The intent is good but the economics is wrong in the Attorney General’s office enforcing price gouging laws (April 17 Chronicle).
An actual free market would do a better job at allocating resources during a disaster, just as it does in good times.
Let’s say there is a shortage of fuel to escape a flood. Some people have enough to get to high ground, others don’t. If the price of fuel rises in response to increased demand, the people with enough fuel would not buy more “just in case.” They would wait for the price to go down. That would free up supplies so the people who need it could still get it. If supplies were tight but prices were kept artificially low, those with enough fuel would consider it a bargain and stock up, making it impossible for those who really need it to get it.
Also, the shortages and higher prices would inspire people to stock up in better times as they prepare for another disaster. This would bring down those prices when disaster strikes.
Price gouging laws punish people for being resourceful and they are just the people we depend on in a disaster. Price gouging laws are like a return to the lawless times of the old west, when the point of a gun (this time government) was more important than an agreement between two people.
Love, Fritz Groszkruger