Should engineers price gouge 14

[2dye4]

After any hurricane in the US the price of lumber
immediately goes up even for inventory that was on
the shelf before the storm. The price rises can be
dramatic 3X or more. The reason of course is the sudden
need for repair lumber. This practice is widely supported
by the free marketers and the point is made that this
price gouging helps ration a crucial resource in times
of need. Makes sure people are building dog houses with
plywood needed for roofs.

Consider a scenario where the engineering outsourcing
suddenly is interupted by a dramic event or events.
Say a bird-flu pandemic or global war.

Is it ethical for us engineers to demand the market price
for our services in time of a shortage brought on by
international circumstances??

Maybe we ask 350000 US dollars per year for a job that
previosly paid 60000 ??

 

[CorBlimeyLimey]

Immoral ... I don't know. Unfair to the 600 volunteers ... definitely. Although I'm sure they are very grateful for the help.

And I think you'll find that the firefighters are being offered the higher pay to encourage them to go. I have not read or heard that they are demanding the higher remuneration before agreeing to go. I have a couple of firefighter friends who would be willing to go for their regular pay and for a free trip to Oz. If you have data to the contrary, please post it.

 

[bvanhiel]

CorBlimeyLimey,

There's nothing wrong with "gouging" as long as somebody doesn't have inside information (they create the scarcity and then profit from it) or a monopoly. Otherwise, gouging is just an extreme example of the price fluctuations that encourages resources to go where they are really needed.

Water in a disaster zone isn't a good example because it reaches the edge of where capitalism starts to break down. Capitalism requires choice, and if you're dying of thirst, you can't wait for cheaper water. This is where I think government has a role in providing necessary goods and services.

-b

 

[CorBlimeyLimey]

-b,
So you are OK with people extorting, swindling and overcharging you providing they didn't create the crisis.

 

[bvanhiel]

So you are OK with people extorting, swindling and overcharging you providing they didn't create the crisis.

Yes.

I put up with it all the time. Every time I go to the movies I pay too much for popcorn, if I'm too far or too close to the city I pay too much for gas, and if there's a conference downtown I pay too much for parking.

The alternative is rationing and having everything end up on the black market at inflated prices anyway (like concert tickets).

The key is choice. If there's no choice (such as in matters of life and death) then capitalism falls apart. Buying plywood to board up your home ahead of a storm is a choice, and the plywood should go to whoever views it as most valuable. Begging for water because you are dying of thirst is not a choice. Not many people have a desparate life-and-death need for an engineer, hence I wouldn't feel guilty about charging whatever the market will bear.

Do you think contracters in Iraq are immoral for charging more than what they would make somewhere else? I can't think of many places that better qualify as a disaster area.

-b

 

[GregLocock]

CBL So, one man stockpiles water. Another stockpiles gold.

According to this rather socialist ideal world, if the second man needs water the first is morally obliged to swap it for the usual amount of gold. Yet, I strongly suggest, that absent a shortage of water, if the first man needs some more gold (money) the second man would have some forthright opinions about the appropriate exchange rate.

Why do you regard money as having a higher importance than any other resource, whether that be my time, or water?

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[prohammy]

Excellent point Greg.

Goes back to the 'route of all evil' argument about money, but there is no doubt that we have become a society that has an entrenched view of the importance of money

Kevin Hammond

Mechanical Design Engineer
Derbyshire, UK

 

[EOIT]

Actually the correct argument's phrase is "For the love of money is the root of all evil" therefore it would seem to me that the interpretation is greed is evil and not money itself. Again a misquoted passage over time turned to mean something else.

So I guess this would evolve to if the "water-seller" or the "crisis-engineer" did their job for the money and didn't get greedy then they wouldn't be evil.

EOIT

 

[CorBlimeyLimey]

bvanhiel ...

Every time I go to the movies I pay too much for popcorn, if I'm too far or too close to the city I pay too much for gas, and if there's a conference downtown I pay too much for parking.

???? These things are crises ????

As I've already stated, the OP was asking about times of crises such as hurricanes, pandemics and global war.

I believe a big part of the pay contractors get in Iraq would be danger money and working conditions. I wouldn't go there for any amount.

Greg ...
I don't regard money as having more importance than any other resource; in fact just the opposite. The resources are more valuable; money is just a means to obtaining them. I do regard as unethical, the principle of charging exorbitant amounts for engineering services (e.g. rebuilding bridges, towns, roads, etc) after a crisis has occurred.

For those who disagree with my view, we will have to agree to disagree. I've spent too much time repeating myself here.

 

[bvanhiel]

KBL,

They are everyday examples of something costing more than we think they should, but the same idea applies. Lets use the example of rebuilding bridges after a hurricane.

The higher price to build a bridge after a storm encourages tow things:

1) Waiting until the price is lower. Less important bridges will be able to wait for a better price. This directs resources to more important bridges first.

2) Attracting more bridge builders to the area. If I can make more money I'm encourages to come to the area to work.

If the prices don't go up neither of those things happen. The order of rebuilding will be haphazard, and the whole thing will take longer because of the limited number of bridge builders in the area.

-b

-b

 

[Romefu12]

Dear All
Personally I think many Engineers pay is extremely low. At this point I really don't understand why anyone would want to do my job for less than 6 figures a year. I have been in the Power Generation business and worked for the big 3 Power Generation companies for 25 years. If I had spent as much time in Medical School as I have spent in Engineering School, I would be a multi-millionaire by now.

Instead I am on call 24 / 7 and enjoy many perks including spending too much time in 3rd world countries brining power to the people working in all weather conditions under extreme deadlines costing millions of dollars in Liquidated damages, reliability claims, insurance for crashed equipment and all without very many “Thank You’s” for doing my job and being away from my family. However, there must be something wrong with me as well because I have to admit, I really do enjoy what I do.

I remember getting satisfaction on one person who wasn’t a customer, but an end user that relied upon my dedicated work. The occasion was after a hurricane came through and power, including the local power plants were completely down and dark. Myself with not having any time off during past assignments was thrown into yet another disaster while battling a sever case of flu. I had walked into a small family owned grocery store with a pharmacy to get some much needed prescription drugs for my condition and to keep me on my feet long enough to assist the power companies in recovering from this hurricane.

Upon getting my prescriptions filled and presenting my company insurance cards to the owner of the store (his wife close behind and whose food in the store was beginning to thaw, thus he needed power turned on urgently) the owner said snottingly “It’s not fair to see a guy such as yourself, working for a great company, pay so little for prescription drugs, Do you know that you pay much less than people on Medicare / Medicaid are required to pay? That just should not be.”

My reply to the owner was this:
(Me) Pardon me but, whom do you call when the power goes out?
(Owner) Why I call the power company of course
(Me) And who the F*#K do you think the power company calls when their power goes out?
(Owner) Why I don’t know?
(Me) Me Dumba*s
(Owner’s wife) Why I do believe he ‘s got you there dear. Thank you for your efforts sir, is there anything else we can do to assist you?
(Me) No Mam, Thank you, this will do.

So, in the grand scheme of engineering, I think many of us go underpaid, un-respected and undervalued until something goes wrong. After all management needs someone to blame when things go wrong. As for getting rid of the older talent and replacing them with the younger talent, I say go ahead, your management team will live to regret that idea as there is much more to engineering than just a skin on the wall. Perhaps we should unionize and strike for better compensation? Just a thought.

Kind Regards
Romefu12

 

[2dye4]

Hi
Very interesting discussion. I am also interested in the question of whether capitalism can survive total unrestrained self interest like is being discussed with the water question.

My original intent was to ask about what to do in the event of a meltdown in trade for some reason. Most likely a large war breaking out somewhere. We engineers have been frequently given the boot because there were cheaper options elsewhere. Then given a hard lessons of life lecture by the economists and CEO's. We learned about creative destruction. If we had a turn in this country or wherever you may be where we suddenly had to bring up massive new capacity to compensate for lost ties to overseas suppliers would we be right to ask $500 k/year because that is what the market will bear. We could argue that the pricing makes sure that engineering resources are used at the point they are most needed and this being enforced by the free market.
Which by the way brings an interesting question. I have been told that durint WWII in the USA the free market was temporarilly given the boot in many areas and the gov did many controlling, resource allocating functions. If the free market allways produces the best result in term of minimizing waste why would it not have worked then during the wartime??

 

[zdas04]

2dye4,
I've got to address your last point.

The free market will generally work in a "survival of the fittest" sort of way to eventually realign resources towards efficiency. During WWII, the government had zero interest in waiting for market forces to realign themselves to a war footing. The interventions were directed at making industry move in the direction that the government wanted, NOW. Remember that the government was not interested in efficient redistribution of activities to a war footing, they wanted war production fast and they really didn't care how efficient the transition was. After everyone was making war material instead of consumer goods, there were significant realignments over time that resulted market forces increasing efficiency, but to start with that just wasn't a priority.

The government's material-distribution activities that continued throughout the war mostly resulted in significant under-production of the material that the government retained distribution-control over. This was the early days of "scientific management" and the watchwords were "economies of scale" and "central control", so a lot of the bureaucrats had more in common with Marx than Nixon.

David

David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

The harder I work, the luckier I seem

 

[BJC]

The free market is hopefully constructive.
There is a good quote (by Isenhower I think, that I can
t exactly quote ) That goes "War by it's very nature is destructive....". It's the total opposite of peace. I think the quote is in his book "Crusade in Europe"

 

[csd72]

Every other profession would, so why shouldnt we.

We charge too little for our services most of the time anyway.

 

[2dye4]

Zdas

I can understand the gov need for speed. But why wouldn't a free market system be able to deal with this more effectively by offering obscene financial rewards to the first producer of war goods. They free market could probably work in some additional effeciency over the gov control.

I think the answear is part of bvanhiel response above. The free market works effectively when all parties have some choice space to move about in. During the war our choice space was limited. Maybe free market rhetoric is best countered by a clause that some minimum choice space must be available to all parties or free market effeciency breaks down.

How would we engineers feel if after years of downsizing and being replaced by lower cost workers if all of a sudden there was a "crises" and we were not allowed to set our own prices for a market that had suddenly turned in our favor. Sounds like a stacked deck to me.
I for one plan to auction my services on a weekly basis to the highest bidder.

 

[HgTX]

http://feeds.theonion.com/~r/theonion/daily/~3/102724091/30234

Hg

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[zdas04]

2dye4,
I see it as a combination of free will and reluctance to change. No one likes change, and if I'm selling all the toasters I can produce at a price that seems like a good profit why would I spend the money to retool to produce ammo boxes or mess kits? I'm going to keep making toasters as long as there is a strong market. The government did not want that lag time and jumped in in a big way.

David

 

[regalia]

In the United States, the 'Patriot Act' is the best thing to happen to the engineering profession in decades. It has put a significant (and much needed) reduction on work visas which helped turn engineering into a commodity in the US. This is at least part of the reason engineering graduates have risen so much in the past five years. There is no shortage of engineers in the US, coroprations are just irritated that the market is no longer oversaturated.

In America, we have 'selective free trade' where corporations can bid engineer salaries down yet lawyers and doctors have strict quotas and price controls. Since there will never be similar institions to protect engineers from market efficiency, my only recommendation is to get to management and business positions quickly.

 

[moltenmetal]

regalia: people in the US have nothing to complain about in relation to oversaturation of the engineering workforce. You do have a functioning visa/quota system, Patriot Act or no, which beats Canada's so-called "human capital" labour force model- basically a free-for-all with society picking up the tab for all the mis-matches between supply and labour force demand that result. Visit Toronto sometime and take a taxi anywhere- chances are very good that a foreign-trained engineer will be behind the wheel!

Care to delve into the REAL reason why this is? Visit

http://www.geocities.com/martinsmoltenmetal/index.htm

. I no longer have access to the profession-specific stats, but the overall numbers haven't changed much in the past few years. The situation is the result of simple supply and demand, not a conspiracy of xenophobic employers as the popular media myth would have us believe. And industry here STILL screams "shortage"- they want a labour force which is "flexible"...

Engineering's a great profession, but there's a reason we've slipped in compensation levels relative to those of doctors, lawyers and just about everybody else. And we're such a group of prima donnas- we're so "above" the marketplace- that we'll never do anything about it.

 

[0707]

“Engineering's a great profession, but there's a reason we've slipped in compensation levels relative to those of doctors, lawyers and just about everybody else. And we're such a group of prima donnas- we're so "above" the marketplace- that we'll never do anything about it.”


Most of the engineers are not doing engineering; instead they are mainly in management job positions, doing management. I agree with you moltenmetal! Engineers are a lit bit, like prima donnas, with oversized stewardships doing management without the proper skills, this is more visible in large company organizations where doesn’t matters what you do, but what is your status, the result of this is, poor engineering and bad management.