While free market principles might work for many items, I disagree on the use of price gouging being "acceptable" for certain items like insulin, which people need to survive. Charging $325 a vial "because you can" when the product costs probably $10-15 (if that) to produce is reprehensible, especially when there are people dying for the simple reason that they have to choose between rent, food, or medication. Also, while there is plenty of expensive health insurance coverage in the US and many who are without it, why isn't the price coming down to the level where the "poor" can afford it? Limiting amounts of essential products purchased, like toilet paper, is working where I live. It helps that we have a grocery chain that has planned and prepared for times like the present. Go ahead and charge whatever for nonessential items, but price gouging will guarantee that the poor will never be able to afford something essential that they may need just as badly (or perhaps worse) than those willing to pay whatever price is set. And who is likely to hurt the most from that? Children. It's upsetting that in a country as wealthy as America that the poor are told to just "wait their turn" until the rich have had their fill, or until the supply is refilled (whenever that is), or until an alternative is developed for certain essential items. Thank God there are still people and organizations that care about one another to help the less fortunate through difficult times because not everyone who needs help is a freeloader.
One issue I have with your take is that the problem with the insulin market IS the lack of free market principles. There are major limitation on who can sell and produce it. Importing from another country is extremely regualted.
Medical care is hardly an example of "free market" activity. The government places myriad restrictions on entry, and on who can manufacture or sell drugs, even generic drugs. You'll notice that that groceries charge low prices, even though they want to charge high prices. Insulin is a problem because the government has allowed, and even encouraged, patents to be extended and to include delivery devices that make it impossible for a new firm just to make insulin for an existing delivery device. www.medicinenet.com/script/main/art.asp?articlekey=225725 So, I agree that "price-gouging" happens all the time, as long as government shills try to pay off their cronyist corporate buddies. But water, which we need even more than insulin? Water is available very cheaply in the grocery store, from many sources.
I agree, insulin is a product that shouldn’t be price gouged because of its availability. The supply of insulin is actually high and the price is only high because of monopolistic tactics rather than solving the supply shortage
Ive been listening to Munger for years on econtalk. i would’ve liked for him to address the psychological parts more. the anger and rage from being charged exorbitant amounts for food and water is real.
Good point! We were trying to keep this video short, but that's definitely a great topic for class discussion! It's one of the reasons that even without price gouging laws, some businesses choose not to raise prices during a shortage, since they don't want to anger their customers.
The problem with this is it operates under some assumptions that are not true 1) consumers cut back. They do not. Those who can buy in bulk do and those who can’t afford it end up suffering in the short term. We saw this phenomenon during COVID with toilet paper. 2) Producers make more. And they realize they can continue to make more by keeping that price at that rate well after the scarcity issue is resolved. Most corporations large enough receive government subsidy. They make massive profit off of this when prices are high because of the offset costs with that subsidy. This leads to abuse of price gouging, as we’ve been seeing. Despite supply meeting demand (surpassing it for essential goods actually) prices on those goods remain high if not higher than when supply was low for really no better reason than they can and no one has stepped in to stop it yet. 3) Entrepreneurs create alternatives, assuming there’s actual competition in a functional market. There is not in America amongst the largest of corporate enterprises. It’s an oligopoly, meaning a select few major names that own a variety of smaller businesses and sellers that gives the impression or illusion of choice. You can pick between 3 or 5 different brands of diapers except all of them are owned by Procter & gamble and the price remains high. These few corporations see that their one or two other competitors raise prices, so they themselves follow suit. It’s a symbiotic relationship that keeps all of these in power. If they were genuinely in competition, we wouldn’t see the massive amounts of mergers we get on a regular basis for companies in the grocery market, entertainment or otherwise. All of this is to say: price gouging in a vacuum is totally normal. But we do not exist in a vacuum and supply and demand laws do not apply when we live somewhere with a surplus of certain goods that are often artificially thrown away or unused in order to justify keeping prices high or raising them higher. If there are loopholes, corporations will take them. So price gouging isn’t good when it’s another tool for exploitation
Supply and demand is not the same as price gouging. It's a good thing you folks that understand that as being the same thing weren't alive during the great depression. You might have heard about it... But people were pretty upset once it continued past the point of need in the support of a world war. They amended the constitution to avoid it being used to pillage our resources and everything. It was kind of a big deal. 🧐
Price gouging is not supply and demand economics. Price gouging is unnecessarily raising prices when there is no scarcity or creating an artificial scarcity in order to raise prices, most likely done by an entity that has total or near total control of the given market.
More people need to hear this. People truly in need will buy the higher-priced scarce goods, more will be produced because of the price and those with less utility from the good will buy as supply eases prices. Markets work if allowed to work.
Great video. And allowing price gouging clearly improves collective welfare. But there’s a different moral principle that many people care about: fairness. I wonder if there’s a way to take advantage of free market principles without ignoring fairness during emergencies?
I agree with most of this, but your bird flu example seems bad. I bet that if, somehow, egg prices had remained the same, demand would still have gone down. Nobody wants to eat eggs during the bird flu, At least until they check to see if that's a plausible vector.
I don't think that's true. It is not thought that avian flu can be transmitted through cooked eggs. (see www.fda.gov/food/eggs-guidance-documents-regulatory-information/questions-and-answers-regarding-safety-eggs-during-highly-pathogenic-avian-influenza-outbreaks).
In the heat of the 2025 Election, this video was very informative. But I couldn’t help to think that things are just not that simple when you deal with the complexity of human beings (greed). We are no longer in a pandemic, supply chains have recovered, and Inflation has been reported to be back to a more normal rate….but Americans are still not seeing the result of any of this…the way I see it, the corporations are the last one standing to do their part to help the working class people afford the basics…and have a little breathing for other things… but instead they are keeping the prices high trying to suck everything that they can out of america…to do what…? Pay taxes? …no…enrich their community? …no…they want to fill the pockets of shareholders and barely any of the money trickles down…as a nation we growing more to understand that there has to be balance…so I say develop these laws…make it fair…and give the working class people a fair chance at the American Dream once again… #KAMALAWALZ2025
His name is Martin Shkreli and do not compare him to this guy. You seem to be lacking in facts so I will help you. The medication was Daraprim. It is listed as an antimalarial medication but often used for toxoplasmosis. Toxoplasmosis is a disease that results from a parasitic infection. Most people fight it off without any issues. However, if you have a compromised immune system, such as a patient with HIV, you might not be able to fight it off. Daraprim has awful side effects. There are only approx. 2000 prescriptions written annually for Daraprim so it has been a very low (read no) priority for reformulation or to come up with a better alternative. In comes Martin, increases the cost, FOR INSURANCE COMPANIES, puts most of the profit into R&D to come up with better alternatives. There was a program in place that if the patient did not have insurance their out-of-pocket cost was no greater than $20. There wasn't one documented case of someone who needed this drug, going without it because of cost. You cannot same the same for other necessary drugs like insulin and epi-pens. Take a minute to watch this interview he did with an HIV+ advocate Josh Robbins. It's enlightening. th-cam.com/video/_PjHF87zwiM/w-d-xo.html&ab_channel=I%27mStillJoshbyJoshRobbins
Business are obligated to pay payroll first. So profits trickle up not down. There is an easy way to understand how economically literate you are, make a prediction and see how often you are right. Bet it’s not often.
In other word, PRICE CONTROL as plan by Kamala is dangerous .
While free market principles might work for many items, I disagree on the use of price gouging being "acceptable" for certain items like insulin, which people need to survive. Charging $325 a vial "because you can" when the product costs probably $10-15 (if that) to produce is reprehensible, especially when there are people dying for the simple reason that they have to choose between rent, food, or medication. Also, while there is plenty of expensive health insurance coverage in the US and many who are without it, why isn't the price coming down to the level where the "poor" can afford it?
Limiting amounts of essential products purchased, like toilet paper, is working where I live. It helps that we have a grocery chain that has planned and prepared for times like the present. Go ahead and charge whatever for nonessential items, but price gouging will guarantee that the poor will never be able to afford something essential that they may need just as badly (or perhaps worse) than those willing to pay whatever price is set. And who is likely to hurt the most from that? Children.
It's upsetting that in a country as wealthy as America that the poor are told to just "wait their turn" until the rich have had their fill, or until the supply is refilled (whenever that is), or until an alternative is developed for certain essential items. Thank God there are still people and organizations that care about one another to help the less fortunate through difficult times because not everyone who needs help is a freeloader.
One issue I have with your take is that the problem with the insulin market IS the lack of free market principles. There are major limitation on who can sell and produce it. Importing from another country is extremely regualted.
Medical care is hardly an example of "free market" activity. The government places myriad restrictions on entry, and on who can manufacture or sell drugs, even generic drugs. You'll notice that that groceries charge low prices, even though they want to charge high prices. Insulin is a problem because the government has allowed, and even encouraged, patents to be extended and to include delivery devices that make it impossible for a new firm just to make insulin for an existing delivery device. www.medicinenet.com/script/main/art.asp?articlekey=225725 So, I agree that "price-gouging" happens all the time, as long as government shills try to pay off their cronyist corporate buddies. But water, which we need even more than insulin? Water is available very cheaply in the grocery store, from many sources.
@@gsockpuppet2490 absolutely, government regulation started the problem in her insulin example.
I agree, insulin is a product that shouldn’t be price gouged because of its availability. The supply of insulin is actually high and the price is only high because of monopolistic tactics rather than solving the supply shortage
I have been diabetic for 25 years the price of insulin has never ever been the problem
Ive been listening to Munger for years on econtalk. i would’ve liked for him to address the psychological parts more. the anger and rage from being charged exorbitant amounts for food and water is real.
Good point! We were trying to keep this video short, but that's definitely a great topic for class discussion! It's one of the reasons that even without price gouging laws, some businesses choose not to raise prices during a shortage, since they don't want to anger their customers.
It is that or shortages
Are you for real? The market is not concerned nor should it be with your feelings.
@@JuliusG73 You're right, but politicians are concerned with people's feelings and they create price-gouging laws.
The problem with this is it operates under some assumptions that are not true
1) consumers cut back. They do not. Those who can buy in bulk do and those who can’t afford it end up suffering in the short term. We saw this phenomenon during COVID with toilet paper.
2) Producers make more. And they realize they can continue to make more by keeping that price at that rate well after the scarcity issue is resolved. Most corporations large enough receive government subsidy. They make massive profit off of this when prices are high because of the offset costs with that subsidy. This leads to abuse of price gouging, as we’ve been seeing. Despite supply meeting demand (surpassing it for essential goods actually) prices on those goods remain high if not higher than when supply was low for really no better reason than they can and no one has stepped in to stop it yet.
3) Entrepreneurs create alternatives, assuming there’s actual competition in a functional market. There is not in America amongst the largest of corporate enterprises. It’s an oligopoly, meaning a select few major names that own a variety of smaller businesses and sellers that gives the impression or illusion of choice. You can pick between 3 or 5 different brands of diapers except all of them are owned by Procter & gamble and the price remains high. These few corporations see that their one or two other competitors raise prices, so they themselves follow suit. It’s a symbiotic relationship that keeps all of these in power. If they were genuinely in competition, we wouldn’t see the massive amounts of mergers we get on a regular basis for companies in the grocery market, entertainment or otherwise.
All of this is to say: price gouging in a vacuum is totally normal. But we do not exist in a vacuum and supply and demand laws do not apply when we live somewhere with a surplus of certain goods that are often artificially thrown away or unused in order to justify keeping prices high or raising them higher. If there are loopholes, corporations will take them.
So price gouging isn’t good when it’s another tool for exploitation
You understand very little about economics.
Well stated yet another classic example of government imposing what it considers a moral decision not understanding basic economics.
No such thing as basic economics
Very well said. I remember in econ class the professors taught this. I thought everyone knew, it's simple econ 101
Most people understand almost nothing about basic economics. When prices rise, they just think businesses are greedy.
Supply and demand is not the same as price gouging. It's a good thing you folks that understand that as being the same thing weren't alive during the great depression. You might have heard about it... But people were pretty upset once it continued past the point of need in the support of a world war. They amended the constitution to avoid it being used to pillage our resources and everything. It was kind of a big deal. 🧐
Quantity gouging is the new technique by the corporates.
Most processed food comes in air filled bags with so little stuff!
Big bags little stuff.
and smaller portions amounts
Price gouging is not supply and demand economics. Price gouging is unnecessarily raising prices when there is no scarcity or creating an artificial scarcity in order to raise prices, most likely done by an entity that has total or near total control of the given market.
More people need to hear this. People truly in need will buy the higher-priced scarce goods, more will be produced because of the price and those with less utility from the good will buy as supply eases prices. Markets work if allowed to work.
Posting this comment so I can prove to Chally that I watched this
Excellent overview 👍
Very nice and well needed.
Great video. And allowing price gouging clearly improves collective welfare. But there’s a different moral principle that many people care about: fairness. I wonder if there’s a way to take advantage of free market principles without ignoring fairness during emergencies?
a common proposal is to provide emergency stipends to the poor for use in emergencies.
charities stock-pile goods when times are good, while the rest try to do it when times are bad
Tell that to Rena-A-Center!!
Incentives matter
I agree with most of this, but your bird flu example seems bad. I bet that if, somehow, egg prices had remained the same, demand would still have gone down. Nobody wants to eat eggs during the bird flu, At least until they check to see if that's a plausible vector.
I don't think that's true. It is not thought that avian flu can be transmitted through cooked eggs. (see www.fda.gov/food/eggs-guidance-documents-regulatory-information/questions-and-answers-regarding-safety-eggs-during-highly-pathogenic-avian-influenza-outbreaks).
Ambulance chasers is keyword..TV as university Avenue purdue
People look at me as evil when I say price gouging is a good in emergencies lol
there are things that need to be high priced due to the rarity and limited amount available
In the heat of the 2025 Election, this video was very informative.
But I couldn’t help to think that things are just not that simple when you deal with the complexity of human beings (greed). We are no longer in a pandemic, supply chains have recovered, and Inflation has been reported to be back to a more normal rate….but Americans are still not seeing the result of any of this…the way I see it, the corporations are the last one standing to do their part to help the working class people afford the basics…and have a little breathing for other things… but instead they are keeping the prices high trying to suck everything that they can out of america…to do what…? Pay taxes? …no…enrich their community? …no…they want to fill the pockets of shareholders and barely any of the money trickles down…as a nation we growing more to understand that there has to be balance…so I say develop these laws…make it fair…and give the working class people a fair chance at the American Dream once again…
#KAMALAWALZ2025
This guy must have learned from Martin Schrelli, who increased the price of HIV medication by more than 1000%, even though there was no scarcity.
His name is Martin Shkreli and do not compare him to this guy. You seem to be lacking in facts so I will help you. The medication was Daraprim. It is listed as an antimalarial medication but often used for toxoplasmosis. Toxoplasmosis is a disease that results from a parasitic infection. Most people fight it off without any issues. However, if you have a compromised immune system, such as a patient with HIV, you might not be able to fight it off. Daraprim has awful side effects. There are only approx. 2000 prescriptions written annually for Daraprim so it has been a very low (read no) priority for reformulation or to come up with a better alternative. In comes Martin, increases the cost, FOR INSURANCE COMPANIES, puts most of the profit into R&D to come up with better alternatives. There was a program in place that if the patient did not have insurance their out-of-pocket cost was no greater than $20. There wasn't one documented case of someone who needed this drug, going without it because of cost. You cannot same the same for other necessary drugs like insulin and epi-pens. Take a minute to watch this interview he did with an HIV+ advocate Josh Robbins. It's enlightening. th-cam.com/video/_PjHF87zwiM/w-d-xo.html&ab_channel=I%27mStillJoshbyJoshRobbins
People cause it
From the sound of this, you're likely the type who still believes in trickle-down economics and the Easter Bunny.
No one believes in trickle-down economics, it's not a real thing that anyone argues for.
Business are obligated to pay payroll first. So profits trickle up not down. There is an easy way to understand how economically literate you are, make a prediction and see how often you are right. Bet it’s not often.
Sociology people
chally
Ah yes as demand lowers profits increase! Basic economics amirite. What is this the fucking heritage foundation?