David R. Henderson  

Markets for Everything, Minaki Edition

American Health Care Policy Is... A Consensus to Question...

$5 for 4 eggs

On Monday, August 2, I was at my cottage and wanted to make a special breakfast for my cousin and his wife that morning and the next morning. I needed an additional 4 eggs. The problem: it was the end of Canada's August long weekend and the odds that any of the small stores at Minaki would still have eggs were close to zero. Just in case, I went to the Minaki Marina and, sure enough, they were out of eggs. So I walked to Paradise Bay and they were out. I was desperate. I walked out of the Paradise Bay store and saw a bunch of fishermen standing around talking to owner Duane Hell. They were presumably staying at the various cabins nearby. How to coax 4 eggs out of people? Make it worth their while. So I pulled out a $5, held it up, and yelled, "I'll pay someone $5 for 4 eggs." The fishermen looked at me quizzically. But Duane Hell said, "Go to my cabin and ask my wife." So I walked over to his cabin, knocked on the door, and told his wife the situation. She invited me in and I got to see one of the nicest residences in Minaki. She gave me 4 eggs and, of course, refused to take the money. (Duane is an entrepreneur and I'm guessing he would have taken the money.) Later that day, I saw Duane, thanked him, and said, "I'm going into Kenora tomorrow. What's your favorite wine?" "A twelve pack of diet Pepsi," he answered. I delivered it to him the next day. And I made the two breakfasts.

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CATEGORIES: Business Economics

COMMENTS (6 to date)
Robert writes:

What do you think would have happened if you just asked if anyone was willing to give you 4 eggs, and you would buy them a half-dozen box in return tomorrow? I don't think this is an good example of "Markets for everything" unless they would not have helped unless you paid them.

bjk writes:

The real lesson of this anecdote is that there aren't markets in everything. The "sellers" in this case consider market transactions to be morally demeaning. Only when forced to accept "payment" do they agree to the demeaning transaction. They would have preferred to do a small favor.

Jeremy, Alabama writes:

I think you both broke the law.

- neither of you paid sales tax on the transactions with each other.

- the domestic refrigerated storage for the eggs was not government inspected or approved.

- you did not mention whether you checked Duane's ID before offering to purchase alcohol for him.

It was a transaction that risked harming government property (i.e. making you sick) that evaded taxes and potentially abetted selling alcohol to a minor. With proper enforcement of existing regulations, this kind of "neighborly favor" can be stamped out.

Kevin Driscoll writes:

Jeremy, I think Mr. Henderson was in Canada at the time, so I don't know exactly what their sales tax laws are, but in the US, neither party would be required to pay sales tax.

In the US, only the final consumer is required to pay sales tax, but if any good is resold at a later date, sales tax is not paid again. For each item, sales tax should be paid only once. If an intermediate party is forced to pay sales tax, he can record that and seek a gov't refund. Either way, from the gov't perspective, it doesn't care whether Duane's wife paid all the sales tax and Mr. Henderson none or if Duane's wife paid it all at the store, sought a refund for 4 eggs and then Mr. Henderson paid the balance. As long as it gets paid.

Anyway, I approve of the overall character of your post. It made me chuckle.

Hyena writes:

I grew up in the rural Midwest and the idea that you would lack eggs at any time of the year is unthinkable to me.

Tom West writes:

I think bjk has it right. It is a friendly indicator that economic rules about raising prices in an emergency, sensible thought it might be for purposes of allocation, don't sit right with human beings.

Taking advantage of your need, even if you were perfectly willing to pay it, felt wrong to them. Similarly, most people feel that having to pay a premium in an emergency, even when willing to pay the higher price, is doing them wrong.

On another level, David indicating his willingness to pay was so "out of the norm" that it successfully indicated his desperate need. I suspect that instead of being mildly irritated by the request if he had just asked if he could borrow four ("how could someone forget eggs?"), they probably felt good about having helped someone out of a critical situation.

Chalk one up for signaling over economics :-).

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