Different River

”You can never step in the same river twice.” –Heraclitus

August 18, 2005

Economic Ignorance Causes Injuries

Filed under: — Different River @ 1:36 am

If you’ve ever taken any economics class, you should remember that if prices are free to adjust, there will never be a persistent “excess” or “shortage.” If there’s an excess, sellers will cut prices to get rid of the stuff, and if there’s a shortage, they’ll raise prices until enough people decide not to buy whatever it is. And when either of these happens, we say the market “clears.”

When prices aren’t free to adjust, weird things can happen. If prices are too low and can’t adjust upward, the amount buyers want to buy exceeds the amount sellers have to sell. That means that something other than “willingness to pay a higher price” has to be used to ration the few goods among the many buyers. And this results in buyers “paying” more, but in different ways than paying more money to the seller. This is why, for example, in places with rent control (like New York City) you have things that don’t exist in other places, like rental agents paid by the tenter, bribes to the building superintendent, illegal subleasing, and so on. It’s also why there are waiting lists (where you “pay” with your time) for health care in Canada, and for popular books at your local library.

It is also why some people got trampled a couple of days ago in Richmond.

Laptop Stampede

See, it seems the Henrico County School District had 1,000 surplus iBook laptops to sell, and they decided to sell them for $50 each. At which price way more than 1,000 people wanted to buy one. No doubt they thought they were doing enough “rationing” by giving Henrico County residents first crack at them, but it turned out way more than 1,000 Henrico County residents wanted to buy one. So, implicitly it got to be “the first 1,000 people in get one,” so there was a mob scene:

What started as a sale turned into a mob scene as thousands of people pushed their way through the Richmond International Raceway gates to buy a $50 iBook laptop computer from Henrico County Schools this morning. The school district had only 1,000 of these surplus computers to sell, and Henrico County residents got first dibs.

Starletta Wilson came to the sale but when the gates opened at 7 a.m., chaos broke out.

“Yeah, they pushed me, look at my child’s stroller… they actually pushed me and stampeded over me. Those people who are down there now were behind us,” Wilson said.

Dustin Coppinger, who attended the sale, said he saw an older man get trampled.

“An old man in a walker was trampled to the ground. Trampled to the ground… walked all over,” he said.

Dozens more were pushed to the ground as the crowd races through the gates.

A one-year-old baby almost became a victim. Her father pulled her out of her stroller.

“Look at her stroller. Her stroller’s demolished. Look at my stroller,” said Wilson.

Alice Jemerson was one victim who got trampled.

“Look at my knees. They ran on top of me. I just starting kicking the people,” she said.

Note that whenever the price of something can’t adjust, the amount “paid” has to adjust in some other way. In this case, successful — and even unsuccessful — buyers ended up “paying” with their running speed, agility, and tolerance for violence towards themselves and others, in addition to waiting time. And, some buyers paid part of the price and decided it wasn’t worth it:

A man who had been standing in line since 2 a.m. came to Jemerson’s rescue. Bair Hossai was almost guaranteed to get one of the coveted computers.

“I’m not going to leave somebody who’s hurt. It’s not worth it. I could have been in the line, but I’m not going to do it, because it’s not worth it,” Hossai said.

Faced with the “cost” of living with his conscience after leaving someone on the ground unprotected, this fellow decided that was too high a price to pay.

To bad he couldn’t have found out just by being outbid in a peaceful auction, or by hearing a higher price when he heard about the sale. That would have saved him five hours of waiting — and it would have saved Ms. Jemerson from being trampled.

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