The price 'gougers' save lives

"Politicians and the media are furious about price increases in the wake of Hurricane Katrina. They want gas stations and water sellers punished. If you want to score points cracking down on mean, greedy profiteers, pushing anti-'gouging' rules is a very good thing. But if you're one of the people the law 'protects' from 'price gouging,' you won't fare as well... Any number of services—roofing, for example, carpentry, or tree removal—are in overwhelming demand after a disaster. When the time comes to rebuild New Orleans, it's safe to predict a shortage of local carpenters: The city's own population of carpenters won't be enough. If this were a totalitarian country, the government might just order a bunch of tradesmen to go to New Orleans. But in a free society, those tradesmen must be persuaded to leave their homes and families, leave their employers and customers, and drive from say, Wisconsin, to take work in New Orleans. If they can't make more money in Louisiana than Wisconsin, why would they make the trip? Some may be motivated by a desire to be heroic, but we can't expect enough heroes to fill the need, week after week; most will travel there for the same reason most Americans go to work: to make money. Any tradesman who treks to a disaster area must get higher pay than he would get in his hometown, or he won't do the trek. Limit him to what his New Orleans colleagues charged before the storm, and even a would-be hero may say, 'the heck with it.' If he charges enough to justify his venture, he's likely to be condemned morally or legally by the very people he's trying to help. But they just don't understand basic economics. Force prices down, and you keep suppliers out. Let the market work, suppliers come—and competition brings prices as low as the challenges of the disaster allow. Goods that were in short supply become available, even to the poor. It's the price 'gougers' who bring the water, ship the gasoline, fix the roof, and rebuild the cities. The price 'gougers' save lives."

John Stossel