Another natural disaster has struck the United States, so you know what that means: More anti-price gouging laws, statements, and articles!
With Hurricane Lane recently pounding the state of Hawaii, there are tons of anti-price-gouging stories going around.
Here are just some of them:
“State investigating reports of price gouging as Hurricane Lane nears”
“Delta Responds to Allegations of $10,000 Tickets to Flee Hawaii”
“Price gouging during a declared disaster or emergency situation is a CRIME”
It’s all this nonsense that you will inevitably see during and after every single natural disaster, which is why AEI’s Mark Perry came up with this “‘Fill-in-the-Blank Price Gouging Form’ for Hurricane Lane.”
Price gougers help society when it is in ruin. They should not be fined or imprisoned for coming to our rescue. They are merely taking advantage of supply and demand; because prices are higher, entreprenuers, businesses, and average folk are willing to travel 10 hours to sell a power generator.
Higher prices incentivize producers and suppliers at a time when supplies are nowhere to be found.
In addition, higher prices encourage conservation:
“For instance, let’s say a group of eight people went to a hotel room to rent a suite for a couple of days during or following a horrific weather event. If prices go up, then this group is more likely to stay in one or two rooms rather than splurge on three-plus rooms, as they might, had prices remained unchanged.
In the case of water, the market forces are at play in a time of price gouging. On Wednesday, a photo of a Wal-Mart shopper with about four-dozen cases of bottled water went viral – many said in jest that she is probably the biggest proponent of anti-price-gouging laws. It is customers like these that will help make shelves bare, but this can be avoided when the price goes up.
First, if the price-tag went from $2 to $10, the consumer is far more likely to buy less and conserve their water out of necessity rather than drinking whenever they feel like it or choose to waste it by cleaning the floor or kitchen counter. Second, if there is a limited supply of water and the price is $10, the entrepreneur will take the risk to bring the water to the struggling public.”
There should be no law against price-gouging. And, if there is, authorities should ignore it.
Anti-price-gouging efforts only produce equal misery for all.
The only “logic” I can see to the idea of price-gouging laws is that they reward those who don’t prepare for what they think is an unlikely-to-occur event.
No one prepares years in advance for a hurricane that may never come by buying 20,000 square feet of plywood. And the amounts of resources needed to recover from a disaster are immense. However, when you drive by The Home Depot or Lowe’s every day and see the amount of lumber they have on a regular day, you think it will always be available for you when the hurricane comes. But the whole city is under the same stress when the hurricane hits; no one buys up the lumber yard weeks in advance. And if they did, they’d probably be charged by the local authorities with hoarding supplies.
The result is these anti-price-gouging laws cause recovery to take longer than it should.