\u201cEvil corporations\u201d are often charged with profiting unethically or from the misfortunes of others. Airlines collect an estimated $2 billion each year in ticket change and cancellation fees from fliers. Chain retailers often charge more for a certain products in one location than in another. Credit card companies charge \u201coutrageous\u201d fees and interest rates on their balances. Should we regulate these companies so they can\u2019t profit from our bad circumstances? I discussed this topic earlier today on the Wilkow Majority, but I think it deserves a blog post as well.<\/p>\n
Let\u2019s start with a fundamental business principle: Profit does not come from the most visible sources, nor is it generated equally from all sources. A service station might break even on gasoline sales and make its money on hot dogs and Cokes. Grocery stores charge higher margins on candy bars in the checkout lines. Oceanfront hotels raise rates and make their money in the summers. Carmakers typically earn less on entry level vehicles than on their upscale models. The point here is that companies earn profits when and where they can.<\/p>\n
There is a flipside to this reality we often forget. If the service station did not charge high margins for snacks, it would have to raise the price of gas to cover its overhead. If grocers did not earn a lot from selling products in the checkout aisles, they would have to raise other prices to make up the difference. If airlines were not allowed to charge $100-150 when customers change flights, they would have to raise fares to remain profitable. In the end, it all comes out in the wash.<\/p>\n
IN MOST INSTANCES, REGULATING THIS TYPE OF BEHAVIOR HURTS CONSUMERS INSTEAD OF HELPING THEM. I once heard a guy complain that gas stations in the desert shouldn\u2019t be able to \u201ctake advantage of customers\u201d by charging more than those in cities. He was willing to allow a few cents per gallon to cover additional transportation costs, but nothing else. I asked him who would run a gas station in the middle of nowhere if he were not allowed to charge higher prices to compensate for getting fewer customers. \u201cIf they can\u2019t make money charging a fair price, then they shouldn\u2019t be in business.\u201d I reminded him that if the specific station he was complaining about wasn\u2019t there, he would have been stuck on a desert highway without any gas at all. He was arguing for his own demise.<\/p>\n
The bottom line is simple. If you don\u2019t want to pay more for gas, fill up in the city before you drive in the desert. If you think the interest rates and fees charged by your credit card company are too high, live within your means and you won\u2019t pay them anything. There is no free lunch. If companies can\u2019t earn profits in one area, they\u2019ll try somewhere else. Authorize the government to regulate companies on your behalf and you will lose another piece of your own freedom.<\/p>\n","protected":false},"excerpt":{"rendered":"
\u201cEvil corporations\u201d are often charged with profiting unethically or from the misfortunes of others. Airlines collect an estimated $2 billion each year in ticket change and cancellation fees from fliers. Chain retailers often charge more for a certain products in one location than in another. Credit card companies charge \u201coutrageous\u201d fees and interest rates on […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/117"}],"collection":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=117"}],"version-history":[{"count":0,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/117\/revisions"}],"wp:attachment":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}