David M. Brown's Blog

July 12, 2009

Hurricanes, Price Controls Threaten Coast

Filed under: Economics — davidmbrowndotcom @ 6:08 pm
Tags: , , ,

Hurricane season is looming again. In the summer of 2004, central Florida was blessed with three of them churning through. So I thought I’d revive an article about how to improve the recovery process after the next natural disaster strikes somebody in Orlando or anywhere.

Back then, in the wake of Hurricane Charley, I wrote a piece for Mises.org called “Price Gouging Saves Lives” on the inadvisability of imposing price controls on urgently needed goods in the wake of any natural disaster. The champions of pummeling market actors for so-called “gouging” came out in force in central Florida as they do everywhere and everywhen that disaster strikes, supplies and supply lines are disrupted, and the consumers of goods really, really need prices to accurately reflect current market circumstances so that temporarily truncated supplies can be appropriately economized and regenerated. If supply goes way down while demand goes way up, prices go way up if you have a market. But as I explained, this going-up of prices is a good thing, not a bad thing.

In the evening before Hurricane Charley hit central Florida, news anchors Bob Opsahl and Martie Salt of Orlando’s Channel 9 complained that we “sure don’t need” vendors to take advantage of the coming storm by raising their prices for urgently needed emergency supplies.

In the days since the hurricane hit, many other reporters and public officials have voiced similar sentiments. There are laws against raising prices during a natural disaster. It’s called “price gouging.” The state’s attorney general has assured Floridians that he’s going to crack down on such. There’s even a hotline you can call if you notice a store charging a higher price for an urgently needed good than you paid before demand for the good suddenly went through the roof. The penalties are stiff: up to $25,000 per day for multiple violations.

But offering goods for sale is…

Read the rest at the Mises.org site.

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