by
Walter E. Williams

Recently
by Walter E. Williams: Black
and White Standards

Here’s a which-is-better
question for you. Suppose a New Jersey motel room rented for $125
a night prior to Hurricane Sandy’s devastation. When the hurricane
hits, a husband, wife and their two youngsters might seek the comfort
of renting two adjoining rooms. However, when they arrive at the
motel, they find that rooms now rent for $250. At that price, they
might decide to make do with one room. In my book, that would be
wonderful. That decision would make a room available for another
family who had to evacuate Sandy’s wrath. New Jersey Gov. Chris
Christie and others condemn this as price gouging, but I ask you:
Which is preferable for a family seeking shelter – a room available
at $250 or a room unavailable at the pre-hurricane price of $125?
It’s not the intention of the motel owner to make a room available
for another family. He just sees an opportunity to earn more money.
It was not the intention of the family of four who made do with
just one room to make a room available for another evacuating family.
They are just trying to save money. Even though it was no one’s
intention to make that room available, the room was made available
as if intended. That’s the unappreciated benefit of freely fluctuating
prices. They get people to do voluntarily what’s in the social interest
– conserve on goods and services that have become scarce.

Gov. Christie
told merchants that price gouging during a state of emergency is
illegal because “during emergencies, New Jerseyans should look out
for each other – not seek to take advantage of each other.” Christie
warned: “The state Division of Consumer Affairs will look closely
at any and all complaints about alleged price gouging. Anyone found
to have violated the law will face significant penalties.” It’s
not just Christie who has threatened to prosecute sellers for raising
prices. New York Attorney General Eric Schneiderman has launched
an investigation into post-storm price increases after receiving
consumer complaints about higher prices for everything from gasoline
to hotel rooms.

Christie, Schneiderman
and public officials elsewhere know better or have access to economists
who inform them. But they’re playing politics with people’s suffering,
emotionalism and economic ignorance. By the way, politicians would
serve us better by focusing their energies on tax gouging.

Disasters produce
ignorance in another way. Peter Morici is a professor at the University
of Maryland and a former chief economist at the U.S. International
Trade Commission. He argues that Hurricane Sandy may prove to be
an economic boon, writing: “Disasters can give the ailing construction
sector a boost, and unleash smart reinvestment that actually improves
stricken areas and the lives of those that survive intact. Ultimately,
Americans, as they always seem to do, will emerge stronger in the
wake of disaster and rebuild better – making a brighter future in
the face of tragedy.”

Professor
Morici is not alone in this vision. Nathan Gardels, editor of New
Perspectives Quarterly, wrote an article titled “The Silver
Lining of Japan’s Quake,” arguing the economic “benefits” of that
disaster. Even Nobel laureates are not immune from this vision.
After the 2001 terrorist attack, economist Paul Krugman wrote in
his New York Times column titled “Reckonings; After the Horror”
that as “ghastly as it may seem to say this, the terror attack –
like the original day of infamy, which brought an end to the Great
Depression – could even do some economic good.” He explained that
rebuilding the destruction would stimulate the economy through business
investment and job creation.

Let’s set one
thing straight: Destruction does not create wealth. The billions
of dollars that will be earned by people in the building industry
and their suppliers will surely create jobs and income for those
people. But rebuilding diverts resources from other possible uses.
Natural or man-made disasters always destroy wealth. Were that not
the case, mankind could achieve unimaginable wealth through wars,
arson, riots and other calamities.

November
26, 2012

Walter
E. Williams is the John M. Olin distinguished professor of economics
at George Mason University, and a nationally syndicated columnist.
To find out more about Walter E. Williams and read features by other
Creators Syndicate columnists and cartoonists, visit the Creators
Syndicate web page.

Copyright
© 2012 Creators Syndicate, Inc.

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