Published February 19 2014
Forum editorial: Gouging or a free market?Next time you hear someone proudly trumpet “the North Dakota way,” take a look at what is going on in the state’s booming Oil Patch. Read Tuesday’s Page 1 story in The Forum about apartment rental rates in Williston, as compared to rents for similar spaces in New York City, San Francisco or Boston. If the situation in oil country is “the North Dakota way,” then the long-cherished ethical behavior that underlies the phrase has become a cynical joke.
There are several ways to view monthly rental costs in Williston and other oil cities. (Two views are reflected in cartoons on this page.) It can be seen as pure and simple profiteering and gouging. It can be defined as the normal effects of supply and demand in an overheated marketplace. Or the rents can be explained as necessary in order for investors and developers to recover high costs of building new housing in a remote location.
The reality is that the phenomenon is driven by all those factors, even as the “what’s right” factor is not prominent in the discussion. Gouging is happening because the imbalances in supply and demand create perfect conditions for gouging. Also, there is little doubt developers who hurried into oil country want rents sky-high in order to recover investments quickly because, as in all booms, one day things will slow, or worse, the bottom will drop out. Communities that uncritically welcomed go-go development could be saddled with empty and rotting white elephants.
Defenders of the “free market” preach that the apartment rent in Williston “is just the way it is.” But a free market unleashes forces that are amoral. The market in that free form cares nothing for the damage it does, as long as players in the market make a buck. Those players, however, cannot excuse the damage they cause. They cannot justify cowering behind the amorality of the market. That’s the threshold when amorality becomes immorality. Thus, they are obligated to infuse into a bloodless supply-and-demand equation a measure of ethical and moral behavior. Like it or not, they are responsible for the wrongs – and the rights – their market produces.
A hitherto unshakable system of moral standards has been a vital part of “the North Dakota way” as we have understood it for generations. It has always made this state just a little different, just a little better than other places. It’s being challenged as never before.
Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.