Legalize sustainable pricing to promote recovery from disasters

Michael Giberson

“Price gouging” is by intent a pejorative term. Nobody wants to get gouged, by a price or in any other manner. Analysts advocating or defending price flexibility for key goods and services in disaster struck areas are burdened from the beginning by the derogatory term. In an editorial essay advocating for post-flooding pricing freedom in Calgary, Peter McCaffrey takes a swipe at giving the concept a new name.

First he offers five reasons to favor price gouging after emergencies: (1) discourages precautionary hoarding after disaster strikes, (2) encourages consumer conservation of goods in most demand, (3) encourages suppliers to acquire precautionary inventories of goods useful after disasters, (4) encourages consumers to be prepared in advance for disasters, and (5) rising prices attract more resources from surrounding areas. Each of these actions tend to alleviate suffering and promote recovery after disasters; if price increases promote actions that promote recovery, the price increases contribute a useful social service. (Critics of price gouging can produce lists of particular burdens created, then benefits and costs of post-disaster price flexibility can be assessed. As with any benefit-cost analysis, I encourage the analysts to be thorough and consistent in counting up both pros and cons.)

Price gouging is good, McCaffrey said, but the term itself is meant to be derogatory. It needs a new name. McCaffrey concludes:

A more accurate description would be “sustainable pricing” — pricing that ensures supplies are sustainable to meet the demand of future customers.

It’s time we legalized the art of sustainable pricing to ensure critical supplies are readily available for everyone the next time disaster strikes.

I don’t think it will catch on, but I admire the effort to reframe the name.

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3 thoughts on “Legalize sustainable pricing to promote recovery from disasters

  1. You’re right,it won’t catch on. Most non-economists just don’t seem to be able to make that leap (that it’s a good thing), and politicians’ instincts lead them to grandstand against it.

    Off-topic, but related, I saw today that the price for using the for-pay traffic lanes here has hit $7. People are still offended that a lane was added but that they have to pay to use it. They boil about it when they’re sitting dead still in the congestion of the other 4 or 5 lanes. They don’t think about the fact that for only $7 they can escape that congestion if they ever really need to.

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