I’m a big fan of capitalism. it’s by far the best, fairest, most rational, most efficient economic system — in normal times. But when disaster strikes, and the “Invisible Hand” and the law of supply and demand entice some businesses to engage in rampant price-gouging, it makes capitalism look bad.
That’s what’s happening in Texas right now. Hurricane Harvey has proven so devastating, and the likelihood of continuing devastation and economic disruption is so great, that supply and demand, which together are supposed to regulate pricing, are completely out of whack. As a result, some people in Texas are charging the people trapped in the hurricane zone outrageous, grossly inflated prices — like $99 for a case of bottled water, gas for sale at $10 per gallon, which is about three times as much as it sold for prior to the hurricane, and marginal hotel rooms rented at Ritz-quality rates.
Texas, like other states, has laws against price-gouging in times of emergency or natural disaster, but it’s hard for the price police to keep up with the businessmen who see a catastrophe as a way to make an easy buck and pad their profits. For every gouger who is caught, there undoubtedly are many others who make a lot of money selling at exorbitant prices to people who don’t know enough to raise an issue about it. It’s an old, time-honored story, because price-gouging is as old as economic activity itself.
Natural disasters like hurricanes often bring out the best in people. We’re seeing a lot of that in Texas, with people selflessly heading out to try to rescue those who are stranded, or opening their homes and their wallets to help those who have suffered terrible losses. It just makes you sick to your stomach that, mixed in with the many Good Samaritans, are greedy people who take advantage of the unfortunate and put money ahead of simple human kindness and decency. How do the gougers sleep at night, knowing that they are profiting from the misery of others?