Probably the most critical event in the effort to alleviate suffering in the course of a natural disaster is for the merchant to begin the practice of price gouging. This is the only means available to at once rationally allocate scarce resources and to send out a signal as to what is most needed.
No state intervention can match price gouging for efficiency and efficacy in disaster relief.
Say potable water is in terrible shortage after a tornado. The stores that do have what little is available begin to charge prices so high that demand slows. The merchant is careful not to set it so high he sells none, not so low all is gone in minutes. This benefits the community in two ways: 1. the merchant defends the community from the hoarder, he who would buy it all and hide it. 2. The merchant sends out a signal as to the going price of items in shortage.
One buyer at the exorbitant price is the charity, who would be securing some supply in order to meet the needs of the desperate.
As this is going on, the price signal goes out, and countless truckers in unaffected areas hauling bottled water to another destination get word of the going price of water in the disaster area, and they turn toward the fantastic profits. Water comes rolling in. The merchants buy high and sell higher.
Others begin to organize around the market at that price. Say natural gas is still plentiful after the disaster. People begin boiling bad water to make it safe, and selling that, meeting demand. Poor people with access to cheap and plentiful natural gas earn tidy sums to begin reconstruction.
The reality of disaster price gouging is the top price ever paid lasts for no more than about 15 minutes. And here the merchant, who up to now has been gouging, is now buying ever lower, and may even overshoot demand, and end up selling water for less than he paid. Condign punishment for any merchant that gouges for greedy motivation, instead of purely altruistic motivations, as is usually the case in price gouging. (In reality, the merchant will closely monitor prices and make sure there is no injustice in the process.) In any event, the community in which the merchant operates, will exact precisely the right retribution for any merchant who goes too far. No state need be involved, because in this matter the people are able to govern themselves.
As truckers find the profits diminishing because diverted supply is sufficient to meet demand and the market is normalizing, as communicated in price, then the supply begins to match demand. Take this phenomena across all needful things in any given disaster, and you have the free market as the best response in a natural disaster.
The state, on the other hand, makes a murderous, chaotic hash of disaster relief. Hurricane Katrina went even further, as the powers that be used the disaster to dispossess americans of African ancestry of their extremely valuable land and reorder New Orleans and Louisiana's unique arrangements regarding oil revenues and taxes to something more amenable to Texans.
Merchants are also the best at responding to more limited disasters, when the question is emergency. When a train crash happened near a Costco in California, the store, employees and customers immediately organized to bring relief to the victims out of store inventory and personal generosity. Can you imagine if the crash occurred outside of a FEMA office? O! The horror, the horror!
Disaster relief starts with the merchant. The more widespread the disaster, the more the need for price gouging. All hail the merchant and the benefit of price gouging!
Feel free to forward this by email to three of your friends.
No state intervention can match price gouging for efficiency and efficacy in disaster relief.
Say potable water is in terrible shortage after a tornado. The stores that do have what little is available begin to charge prices so high that demand slows. The merchant is careful not to set it so high he sells none, not so low all is gone in minutes. This benefits the community in two ways: 1. the merchant defends the community from the hoarder, he who would buy it all and hide it. 2. The merchant sends out a signal as to the going price of items in shortage.
One buyer at the exorbitant price is the charity, who would be securing some supply in order to meet the needs of the desperate.
As this is going on, the price signal goes out, and countless truckers in unaffected areas hauling bottled water to another destination get word of the going price of water in the disaster area, and they turn toward the fantastic profits. Water comes rolling in. The merchants buy high and sell higher.
Others begin to organize around the market at that price. Say natural gas is still plentiful after the disaster. People begin boiling bad water to make it safe, and selling that, meeting demand. Poor people with access to cheap and plentiful natural gas earn tidy sums to begin reconstruction.
The reality of disaster price gouging is the top price ever paid lasts for no more than about 15 minutes. And here the merchant, who up to now has been gouging, is now buying ever lower, and may even overshoot demand, and end up selling water for less than he paid. Condign punishment for any merchant that gouges for greedy motivation, instead of purely altruistic motivations, as is usually the case in price gouging. (In reality, the merchant will closely monitor prices and make sure there is no injustice in the process.) In any event, the community in which the merchant operates, will exact precisely the right retribution for any merchant who goes too far. No state need be involved, because in this matter the people are able to govern themselves.
As truckers find the profits diminishing because diverted supply is sufficient to meet demand and the market is normalizing, as communicated in price, then the supply begins to match demand. Take this phenomena across all needful things in any given disaster, and you have the free market as the best response in a natural disaster.
The state, on the other hand, makes a murderous, chaotic hash of disaster relief. Hurricane Katrina went even further, as the powers that be used the disaster to dispossess americans of African ancestry of their extremely valuable land and reorder New Orleans and Louisiana's unique arrangements regarding oil revenues and taxes to something more amenable to Texans.
Merchants are also the best at responding to more limited disasters, when the question is emergency. When a train crash happened near a Costco in California, the store, employees and customers immediately organized to bring relief to the victims out of store inventory and personal generosity. Can you imagine if the crash occurred outside of a FEMA office? O! The horror, the horror!
Disaster relief starts with the merchant. The more widespread the disaster, the more the need for price gouging. All hail the merchant and the benefit of price gouging!
Feel free to forward this by email to three of your friends.
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