When You Listen

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Markets, supply and demand, and general economic principles are not common knowledge. Those topics were barely mentioned in my single semester of economics in high school.

So, why do we fight so hard to teach them when we converse (or debate, yell and scream) about the issues in politics today?

Previously, we discussed how important listening is in our conversations with “libertarians in waiting” — those we are talking about libertarian ideas in a persuasive manner.

Recently, I discussed Uber’s “Surge Pricing” with my Uber driver. He talked about how much he despises “price gouging,” how many complaints he gets about it, and how it isn’t fair.

Because we engaged in conversation early in the ride, I know that his family owns a hotel. The conversation evolved to his experiences as a driver and came to the Surge Pricing issue.

At this point, we could “defend” the concept we know as scarcity and tried to convey an economic message against his “price gouging” view. How effective would that be?

Instead of trying to teach a strictly economic lesson, let’s focus on the fairness of the situation and the best outcomes for all involved.

So, rather than talk about scarcity, we discussed how fair it is to put a cap on prices in an emergency situation (akin to the anti-price gouging laws in many states). We talked about the hotel business and discussed what would happen if a room rate were capped at $100 per room per night vs. letting the market find a price point of $200 (or more) per room per night.

Here’s my example: If the Ventura family is escaping a natural disaster and comes upon a hotel that hasn’t raised prices, for the sake of comfort, they might take two rooms (one for the adults and one for the children) at the hotel if two are available at that price. That means “No Vacancy” for the travelers behind them. The Thomas family, who left an hour after the Venturas, has to continue on to another hotel or maybe even another town, or they might choose to sleep in their car.

If the hotel operator instead raised the prices as his stock depletes and charges $200 per room per night, the Venturas would be more likely to squeeze together into a single room, leaving a room available for the tired Thomas family, who no longer has to search for a hotel room.

After planting that seed, we discussed the recent controversy about the Surge Pricing by Uber on New Year’s Eve.

I asked him if he was done partying at 1 AM and ready to go home, would he prefer to know that he could get his ride with Uber quickly, but for a higher than normal price, or hail a ride via the service if it can’t pay anything additional to the drivers for the holiday and heavier than normal traffic on a Thursday night. There’s no longer an incentive (higher than normal fares) for new drivers to come out to drive, so the wait might be akin to that of a cab company with a similar problem of a fixed number of drivers. In Indianapolis, I heard about New Year’s Eve revelers waiting nearly 3 hours for a taxi.

When you need a ride NOW, is it fair to have to wait hours, when you could pay more to get one in 5 minutes? Is it fair to the drivers to get paid the same rate for a holiday and much heavier than normal traffic?

When you listen. you get an opportunity to tell a story that someone else can easily grasp with no economic education, by focusing your comments on their concerns.