Is Price Gouging a Necessary Measure?
I have a Friday morning meeting with Sarah Bohnenkamp ever week. She is insightful, energetic and helps me push through the mental blocks that keep me from seeing opportunities. We recorded our conversation discussing how people are reacting to the chaos of Coronavirus and which people are adapting to thrive. We talk about handling the crisis, how teachers are adapting and pushing the boundaries of the new world in addition to the morality of price gouging you’ll read below. View the full interview here.
VC: I am all about people pushing new ideas into society. Right now we’re listening to as many as we can because the old system was set up and it worked for what we had and now new systems are going to grow up and I am definitely not the picker but I am open to hearing what as many different people as I can find are saying. One of the things that I noticed the other day is places are still talking politics as though the way to solve the beef problem we have right now is grocery stores have to carry it. People are having high demand; they want to stock their freezers and there is only so much capacity. These producers and these packing houses have to worry about our workers getting sick and production so I decided to stop in and listen to this archived thing and thought what a great thing they’re going to be talking about — important issues and they weren’t — they were talking about the way in which they’re going about solving today’s problems which seems like way disconnected from what I think is important. Where are you at on that?
SB: I think that there are some organizations that are using Corona for their own political agendas and I’m really sad about that because I don’t think that — country of origin labeling — for instance, has anything to do with our markets right now because our consumers are not demanding it and so you can slice it and dice it any way that you want but that’s just not the case. People just want to have beef in their mouths right now and so I hate that we are even like trying to go down that road because that’s not what matters right now. I love that this is forcing people to be more entrepreneurial, the amount of people in my world that are now trying to figure out how to sell direct is astounding and I’m so excited because that’s what people want right? They want that personal connection; they want to make a good economic return because I mean that’s life. We want to have that kind of opportunity, but I also recognize that you cannot avoid the political side. The policy is required to shift the masses as much as I hate it and so you must have both. I also think that nothing’s going to change right now no matter how many letters we are going to write to Washington DC officials or how many Facebook lives we do, I don’t think that it’s that big of an issue until people come together because we’ve got this voice saying this and it looks so disjointed right so I think Vance, that all big breakthroughs require break wits and this stuff is breaking and I might not be that mad about it because there’s going to be something that’s going to come out on the other side so that it’s really beautiful honestly. It’s interesting, I think that everyone is either the traditionalists or the Futurists and the traditionalists are oftentimes the people that are saying the sickness is so bad that we just have to hunker down and once we get that solved then we’ll move into the new world but not until that’s solved and then you’ve got the futurists that are over here saying hey everything’s different, the rules are up in the air let’s go run around and do new things but you have to have that.
VC: Our system was the most efficient system ever created in the history of time and yes it has some challenges like I can’t just go fill up a freezer full of beef right now without taking away from all of my other neighbors or out competing them for it so I want some alternative system but the system has delivered beef to us consistently for 50 years safely and so it’s an interesting time to be saying I want change when the system that we had brought us a lot of really amazing things. We’ve got the safest, most nutritious, on-demand system in the world. We don’t know how good we’ve got it but when we start hearing stories about farmers and ranchers who aren’t making any money when in fact, they’re in the red all the time, that’s weird. Then you see the profits on the other side when the beef is in the box, that just fundamentally doesn’t make sense, we’ve got to take care of our people and so the humaneness that we bring to it, the logic that matters and so the supply chain is long for our food. We have got to figure a way to make it stronger, not longer. One of the things that I saw the other day I posted on Twitter about how I’m seeing people talk about price gouging and how terrible price gouging is because you’re watching prices go up and people have demands and so they don’t want price gouging but the flip side of that is that prices going up forces it so that you can’t just say, well I have money right now I’m going to buy up as much of these goods as I can instead if the price goes up it means I have to really want that thing in order to spend money on it.
I think there’s a huge percentage of the US population that doesn’t understand if you demand that prices stay the same and yet supply doesn’t go up and demand goes up then you have shortages and so I don’t know how we handle this but if you have this discontinuity like you’re talking about when there’s a ton of demand and there’s supply lacking.
SB: I mean we’ve kept our refrigerators pretty full but not as full as I would want right now so we’ve got to let prices float, I think. I am worried that there are people that don’t understand economics enough to not want prices to float and that just comes back to the fact that we don’t know how good we have it. We have been allowed not to know about the economics even from a producer standpoint. I’ve just been able to say yeah, this is what I’m going to do, and I can just buy some of this and then I’ll just put it to market, and you know that’s worked. We have been allowed a lot of mediocrity if you ask me and that has now come around and can bite us in the butt so it’s forcing people to start to figure out all the dollars in play.
Let’s keep the conversation going,
Vance
For more conversations, ideas, and videos, follow me here or subscribe to the podcast.
