Natural Disasters and Profiteering
Mother Nature’s awesome power was put on display again recently in Moore, Okla., when a mile wide tornado paid a visit resulting in a death toll of 24 people, more than 370 injured, and the loss of over 13,000 homes.
Whenever these natural disasters strike, as horrible as the results can be, they seem to bring out the best in us. The Home Depot Foundation donated $1 million to the relief effort. Lowes Home Improvement matched this amount, a short time later. Donations to the Red Cross poured in from all over the world upon hearing of the devastation of the storm. But they also seem to bring out the worst in us.
Natural Disaster Profiteering
Disasters always seem to create shortages. Power goes out that increases the sales of batteries, candles, and portable generators. People find themselves homeless needing temporary shelter and a food supply. Fresh drinking water is often in short supply. Gasoline and Diesel are not always available due to electric outages.
As these disaster victims are scrambling to hold their lives together there are always some kind souls who are more than happy to greatly inflate the prices of their products or services to make a quick buck off the needs of disaster victims.
Price Gouging Laws
It might surprise you to know that laws against price gouging have been ruled held constitutional in local jurisdictions. However, there are exceptions where some price inflation is allowed. For example, increased cost of supplies, transportation or storage, additional employee help or employees working in dangerous areas.
Most accusations are not prosecuted. As of 2008, thirty-four state legislations had passed laws prohibiting price gouging using three criteria:
- Times of Emergency: The laws only apply to price increases during disasters.
- Survival Items: The laws prevent price gouging of things that are essential to live. Water, food, shelter and maintaining a normal lifestyle.
- Capping Prices: The law can establish the top price an item can be sold for. Things like bottled water, batteries, and food.
Opposition to Price Gouging Laws
Buyers are not forced to overpay for products or services they need say opponents to price gouging laws. They enter into the contract freely and agree to the seller’s asking price.
In addition, they make the case that a higher price reduces the market to those who have the greatest need. People whose power is probably not going to be restored for several days might need a portable generator to keep food from spoiling much more than someone with power who is just covering all their bases.
The Other Argument
Proponents feel that it’s morally wrong to take advantage of people who find themselves in need through no fault of their own. People find themselves short of cash, ATM’s may not be working, credit card processing might be down, and tough decisions have to be made. Gas? Food? Batteries? Water? Which carries the greatest need.
Some Final Thoughts
The thinnest pancake has two sides. This topic is no exception. From the business owners point of view he or she may not even be able to open again so it makes some sense to let the market forces determine pricing.
On the other side you are talking about people who may have lost everything and are just trying to stay alive. Shouldn’t there be a moral obligation to “do the right thing” here?
Obviously it’s tough to think about these types of decisions unless you’ve been in that particular circumstance. One of my favorite quotes is from Davy Crockett, “First be sure you’re right then go ahead.” If your conscious is clear you are probably doing the right thing — even if it might not feel like it at the time.