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<title>Texas Price Gougers Are Hurricane Heroes - Foundation for Economic Education - Working for a free and prosperous world</title>
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<h6 class="sub-heading article-date">Monday, August 28, 2017</h6>
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<span><a class="tags" href="/articles/topics/Price Controls" rel="tag">Price Controls</a></span>
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<h1 class="article-republish-title">Texas Price Gougers Are Hurricane Heroes</h1>
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High profits encourage new sellers to enter the market, which brings prices down.
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<p>I generally use Texas as <a href="https://danieljmitchell.wordpress.com/2010/03/10/texas-thumps-california/">a good example</a> when discussing public policy. Particularly compared to <a href="https://danieljmitchell.wordpress.com/2016/07/15/blue-state-fail-californias-long-term-economic-decline/">places such as California</a>.</p>
<p>I like the <a href="https://danieljmitchell.wordpress.com/2012/12/18/taking-a-logical-step-to-protect-students-a-texas-school-district-allows-armed-teachers/">sensible attitude</a> about guns, but the absence of an income tax is <a href="https://danieljmitchell.wordpress.com/2016/04/05/ranking-states-for-income-taxes-and-government-efficiency/">particularly admirable</a> when considering economic issues,</p>
<p><img style="width: 396px; height: 259px; float: right;" src="/media/24448/img1_tree_cartoon_donkey_elephant.jpg?width=396&amp;height=259" alt="" data-udi="umb://media/fe384d9e54ad468eb63a7f7d8ec06789" /></p>
<p>and I confess to being greatly amused when I read about jobs and investment <a href="https://danieljmitchell.wordpress.com/2012/12/27/the-continuing-exodus-of-jobs-and-taxable-income-from-california/">escaping high-tax states like California</a> and moving to the Lone Star State.</p>
<p>But being more pro-market than California is a low bar to clear. And I’ve written that <a href="https://danieljmitchell.wordpress.com/2013/01/21/just-because-california-is-terrible-that-doesnt-mean-texas-is-perfect/">government is too big</a> in Texas.</p>
<p>And now, because of Hurricane Harvey, I have another reason to criticize the state.</p>
<p>Texas has a law against “<a href="https://danieljmitchell.wordpress.com/2012/11/04/price-controls-are-exacerbating-the-damage-of-hurricane-sandy/">price gouging</a>,” which means politicians there (just like the politicians in <a href="https://danieljmitchell.wordpress.com/2012/04/29/when-hugo-chavez-battles-supply-and-demand-curves-guess-what-happens/">places like Venezuela</a>) think they should get to determine what’s a fair price rather than allow (gasp!) a <a href="https://danieljmitchell.wordpress.com/2017/05/06/the-invisible-hand-of-free-enterprise-enables-great-prosperity/">free market</a>.</p>
<p>The state’s Republican Attorney General is even <a href="http://www.foxnews.com/us/2017/08/26/hurricane-harvey-price-gouging-complaints-include-99-for-water.html">highlighting</a> his state’s support for this perverse example of price controls.</p>
<blockquote>
<p>Price gouging by Texas merchants in the path of Hurricane Harvey has drawn the attention of Texas Attorney General Ken Paxton, who said Saturday<img style="width: 351px; height: 131px; float: right;" src="/media/24449/texas-price-gouging.jpg?width=351&amp;height=131" alt="" data-udi="umb://media/bd57cdba27be4e64837a82bc4bcd98ce" /> that his office is looking into such cases. …”We’ll be dealing with those people as we find them,” he said. …Paxton issued a warning about price gouging Friday as the hurricane approached the Texas coast. Texas law prohibits businesses from charging exorbitant prices for gasoline, food, water, clothing and lodging during declared disasters.</p>
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<p>Paxton is right about Texas law, but he is threatening to enforce a terrible policy.</p>
<p>To help explain why Texas law is bad and why the Attorney General is misguided, here’s a video from John Stossel on so-called price gouging.</p>
<p style="text-align: center;"><iframe width="560" height="315" src="https://www.youtube.com/embed/R6ojYtKazgQ" frameborder="0" allowfullscreen=""></iframe> </p>
<p>It’s disgusting that Mississippi arrested John. The guy should have received a medal for putting his money at risk to serve others.</p>
<p>To augment Stossel’s analysis, here’s a video from Learn Liberty that explains why politicians <a href="https://danieljmitchell.wordpress.com/2015/11/07/if-we-want-prosperity-prices-should-be-determined-by-markets-rather-than-politicians/">shouldn’t interfere</a> with the price system.</p>
<p style="text-align: center;"><iframe width="560" height="315" src="https://www.youtube.com/embed/h9QEkw6_O6w" frameborder="0" allowfullscreen=""></iframe></p>
<p>And here’s Walter Williams discussing the role of “windfall profits” and how high returns encourage the reallocation of resources in ways that benefit consumers.</p>
<p style="text-align: center;"><iframe width="560" height="315" src="https://www.youtube.com/embed/2kQuW9K9bt0" frameborder="0" allowfullscreen=""></iframe></p>
<p>The bottom line on this issue is that buyers understandably want low prices, particularly in emergency situations.</p>
<p>But that makes no economic sense.</p>
<p><img style="width: 248px; height: 190px; float: right;" src="/media/24450/4-21-09freehealfd.jpg?width=248&amp;height=190" alt="" data-udi="umb://media/9de9f1f1cf3f45999b738f69a1d2df12" /></p>
<p>However, since buyers generally outnumber sellers, politicians will always have an incentive to demagogue on the issue.</p>
<p>I’m not surprised when we get economic illiteracy from certain politicians. Nonetheless, it’s very disappointing when Texas lawmakers sink to that level. I hope Mr. Paxton at least is feeling guilty.</p>
<p>P.S. But I’ll close on an upbeat note by sharing my collection of Texas-themed humor: <a href="https://danieljmitchell.wordpress.com/2011/01/14/texas-california-and-the-tale-of-the-coyote/">Here</a>, <a href="https://danieljmitchell.wordpress.com/2009/09/30/the-difference-between-liberals-conservatives-and-texans/">here</a>, <a href="https://danieljmitchell.wordpress.com/2011/09/03/the-texas-police-exam/">here</a>, and <a href="https://danieljmitchell.wordpress.com/2016/07/17/fighting-terrorism-europe-vs-texas/">here</a>.</p>
<p style="text-align: right;"><em>Reprinted from <a href="https://danieljmitchell.wordpress.com/2017/08/27/teaching-economics-to-texans-three-cheers-and-three-videos-for-price-gouging/">International Liberty</a>.</em></p>
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