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The Case for Post Disaster Price Gouging

(Photo credit: Foundation for Economic Education)

On August 23, 2005, a new storm was reported to have formed 350 miles east of the Florida Coast. As the storm grew in strength, it quickly overwhelmed the Gulf of Mexico and then put a large chunk of the Southeast United States in its crosshairs. Its power grew exponentially and by the time it had reached the Southern seaboard of the United States, it was a category four hurricane.

This hurricane was dubbed ‘Katrina.’ Its rain overwhelmed the levee system of New Orleans which resulted in massive flooding and an even larger loss of life. The aftermath was devastating. Over one thousand people were officially confirmed to have died, infrastructure was essentially gone, and billions of dollars worth of property had been decimated.

As with any disaster, people from around the nation pitched in to help the recovery by traveling down to New Orleans and other affected cities. However, among those traveling down, some did not intend to aid in the recovery effort. Some were traveling down to make a profit by selling necessities at high prices.

These people are known as price gougers.

In times of extreme need, people that are looking to make a profit off of other people’s desperation are often looked down upon by society. While it is true that this method of making money is morally dubious, an argument can be made that it helps, and not harms the recovery effort. While the price gougers have ill intentions, they inadvertently end up helping those they intend to take advantage of in a crisis.

Unlike in some situations like a pandemic, when a disaster hits a contained area, there are usually enough supplies for everyone affected somewhere in the country. The problem usually lies in trying to get the supplies to the people in the region. This is where price gougers could help.

To help people in an affected region, the ultimate goal of any organization or individual is to move supplies into a region. Whether it be materials to build a house or water, the more goods there are in a region, the better. Price gougers often come in addition to supplies and donations from others.

This simply means that price gougers are helping even by just bringing goods into the region, regardless of whether it is at a markup or not. Price gouging is not going to prevent people from donating or governments providing aid.

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