Toledo residents should be complaining about greedy water-hoarding panic buyers during the city’s water crisis

Great post by Mark Perry.

"Toledo, Ohio is facing a water shortage/crisis resulting from toxins that have fouled the city’s water supply, possibly from algae in Lake Erie. City officials have issued warnings not to drink the water and the governor declared a state of emergency. Worried residents descended on stores, quickly clearing shelves of bottled water, according to this news report.

As usually happens with any temporary shortage, e.g. temporary shortages of water, generators, chain saws, plywood, etc. following a natural disaster, the Toledo water shortage has yielded these perfectly predictable results: a) rising market prices at many retailers reflecting the sharp decline in supply and rise in demand, b) panic buying and hoarding on behalf of many consumers in response to the temporary shortage, and c) claims of “unfair” price gouging. And as also usually happens, the Toledo water hoarders and panic buyers receive no criticism at all for significantly exacerbating the shortage with their greedy behavior. On the other hand, the “price gougers” receive almost 100% of the criticism – even though the “price gougers” should be commended for accurately and realistically pricing a scarce commodity according to market forces, which significantly facilitates the efficient allocation of Toledo’s scarce water in this case.

Here’s a little editing of another news report from Toledo’s ABC TV station on the local water shortage (“Toleodans complain about
price gouginggreedy water-hoarders during water crisis”), re-directing some of the blame from price gougers to the greedy water-hoarding panic buyers.

Lots of our viewers called with complaints about
price gouginggreedy panic buying during Toledo’s water crisis. While the water supply was low, prices went sky-high and greedy consumers are buying more water than they really need and are hoarding it.

When word that Toledo’s water was not safe to drink got out, the rush of greedy waters hoarders was on at places like Costco.

Chelsa Sparks said, “if I don’t have water, my baby doesn’t eat. So that’s going to be an issue. I resent the fact that so many greedy water hoarders are panic buying and unnecessarily buying so much of the water for themselves without thinking of vulnerable populations, like families with children.” 

Some like Claudia Roberts didn’t get there in time. “We waited an hour and 15 minutes. Nothing, it was all gone. The greedy water hoarders bought it all up in no time, leaving nothing for the rest of us.”

Others decided to
take advantage of the situationhelp conserve scarce water like the guy we found selling water for $20 bucks a case to allocate a scarce resource to those who value it most highly, like families with children. He said the price was high to pay for his expenses and to allocate a scare resource in the most efficient way possible – with market prices that accurately reflect the relative scarcity of water.

We also found water listed on Craigslist for $10. A 13ABC photographer spent $13 for a 40 pack of water that still had a sticker on the side saying 40 bottle for under 10 cents.

If you suspect
price gougingretailers of engaging in first-come, first-served pricing that fosters greed-based water hoarding, panic buying, and unnecessary water shortages you can
save your receipt andcontact the Ohio Attorney General.

MP: There are really only two choices for water in Toledo: a) allow water to be priced according to market forces which will accurately and truthfully reflect the underlying conditions of supply and demand, and allocate the scarce water efficiently, or b) artificially, by government mandates against “price gouging,” prevent water prices from rising to their true market level, and allocate water inefficiently, e.g. first-come, first served. If doing the most good for the most people is the criterion, then there’s no question that Option A – market prices – is superior to Option B – government-mandated prices, e.g. price controls."