Price gouging is like beauty - it's in the eye of the beholder. Let's say that before the hurricane, plywood was selling for a nationwide price of $8 dollars, and after the hurricane for $50.
Economics 101 teaches that if one person has plywood and is willing to part with it for $50.00, it's because he prefers having the money to having the plywood. If another person (the buyer) has $50.00 and is willing to pay that for the plywood, it's because he prefers the plywood to the $50.00.
Some would call that "price gouging," even though no one is forced to engage in this transaction, and it results in a mutual benefit. The broader benefit is that the $50.00 price motivates more people who have plywood to get it where it's needed. After the supply increases, the price declines. Many businesses charge less out of their concern for those in need. But should it be a crime - a felony, no less - to make an economic decision to sell on the Coast for $50 what they could only get $8 for elsewhere? If so, they'll ship the plywood somewhere with fewer obstacles, thus worsening the shortage in the area that needs it most.
Regulating prices almost always ends up harming consumers.
The massive damage done to coastal communities by Hurricane Katrina provides a unique opportunity to build a highway system that will provide for quicker evacuation during emergencies, but also quicker transporting of goods from our ports on the Gulf of Mexico.
What is the proper role of government in the process of rebuilding south Mississippi? Our organization has suggested, along with the governor and others, that private investment is the key to recovery. So what can the government do to attract private investment?
Now that Congress has appropriated money to help rebuild south Mississippi, it would be easy for those of us who live north of the areas most affected by the storm to think that nothing else is needed. That's always the problem with government programs; they lull people into thinking any problem is solved if the government is spending money on it. (more…)
As the federal and state governments consider how much money to appropriate for helping to rebuild the Coast, other options for financing should be explored.
Several states and many foreign countries allow private sector investors and developers to build and own public infrastructure. In Europe, many highways are privately financed and operated, and are supported either by tolls or by long-term leases with the government.� Airports, water systems, and many public school facilities are built, owned and maintained by private developers.
With the significant priority we should be giving to rebuilding the areas affected by the hurricane, our state leaders should evaluate the inventory of assets owned by the state and sell those assets that are not producing the results they were intended to produce.
Governor Barbour and our congressional delegation in Washington are asking the federal government to give south Mississippi priority in the federal budget. Conservative organizations around the country have agreed with that plea and have put pressure on Congress to do just that - but only that.
Congress is working on legislation to create a Gulf Opportunity Zone, or GO Zone, and our state legislature should create one as well.
Have you ever heard of a public school being built at no cost to the taxpayers? That�s exactly what happened in our nation�s capital, in a deal that may have some merit in Mississippi school districts affected by Hurricane Katrina.