Lots of damage on the East Coast from the latest hurricane. You have read the stories.

But have you read the tales of politicians heroically standing on principle (and law), opposing “price gouging”?

If yes, then you know precisely how government works. First, it prevents normal market forces from aiding in the recovery. Then we are told how vitally necessary government programs (like FEMA) are, because, otherwise, there would be no recovery. First the boot to the voluntary sector, then the cheers for the government sector, to be followed by more boots: of tax collectors, regulators, and other scourges of mankind.

Yes, this is the eternal pattern: call market forces evil; prevent the seemingly ugly but (in truth) vitally necessary market activity from helping solve the problem; then blame the market for its “limitations”; praise government for “heroically” stepping up to the plate; after all the costs are accounted, go further into debt or raise taxes.

The rational alternative: let businesses raise prices during horrible shortages, and the shortages will quickly (“magically” — as if by an invisible hand!) disappear, with prices turning to normal at a faster rate. The higher prices signal entrepreneurs to quickly move goods to where they have become scarce. The higher prices allow for profits, but only for a short time.

High prices aren’t a problem, they are the solution. At the very worst, they constitute a problem that solves itself.

Government, on the other hand, “solves” problems by making yet more of them.

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