Want the quickest possible relief from the effects of a natural disaster? Price gouging is the answer.

Hurricane Charley has devastated vast areas of Florida, creating a need for all kinds of repair and emergency materials. Predictably, the politics of price controls has reared its head, and is ready to create a second and third round of victims of the hurricane’s blast.

Merchants are now to be prosecuted for price gouging–a pejorative term for selling goods at prices higher than they were prior to the hurricane’s wreckage. Preventing prices from rising is a false remedy, as James Doti points out so well in The Market Economy: A Reader. Doti details his own experience during one of Chicago?s worst snowstorms, as weather-bound residents and grocers tried to keep provisions from running out before normal supply schedules could be restored. We may want to impute evil, greedy motives to these folks, but regardless of their moral status, higher prices are the right, and compassionate, route to follow.

Right now, higher prices in Florida reflect intense scarcity and the urgency of the demand for basic needs. Anti-price gouging laws will cause Floridians, many newly (and truly) homeless, to suffer needless extra delay in recovering property and reestablishing their basic as well as extended needs. Why? Suppliers outside Florida will be less able to respond to thier needs under price controls, and government will be deciding who is “needy” or “most needy,” rather than the individuals who are directly affected by the disaster. Just ask the victims of Floyd, some of whom waited years for promised government aid in restoring their homes and property, how efficiently the process went.

Are merchants who “jack up” (another pejorative term) prices after a disaster following a path of greed, or good economic sense? Perhaps both, but good economic sense for sure. If we let the market do its work, supplies will race to the scene.

Many victims will need charity in the meanwhile, and agencies like the the American Red Cross, and other civic and church outreach efforts exist precisely because markets can’t cover that part of the job.
In extraordinary times, it is essential to emphasize the role of emergency relief agencies, volunteer organizations, and goodwill. That’s one good reason why we should support these agencies, both with cash and with our efforts, during “fat” times. They need to build the reserves they can use in a crisis. Businesses, on the other hand, should not be expected to become de facto charitable organizations, especially if we want them to remain viable engines of production and employment. Forced charity through price-fixing simply transfers wealth from business workers (not just business owners) to disaster victims.

It would be nice if every Florida and area merchant–themselves trying to support their families and make a buck–would donate time, materials and services to the needy in Florida. If they could afford to do so without impoverishing themselves and their families, or ruining their businesses, some surely would. Those that would not should not be criminalized. The sense of community and civic responsiveness has long been alive in the business community, even without the heavy hand of government wagging its finger and forcing “compassion.”

Does a free-wheeling price strategy help the dispossessed? Most decidedly. Nothing brings additional supplies at the greatest possible speed than suppliers competing to get there first. True, it’s more costly to bring in temporary housing, erect new shelters, supply emergency food, electricity, and sanitation from a distance. That’s exactly why prices should be allowed to rise. As soon as additional supplies roll into town, local prices will tumble. In fact, nothing makes them tumble faster than letting the gougers set their own prices, bringing on their competition.

In the interest of public relations, many home centers do not charge more for generators, plywood, etc., after a disaster. National chains may be able to do this, for a while, by subsidizing extra costs in those areas with revenues from the rest of their operations. And the public relations surely doesn’t hurt them. But few solvent operations can afford to be loss leaders, and it makes far more sense to ration by price than by government fiat or fistfights. A mandated constant-price strategy exposes the very businesses we need in these situations to the risk of bankruptcy, failure, or unemployment for their workers. That’s not a compassionate strategy, or a smart one.