Governments want to tell us how much is too high or too low.



If you are in sync with meddlesome government bureaucrats, you probably believe that price gouging is profoundly evil. That charging higher prices than normal, especially during emergencies, is an economic abomination. That any seller who does this is taking advantage of people who are in precarious economic circumstances.

When a storm hits, or a flood, or a tornado, heavy snow, ice, the closing of the Hormuz Strait, many of us will be without gas for our car, food, medical help, or other such necessities.

Yet we face jacked-up prices to fulfill these needs. Just when we need them the most, these things are more expensive. To anyone who doesn’t understand basic economics, this seems outrageous and unfair.

But to those who do understand supply and demand, it makes sense.

When Hurricane Katrina hit New Orleans in 2005, the city was in dire straits. Help poured in from every one of the other 49 states and even from abroad. There were several motivations underlying this aid. One was simple benevolence. The thought that there, but for fortuitous circumstances, go I; and I would be happy if others helped me in my hour of distress. That is natural compassion that drives much charitable support.

But some who went in were incentivized by profit. They took a risk to go into an undesirable circumstance, and charged a higher premium to offer their goods or services because of it. What some call “gouging” is the market at work.

...read more at fee.org