Price gouging: a feature, not a bug

Something we were treated to in the last couple weeks with the hurricanes in Texas & Florida was indignant outrage from price gouging in the affected regions. There were many examples of prices for gas, water, and airline tickets increasing tenfold. This shouldn't be terribly surprising. Prices respond to demand; that's like day 1 of microeconomics. What's a little more surprising is how easily the situation evoked communist messages. Memes from liberals cried this was finally proof that capitalism is evil. On facebook this video was being passed around, garnering 16 million views. Let's look at a couple screen grabs out of that.

Businesses are trying to MAKE MONEY off of hurricane victims. Oh, the horror! Guess what, that's what businesses do! The opposite headline would read: Businesses REFUSE SERVICE to hurricane victims.

You know what else skyrocketed? Demand for fuel, ice, and lumber throughout the state.

Opposite headline: customer stranded in hurricane zone because all flights quickly sold out.

In other words, it's time for resources to be free. Welcome to r-selected philosophy. There should be no competition for resources; they should be free.

As a thought exercise, imagine a scenario where disaster hits. A town has 100 residents and one store. That store has 100 cases of water. The store must decide whether or not to raise water prices. If they do not, there are three possible outcomes.

1. High trust society. This is what liberals assume. The store doesn't seek to make an unfair profit and each resident takes just what they need, a single case, and everyone gets a case. This is the ideal scenario, but relying on this in reality would be a nice way to die of thirst. Liberals assume a high-trust society while doing everything to destroy it. Conservatives wish to preserve the high-trust society we had.
2. Hoarding. The most likely scenario is that each customer buys more than one case to ensure they have enough in a worst-case scenario. So 50 people each buy 2 cases, and 50 people are turned away.
3. Misuse. Kevin buys 50 cases so he'll be able to keep watering his weed grow operation throughout the emergency. 50 people are turned away.
4. Illegal markup.  Mark sees a business potential and buys 50 cases. He sells them at double price. This is no different than if the store had raised prices, but Mark profits instead and pays no sales taxes.

On the other hand, the business could raise prices, which discourages hoarding and misuse. It's the best you can do, short of a high-trust society. It might put a stronger burden on the poor, but that can be avoided through preparedness. Everyone knows they should maintain emergency preparedness, and that it may cost them if they do not. Rich people can afford to neglect preparedness; the rest of us can't. With a little personal responsibility, and a high-trust society, these problems would not have arisen. But that would be the conservative solution. They don't want the conservative solution. They don't even really want a solution. They just want the state be in charge of distributing resources. They want communism.