On Human Action and Emergency Situations (actually, I just didn't have anything else to do today).
In the wake of the catastrophe that has befallen the Eastern Seaboard, there has been a great deal of discussion regarding what is frequently referred to as "price gouging". While the frustration is very understandable, I would like to present a different perspective on it.
Something that many politicians (regardless of their philosophical leanings) seem to frequently not realize, is that when price controls are implemented, that actually makes the availability of those items much, much harder to come by. It also acts to interfere with the prices becoming lower.
Many people rushed to the stores to stock up on essentials prior to the storm, which is normal. You can't really predict these things, and I suspect that the general populace has gotten so used to the media hyping up pretty much everything, that they probably tend to ignore it, or mentally downplay it, and most of us have read that fable and know how it ends. And even when we see the results played out before our lives, many people seem to tend to make the same mistake once more. It's part of being human, and I'm not here to criticize it.
The long, rambling point of this is that an emergency tends to create an instant and seriously major demand for many things. If the supply runs out, that only makes the demand even greater. This is where human action comes into play. Imagine that you are someone who can supply one or more of these goods. You sell them to stores all over the country, east and west, north and south. If you can get a better price for your goods in the west, would you ignore that aspect and sell exactly the same amount there as you would anywhere else? Or would you instead work to increase your capacity to create, purchase or otherwise acquire those goods (including buying them from someone else)? Speaking for myself, I would work to increase my sales in that region.
This comes into play even more sharply in catastrophe scenarios. The power is out in many regions, various receiving terminals are not available (either damaged and unusable, or just overloaded because others are). The supply of these goods goes way down as a result, and the stockpile has already been depleted as people rushed to pick them up before the catastrophe hit, in part because we have all seen what happens to the supply after many catastrophes have hit and passed. The demand is greater than ever as a result. Thus, the perceived value of those products goes up, often very sharply.
As a quick note, value is not something which simply exists, objectively. It is a purely relative attribute. If you're sitting at home, with everything working, and someone offers to sell you a glass of tap water, you're probably not going to want to pay for it, since you can just get up from your chair and go get it yourself. On the other hand, if stranded in the desert for a few days, a lot of people would be quite willing to provide whatever is necessary in return to buy that glass of tap water. If the seller is the only person who can provide it, the value goes up in many people's heads even more. However, if there is another seller who is willing to sell that glass of water at cost, then there is no motivation to buy from the other seller -- until the person who was selling at cost no longer has it to sell. At the same time, if there is another seller who is willing to provide it at cost, then the other person has no reason to try to sell it for anything more; even if his water is superior in taste, that's not something that the person dying of thirst is going to care about. It also means that there is no motivation for that person to undergo the costs of providing that water -- again, as long as there is already a supply.
Now, I would like to add another twist to this imaginary scenario: There is also a large organization of people who have the ability to tell the sellers what they are allowed to sell their water for, and to enforce that. That organization declares that anyone who wants to provide water in this section of the desert are not allowed to charge more than 10% above what the normal cost of acquiring that water would be in a non-catastrophic situation. This may be perfectly fine for the sellers, when they have already purchased the water at those earlier levels. Once they run out, however, they are then faced with a dilemma: they cannot acquire more water by the usual methods, maybe because the power is out, or maybe because the terminals are overloaded or unusable. They must then turn to other sources to get it. Those other sources are often much more expensive, for various reasons; the delivery may be much further, increasing the costs of delivery. Or, they may simply have multiple people in other areas to sell to in addition to the desert, and have not until that point had any reason to increase their deliveries to the desert. Unfortunately, people are dying of thirst now. They may not have had the reason before, but they sure do now. That in turn may create additional demand, and the cycle proceeds on and on.
Except for one problem: that group of people in the desert will not allow you to recoup your additional costs. You are still free to provide the water, but it's going to cost you extra to do so. A great many people who sell goods and/or services to other people are motivated to help those in need. If they are able to do so (IE, it's not going to bankrupt them or otherwise make them destitute), many of them will go ahead and eat the cost, because people are in need. Others, however, will not. Either they don't want to eat the cost, or they are not able to. Which reason it is does not have any bearing on the fact that they're not providing water to the people in the desert.
On the other hand, if that organization of people were not around to enforce such a rule, that means that the obstacle is no longer present. People need the water, and they are willing to pay what they need to pay to get it. That means the price of the water will probably go up -- which motivates more people to find a way to provide it. With multiple people providing it, the prices that are being charged will probably trend downwards, for many various reasons, including old-fashioned haggling. Why ask fifty dollars for a gallon of water, and risk no one willing to buy it if they can get it cheaper? Yes, there may well be a different organization involved in this, one which is selling water, and because they are all working together, they have no reason to lower the prices that they ask -- unless there's a rival organization that's willing to undercut them. Or just one person that's able to deflect any attempts at coercing the prices that he uses. Thus, human action comes into play.
The various motivations of politicians to implement price controls are understandable, I would say, and are not necessarily nefarious. That is, they may not necessarily be doing it because they may be remembered as someone that tried to help people (regardless of whether or not they actually helped; the connections are not always obvious to many people). However, it would probably be unwise to believe that they are acting solely out of the goodness of their hearts. Regardless of the motivation, however, the results remain the same.
It can be very aggravating to have to pay extra for something that you genuinely need above what you normally would need to pay for it. It also tends to be very aggravating to have a hurricane come through and blow your house down. These are things that we cannot control; trying to do so nearly always makes things worse, one way or another. No matter how tightly you clench your fist, water will still slip through your fingers. Asserting that you can control these things does not change the fact that you cannot; declaring that your inability to control these things is the result of other things rather than yourself also does change the fact that you cannot. I would also suggest that other people buoying your assertions are causing additional harm to others. Charity cannot be mandated. It can only be given freely.