The Market Knows All, Part 3

Hurricane Katrina has been and continues to be a punch to the gut. It’s horrifying and tragic – if you have anything to spare, donate to help.

My good friend Doctor Chuck has posted a couple of pieces on the hurricane and the country’s reaction to it. I think I’ll probably be livid soon, but for now it’s a little numbing.

For now, I’ll pause to reflect on this gem from TechCentralStation, the net’s own little cross between The Cato Institute and Engadget. It springboards off of Katrina coverage, and bears the happy little title, “Three Cheers For Price Gougers.” I’m not sure what free-market libertarians love so much about hurricanes, but every time one hits, they seem to crawl out of the woodwork to squawk Randian tripe about the inherent wisdom of the market.

If a gas station owner has gas, someone has to decide who gets it. If the price remains at pre-hurricane levels, many will fill their tanks, because they can afford to do so... Many will do so even if they have no immediate need for it. But after the first few people do this, the gas will be gone, and none will be available for those who come after, because it's now tied up in the gas tanks of those who didn't really need it.

This is certainly true, but he takes a bold step by stating that price gouging - boosting prices dramatically in areas where critical resources are scarce – is a great solution. That works fine, as long as you live in a happy fantasy world of classroom abstractions. “Bob has $100, and Jane has $100. How will they choose to spend their money?” The reasoning goes. “Their decisions are what makes the free market run!” That’s a fine way to determine the price of plasma TVs and ice cream – it ensures that the people who REALLY want them will get them, rather than just the early-birds. The writer of the article isn’t talking about plasma screens and ice cream, though. He’s talking about how to best distribute critical resources like fuel, water, and food in the wake of a natural disaster. Just in case we misunderstand, he clarifies:

If ice prices rise to the market, the man who needs to keep his insulin cold for his diabetes treatment will place a higher value on it than the man who wants to keep his beer cold, and will have a better chance of getting it.

The writer, in his wisdom, seems to have overlooked the system’s critical flaw. What if the man with diabetes has $50, and the man with a warm beer has $200? No amount of price-gouging will help the man with diabetes as long as our hypothetical beer drinker really wants some ice. The ‘value’ that the diabetic man places on the insulin is infinite, but the resources he has can’t match the value. Tough luck for him – that’s the way the market works!

This is not to say that a free-market economy is somehow inherently bad. It’s simply how things work when people can buy and sell goods freely. To pretend, though, that The Invisible Hand of capitalism is some sort of inherent moral force is a disgusting and crass insult to the victims of Katrina. According to stories coming out of New Orleans, Katrina’s worst-hit victims are people who were simply too poor to leave when the storm approached.

"Let them know we're not bums. We have houses. Our houses were destroyed. We have jobs. It's not our fault that we didn't have cars to leave," Shatonia Thomas, 27, said as she walked near New Orleans' convention center five days after the storm, still trapped in the destruction with her children, ages 6 and 9. Money and transportation -- two keys to surviving a natural disaster -- were inaccessible for many who got left behind in the Gulf region's worst squalor. "It's a different equation for poor people," explained Dan Carter, a University of South Carolina historian. "There's a certain ease of transportation and funds that the middle class in this country takes for granted."

They had no cars, no money to hire transportation, and obviously state and federal evacuation plans offered them no help. The Market, in its infinite wisdom, left them high and dry. Or, more accurately, low and drowned. By the reasoning of TechCentralStation’s article, though, they didn’t “value” escape highly enough.

blog comments powered by Disqus