Windy Profits

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Wednesday 18 August 2004 10.43am

I just came across this from the NY Times - I know we think of the US as the home of rampant capitalism, but I (used to) think of Americans also having a strong sense of local community. Ahh, how my illusions are shattered.

http://www.nytimes.com/2004/08/18/national/18scams.html?th

(you may need to register to access this page - not sure, if so, apologies).
Wednesday 18 August 2004 3.43pm
Hi, yes, looks like you need to register to access. Would you be able to cut and paste the general gist of the article in here?

Thanks :c)
Wednesday 18 August 2004 4.06pm
of course - here is the text...

With Storm Gone, Floridians Are Hit With Price Gouging
By JOSEPH B. TREASTER

Published: August 18, 2004


ORLANDO, Fla., Aug. 17 - Greg Lawrence talks about the $10 bag of ice. Kenneth Kleppach says he was clipped for nearly three times the advertised price for a hotel room. And a man with a chain saw told Jerry Olmstead that he could clear the oak tree off his roof, but it would cost $10,500.
So much for a friendly, helping hand in a time of crisis. Since the winds of Hurricane Charley subsided, officials say a wave of price gouging has swept across central and southwest Florida, putting law enforcement officials into high gear and infuriating storm victims already faced with damaged homes, shuttered workplaces and long lines for basic commodities.

"Why do people try to capitalize on other people's hardship and misery," Mr. Olmstead asked as he fumed over the tree removal. "Of course it angers me. They see an opportunity and, fine, if you want to make a little money. But there's a limit. This is ludicrous."

Charlie Crist, Florida's attorney general, said Tuesday afternoon that he had received more than 1,400 complaints of overcharging from throughout the disaster area. This morning he filed formal complaints against the Crossroads Motor Lodge in Lakeland and the Days Inn Airport Hotel in West Palm Beach, accusing them of price gouging and deceptive business practices. Not every complaint checks out, and certainly the stricken areas of Florida are filled with volunteers and people offering free food or charity. But there are also those brazenly looking to make some extra money.

Some gas stations facing long lines of cars with empty tanks are charging $3 a gallon for gas that would normally go for $1.78, said John McMahon, a sheriff's investigator in Orlando's surrounding Orange County. In one of the boldest cases, some contractors from Jacksonville offered to clear two trees off the roof of an Orlando woman for $23,000, Mr. McMahon said. The woman declined the offer.

In Port Charlotte and in Arcadia, two of the most devastated places, scam artists have been posing as independent insurance claims adjusters, offering, for $500 to $2,000, to help resolve claims with insurance companies, the state's Department of Insurance said.

Mr. Crist said of the complaints coming into his office, "This is just the start." He added, "We saw this after Hurricane Andrew and we're seeing it again."
Mr. Crist has dispatched teams to help consumers, and squads of sheriff's deputies and consumer advocates are also working to discourage price gouging.

While many of the complaints have been coming from Punta Gorda and Arcadia, Orlando, at nearly 200 complaints, is leading the list, with Fort Myers, just south of where the hurricane came ashore on the Gulf Coast, running a close second. Under Florida law, each proven case of price gouging carries a penalty of $1,000; each case of deceptive business practices carries a penalty of $10,000 except when the victim is over 60, in which case the penalty rises to $15,000. The complaints began to trickle in as the storm was approaching and a few came in immediately afterward. But now the pace is picking up, said Sara Kinsey, who has been working late into the night answering the attorney general's complaint hot line.

She said she had heard from a man who said he was told that the new price for a small household generator was now $2,000, up from about $250.
Many of the complaints have been for two necessities: bottled water and ice. But prices have also jumped for construction work and construction materials, and the authorities expect more of that as the recovery stretches on.

Janet Snyder, a pharmacy technician in Cape Coral, said several men in two pickup trucks spotted her roof damage and offered to lay down a temporary covering of plastic sheeting. They wanted $600, about four times what she figured was the right price, based on 15 rolls of plastic that usually sell for $10 each. Across the state, in Ormund Beach, Chris Boyce, a salesman for a roofing supply company, said that when his company tried to restock on Monday the wholesaler tried to raise the price of tar paper 40 percent, to $10.50 for a roll of 216 square feet. "That's criminal," Mr. Boyce said he told the wholesaler, adding, "I'd rather not have it at that price."

Ms. Kinsey said that in one instance a price gouger simply took advantage of anxiety and fear that there was no ice to be had. He bought several chests of ice in a grocery store in a mall at the usual $1 or so for a big party-size bag, she said, stepped outside and began selling scoops of ice for $2 each.
Mr. Lawrence, a cook who is studying to become a Web site designer, came across a gas station here in Orlando selling the equivalent of two $1 bags for $10.

"I said, 'Are you kidding?' and he just looked at me," Mr. Lawrence said. "There were mobs of people buying ice from the guy. Even though that was the only place I could find ice, I refused to buy it."

The first wave of opportunistic pricing came from motels and hotels as the hurricane was approaching, Mr. Crist said. Many people fled the Tampa Bay area after forecasters calculated incorrectly that the hurricane would be coming ashore there.

Mr. Kleppach and his family were among them. They drove inland, and every hotel they checked was full. They continued across the state to the East Coast city of Fort Pierce and still could not find a room.

Finally, in West Palm Beach, Mr. Kleppach said in court documents filed in the attorney general's lawsuits, he saw a sign at the Days Inn Airport Hotel reading, "ALL ROOMS - $39.99." There were two rooms left. But the price, Mr. Kleppach said, was $109.00. "I was desperate and needed shelter for my family," he said, "so I took the room for that price."

At the hotel on Tuesday, Andrew Hill, the manager, refused to discuss the attorney general's accusations. In Plant City, just east of Tampa, Rosemary Duffield, who is in her 80's, decided she should get out of her mobile home and she booked a room a little farther inland, at the Crossroads Motor Lodge in Lakeland, she said in court papers. She was told the price would be $44.79, she said. But when she called to reconfirm later in the day, the price was $55.79. After checking in on Friday and settling into her room, she discovered that she had been charged $61.27.

She did not argue with the hotel, but she complained to the attorney general. She did not respond to a reporter's message left on her answering machine Tuesday. At the Crossroads Motor Lodge, a man who said he was the manager but would not give his name denied that he had been overcharging. "How can we gouge?" he asked. "We advertise in the newspaper."

Wednesday 18 August 2004 4.28pm
Hello

Many thanks for posting this. I think things like this are astounding, but as an American I also remember the countless times that people do donate during times of crisis. I remember specifically during 9/11 the hundreds of companies that donated items/etc from their companies for nothing in return. So, although, I think this instance is appalling, I think it's unfair to hold all Americans responsible for not having a "strong sense of local community" for these obviously greedy people. Not shooting the messenger, just think it's dangerous to generalize.

Thanks :c)
Wednesday 18 August 2004 5.09pm

of course - no american bashing intended.

Something else I thought, is that i am not that impressed by the New York Times report either. There is one line which actually goes:

" She said, she had heard, from a man who said, he was told that... " I have added commas to emphasise just how much hearsay-ey that bit of top class reporting is.

Wednesday 18 August 2004 5.25pm
Yes, I totally agree, what a reliable source huh? :c) Also, I wonder whether there was this much "reporting" on the front cover of newspapers to help the people in crisis. Don't get me wrong, I think it's important for people to be made aware of scams and such, but it would be nice if for once these so called "reporters" would channel their energy for good.

Wednesday 18 August 2004 10.14pm
Can anybody explain the difference between 'price gouging' and free market economics? Why is the first considered 'criminal' and attracts a fine, whilst the second is considered (by some) necessary?
They seem identical to me.
Thursday 19 August 2004 9.17am
red bus wrote:
-------------------------------------------------------
> Something else I thought, is that i am not that
> impressed by the New York Times report either.
> There is one line which actually goes:
>
> " She said, she had heard, from a man who said,
> he was told that... " I have added commas to
> emphasise just how much hearsay-ey that bit of top
> class reporting is.
>

It's poor (American) English, but surely it can be precised as

"An officer in the Attorney General's office received a complaint from one resident that he had had been told by one vendor.."

only two degrees of separation, surely
Thursday 19 August 2004 10.31am

much nicer.

But, it is that second degree that is important :o) then it becomes hearsay rather than direct experience. but fine for the pub i suppose.
Thursday 19 August 2004 4.40pm
The Unladylike Ms. Jo wrote:
-------------------------------------------------------
> Can anybody explain the difference between 'price
> gouging' and free market economics? Why is the
> first considered 'criminal' and attracts a fine,
> whilst the second is considered (by some)
> necessary?
> They seem identical to me.

There are plenty of free market economists who would agree, and regard the anti gouging laws enacted by various states as inhibiting the efficient distribution of goods.
e.g. http://www.mises.org/freemarket_detail.asp?control=417&sortorder=articledate

For another view...
http://www.michiganprospect.org/mirs_html/november_2001.html

It's one of those periodic quirks in the US, when legislation is put into place for moralistic purposes, even it if appears anti-capitalistic.
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