Not a very useful framework for helping people in a disaster

Last week in discussing how our anti-“gouging” law makes things worse, I cited a feature on WRAL:

Attorney General Josh Stein is warning about retailers who “take advantage of people’s desperation” by charging prices that are “out of whack from what they should be” — as determined by the Attorney General’s office and ultimately the courts.

WRAL has instituted a special “price gouging” tag on its web site, suggesting the news service intends to start tracking “gouging” incidents. Reporter Gerald Owens, in his interview with Stein, implied it is “the worst of people” and talked of folks being “scammed”.

Last week’s article in The News & Observer, which quoted Roy Cordato, opened this way:

In the aftermath of a natural disaster, Good Samaritans often undertake selfless acts to help their neighbors or complete strangers.

Others try to take advantage of people’s desperation with high prices.

This is a news story, not an opinion piece. That presumption not only runs counter to basic economics, but it also creates difficulties for providers of goods and services that are suddenly in sharp demand.

I’m reminded of what happened to carpenters, tree-removal firms, generator retailers, and others in North Carolina after Hurricane Fran, as then–Attorney General Mike Easley took to the airwaves repeatedly warning about price gouging:

“[Easley] gave customers the impression that every tree service is in town to rip people off,” said the owner of one Charlotte-based firm that sent a crew to Raleigh. Her fellow tree-service owners called the attorney general’s office to ask him what a “legal” price for tree removal was, and got no answer, making it impossible to defend their charges to angry customers. …

“I wish I had never seen a generator,” said one retailer from nearly Lillington, tired of arguing with customers. “This is the worst thing that has ever happened to me in this business.”

Another retailer from Raleigh said that he sold his generators below retail and still got customer complaints. “We went out of our way to help people, and I’m not sure it was worth it.”

Jon Sanders / Research Editor and Senior Fellow, Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...