
First, former Rep. Bart Stupak, (D-Mich), from 2006:
If you take a look at it, from September 2004 until September 2005, refineries have increased their prices 255 percent. Isn’t that gouging?
I mean, I think we all know what gouging is. What we need is a federal standard so we can hold the oil companies’ feet to the fire and make sure we know what factor goes into every gallon of gasoline, so at least the American public will have some transparency and get a fair shake on what goes into a price of a gallon of gasoline.”
New York State law prohibits price gouging during a state of emergency. The law specifically provides that, in order to prevent any party from taking unfair advantage of consumers during an abnormal disruption of the market, the charging of "unconscionably excessive" prices is prohibited.”
I like that one the best because it is by the former Attorney General/Governor of New York, Eliot Spitzer. Did he wonder about price gouging as he paid all those ladies of negotiable morality?
And finally this one from the very accurately named blog, Neutral Source:
There is no objective definition. Economists–who specialize in price theory and the behavior of markets and can study these things ad nauseum–have no definition for it, either. In fact, economists have avoided the term as if it were a social disease. A review of all the microeconomics textbooks on Neutral Source’s bookshelf reveals that none have as much as an index entry.”
Price gouging, like porn, is in the eye of the beholder. One thing everyone agrees on about it is that it is always committed by someone else.
For businesses price gouging is "when my competitor gets away with charging more than I thought to charge."
For the general public, price gouging is when a company that I don’t work for or have investments in is charging me too much. Profits are when my company is making enough money to not lay me off.
Actually addressing this problem would involve fundamental changes in our system that are much needed but which no one is willing to actually contemplate. Instead we will get more of this Kabuki Theater. The next act will come when the oil companies declare their quarterly earnings. This will be followed by bi-partisan denunciation of their “excessive profits” and a number of bills will be proposed which will go nowhere. Then the oil companies will attempt some sort of PR move to show that they are really nice guys and that will be that.
WikiLeaks suggested the “other source” was Daniel Domscheit-Berg, a former WikiLeaks associate who WikiLeaks claims took, without authorization, many WikiLeaks files when he left.
I am a fan of what WikiLeaks does but not so much of Julian Assange.
I’m sure he’s very upset about this.
Never, ever, let it be said that mere facts will come between an executive and his or her bonus. Transocean which – along with BP – is responsible for 11 deaths while creating the worst environmental disaster in US history, used its safety record as the reason for giving out exec bonuses.
According to the company’s financial proxy:
"Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record." Based on the total rate of incidents and their severity, "we recorded the best year in safety performance in our company’s history."
Transocean’s PR person (now there’s a job for you) said, "The statements of fact in the proxy speak for themselves” before adding the requisite comments about feeling bad for all the little people.
It is worth noting that the company’s execs did NOT get their bonuses the year before because of safety issues. It really isn’t reasonable to expect them to go two years without bonuses. That could lead to the departure of all the great talent that got the company to where it is today.
Let us not think that Transocean is alone. Our good friends in the banking industry have been doing the exact same thing even while they were destroying the economy.
A review of call reports filed with the Federal Deposit Insurance Corp., compiled by BankRegData.com, shows that average compensation in the last few years rose — and at the same rate as it did before the crisis. Employees of the largest banks realized the largest gains. The increases significantly outstripped inflation and can’t be attributed solely to shifts in pay schemes or recovering profitability. Banking in general shielded pay from its cost-cutting ax.
Ah, personal accountability in action.
As American Banker points out: “Over the last eight years, average compensation for a full-time bank employee has risen 35% to $83,050, twice the rate of inflation. In 2003, the banking industry’s 1.3 million full-time employees took home $78.3 billion. In 2010, its 2.1 million employees took home $168.1 billion.”
How much of that do you think went to the tellers and branch managers?
Oh and don’t forget: It’s all those millionaire public-sector employees’ fault.
Abercrombie & Fitch is selling the ‘Ashley push-up triangle’ top which features thick padding in the cup to give the illusion of a larger chest size. What’s news about that? It’s for girls 8 to 14.
Yes, for a mere $24.50 you too can pimp out your not-yet-tween girl and remind her that its all about the cup size.
It’s good to see that old A&F (where my grandfather once went to kit-up for safaris) is keeping true to its newer brand promise of making money off the sexual exploitation of children. (If they’re going to do that shouldn’t they be a division of American Apparel? Here are the details on the latest in a long line of sex harassment suits against CEO Dov Charney.)
A few other things A&F has done to live up to its brand promise:
- Ads that feature shop assistants in lieu of models, often posing semi-nude.
- An ‘Impact Team’ to ensure all employees comply with its ‘look policy’.
- Paid $2.2 million to settle a suit over allegations it forced its employees to buy and wear its clothes while on the job.
- Paid $50 million to settle a discrimination lawsuit brought by pretty much every non-Caucasian who made the mistake of getting a job with A&F.
- Paid $13K to an employee forced to work out of site of the public because she had a prosthetic arm
Nigeria will file charges against former U.S. Vice President Dick Cheney and officials from five foreign companies including Halliburton Co. over a $180 million bribery scandal, a prosecutor at the anti-graft agency said.
NIGERIA is upset over financial fraud? Mr. Pot meet Mr. Kettle. HALLIBURTON is involved in bribery? I’m shocked. Just shocked.