Once again—with all the significant news being made in Nebraska, nationally and overseas—it’s hard to stick to my schedule of multi-subject, full-length columns only every fourth week, gaining time in other weeks, to deal with other affairs like estate planning and management of the family farm in Northwest Missouri.
Today I resist the temptation to write longer and settle instead for comment only on a story which, as I see it, is considerably less than worthy of major Omaha World-Herald front-page play, with the now customary extensive runover to an inside page.
I refer to the major attention given to the story of the increase in Omaha-area hotel room rates during several days of the Berkshire Hathaway annual stockholders meeting that attracts some 30,000 stockholders to an annual-meeting extravaganza promoted so enthusiastically by Berkshire Hathaway chairman Warren Buffett.
Omaha benefits enormously from Warren’s well-known devotion to—and continued residence in—his home town. But nobody’s perfect, and I thought it a very questionable decision by Warren and another of my favorite friends, World-Herald cartoonist Jeff Koterba, to question the increase in Omaha-area hotel rates when Berkshire Hathaway stockholders descend on the city for their annual meeting which—in addition to official business—includes a good deal of entertainment and some bargain prices on various products sold by one or another of the Berkshire Hathaway companies.
The World-Herald didn’t help encourage an objective look at the increase in the hotel prices when it ran the major front-page story under this headline: “Gouging or good business?”
Warren in his comments and Koterba in a cartoon the next day seemed to have, like The World-Herald, forgotten that there is an economic truism at work here:
When an unusual circumstance—like a company’s shareholders meeting designed to attract large numbers of attendees—creates an unusual demand—in this case, for hotel rooms—the result predictably can be that demand exceeds supply.
The economic law of supply and demand comes into play, and prices for the relatively scarce supply increase, sometimes substantially.
If The World-Herald, the Oracle of Omaha and The World-Herald’s very bright and talented cartoonist have discovered a reasonable way to repeal—or at least substantially modify—the law of supply and demand, they ought to share that knowledge with the public. They could be writing new economic history.
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