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Forget Price Gouging: Businesses React Altruistically To Disasters

From Walmart to Uber to AirBnB, businesses should be lauded for their generosity and effectiveness in the wake of Hurricanes Irma and Harvey.

With Hurricane Irma and Hurricane Harvey in the news, the country is being treated to a real-time debate over the sins of so-called price gouging, or sharp hikes in the cost of food, water, fuel, and other essential items in affected areas.

Defenders of gouging, including many libertarians, stress that price hikes force customers to prioritize their purchases while incentivizing suppliers to bring necessities to market. So if jugs of water are selling at $10 a gallon, businesses have a motivation to truck them in. And at that price, no one's going to use them to wash their cars.

Critics, however, say that it's immoral to use the price mechanism to meter out essentials in a crisis.

Both sides ignore a far more-important reality: Local and national businesses routinely give away goods and services more efficiently than public-sector responders or charities can manage.

In the immediate wake of Hurricane Harvey slamming Texas, businesses pledged over $72 million in aid, with over three dozen giving more than $1 million a piece. Airbnb used its home-sharing network to set up places for people to stay, and the crowd-sourced mapping app Waze helped the displaced find shelters. Walmart, the left's favorite corporate bogeyman, pledged more $20 million and brought water and food to the needy. A dozen years ago, during Hurricane Katrina, the world's largest retailer trucked in relief long after FEMA convoys stopped running.

Private sector aid gets less press than empty shelves and gouging accusations, but it also makes good business sense.

In some cases, price hikes during a crisis are appropriate, but most retailers know they're better off showing that they care about their customers and aren't out to take advantage of a bad situation. Successful businesses safeguard their reputations.

In The Wealth of Nations, Adam Smith wrote that he had "never known much good done by" people motivated by charitable aims, but providing aid in disasters is every bit as much a part of the free market as more obvious forms of profit seeking.

If critics and defenders of gouging are really interested in creating a better society, they'd do well to help make this part of the Invisible Hand visible to all.

Edited by Mark McDaniel. Written by Nick Gillespie. Cameras by Jim Epstein and Alexis Garcia.

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  • Fist of Etiquette||

    Both sides ignore a far more-important reality: Local and national businesses routinely give away goods and services more efficiently than public-sector responders or charities can manage.

    But that ignores the fact that, absent of or in addition to that private sector charity, it remains that the free market is the right solution for making needed supplies available. And Walmart isn't getting into heaven no matter how many good deeds until they unionize.

  • timbo||

    Well done sir.

    The largest employer in the whole country has to be the devil right?

  • DEATFBIRSECIA||

    They're burning MAGA hats over at Breitbart!

    http://www.breitbart.com/big-g.....r-bonfire/

    And they haven't even broken the story of the broken Iran promise yet!

  • BestUsedCarSales||

    I'm super embarrassed for that guy who accidentally showed himself burning the MAGA hat while wearing a Red Hot Chili Peppers shirt. Gosh, what a faux pas.

  • loveconstitution1789||

    That is some Soul to Squeeze.

  • DEATFBIRSECIA||

    He should have given it away, now.

  • BestUsedCarSales||

    Walmart, the left's favorite corporate bogeyman, pledged more $20 million and brought water and food to the needy.

    Yeah, but obviously it's because they were shamed into doing it and thus should get no praise.

  • Jujucat||

    It's good PR.

  • Trainer||

    The money from this came from either their marketing budget or from a foundation they set up. Not that we don't appreciate it here (loved the cans of Anheuser Busch water after Ike) but they are not being altruistic.

  • nychotpilot||

    Amen

  • CatoTheChipper||

    A better solution would be for local suppliers to charge the market-clearing price (i.e., the price that equilibrates supply and demand) during the disaster, while offering a coupon for discounts in the future.

    That way the market could do its magic and local suppliers could maintain their customer goodwill.

  • timbo||

    How about layaway

  • Ron||

    When bussiness give aid there are no strings attached when the government gives aid there are always has strings attached. which would you rather get help form

  • Jujucat||

    Is that a trick question...

  • timbo||

    I want all my help to come from Barack Obama. he seems like a smart problem solver.

    Seriously, if you were stuck in a room with that dolt, what would he be capable of figuring out?

  • DaveSs||

    Giant evil ISPs brought in extra hotspot sites, and opened up whatever fixed wifi hotspots that were working across affected areas and opened them for customers and non-customers alike.

  • timbo||

    That's what evil profiteers do. They sometime offer services for free or at a discount to display their capability and possibly gain some clients who would like to pay for their service down the road.

    For such greedy gall, they should be burned at the stake - American High School civics curriculum.

  • Heraclitus||

    FYI Businesses already self-promote their generosity. We don't need the news media doing it for them. And when businesses self-promote because it becomes a potent form of advertising it partially takes away from their so-called altruism. AND, let's do a follow-up on the tax deductions and disaster relief these businesses are going to acquire.

    Sorry Reason, but always trying to be the contrarian kind of makes you look foolish. One could easily point out how Reason always harps on the errors of government without ever pointing out the good stuff it does. But seriously, asking the media to carry the water for these self-promoting businesses is just disingenuous.

  • timbo||

    Please tell me what good the government does besides enforcing some private property rights and some contract law? And provide some long lasting benefits that the group think has provided and what smaller groups were either inconvenienced or disadvantaged because of the larger central role the government attempted to play.

    Although it is extremely uncouth to promote altruism, to some effect, I have less of a problem with companies lie Wal-Mart self promoting their charity over the last 10 years..

    They have ben made out to be the devil when that company has provided great innovations and cheaper products to millions of people all over the world. Wal-Mart, going back to Sam Walton is the essence of why capitalism is great. Their recent ventures into cronyism are disgusting. To some degree, the penalty for becoming hugely successful is the government makes you play or they punish you via regulation. They did it to Microsoft when they realized they could extort them through the anti-trust fiasco and they attempted to do it to apple.

  • Sevo||

    Heraclitus|9.15.17 @ 2:18PM|#
    "FYI Businesses already self-promote their generosity. We don't need the news media doing it for them. And when businesses self-promote because it becomes a potent form of advertising it partially takes away from their so-called altruism."

    I see our newest lefty asshole is still here.
    Tell me one charity which does NOT self-promote based on what they do, and also tell us which charities do NOT take advantage of tax laws.
    Oh, and fuck off, slaver.

  • L.G. Balzac||

    Seems to me that WalMart actually showed through their normal business actions that those small local businesses they displaced had been gouging us all along.

  • Sevo||

    "Seems to me that WalMart actually showed through their normal business actions that those small local businesses they displaced had been gouging us all along."

    Good point!
    But it was Mom and Pops gouging us in an oh-so-friendly manner, right?

  • C. S. P. Schofield||

    I am reminded of the 2004 Indian Ocean tsunami, and aftermath. For days after the news hit, the press was full of how little America was sending...until several people testily pointed out that charitable giving by private American citizens outstripped the contributions of every government combined.

  • Sevo||

    "...Both sides ignore a far more-important reality: Local and national businesses routinely give away goods and services more efficiently than public-sector responders or charities can manage...."

    No, both sides don't.
    The libertarians note that businesses do so and hold that those businesses are more than welcome to do so and others are more than welcome to charge what they please.
    The proggies note that businesses do so and hold that other businesses should be forced to sell their products at X price.
    Nick wrote this? No one should have to point this out to you.

  • nychotpilot||

    Ascribing "altruistic" motives to Airbnb and Uber for that matter beggars belief. Airbnb cashes in on regulatory arbitrage at nosebleed ratios that is the envy of Goldman Sachs. They are the very definition of scofflaws given that they knowingly violate laws in numerous local jurisdictions around the world and have been rapped with fines repeatedly. It is another matter that many of these regs and laws should never be there and are applied and enforced only on legal operators.

  • Sevo||

    nychotpilot|9.15.17 @ 5:32PM|#
    "Ascribing "altruistic" motives to Airbnb and Uber for that matter beggars belief. Airbnb cashes in on regulatory arbitrage at nosebleed ratios that is the envy of Goldman Sachs."

    Care to tell us how (alleged) 'regulatory arbitrage' has any relationship to "altruism"?

  • Kenneth Cochran||

    Come on Nick! When your target audience can identify the logical fallacies of Comte's Positivism you should know better than to equate benevolence with "altruism".

  • macsnafu||

    Big business benevolence is wasted because many people will continue to hate evil, profit-motivated companies no matter what they do. And governments and government agencies will continue to get in the way and try to prevent such benevolence from occurring.

  • Bongean||

    Businesses React Altruistically To Disasters due to some reasons. All those reasons contain this detailed article. I agree with some of them and at the same time not agree with some reasons. As we know that solution of every problem in this world just need to find it with honest dedication. However, I'm looking reliable essay writing service but some my other friends discuss more related points here.

  • macooxi||

    Hi Bongean, are you still there? I am from here, have something to ask you.

  • Liberty Lover||

    Giving away goods in a crisis is brilliant. It builds good will that you could never buy. It will bring and keep customers for years. Price gouging will make you a few bucks now, but people have long memories. Even those that don't purchase your inflated items will remember your attempt to bilk them. Look for business to fade when others open or receive goods.

  • Asphalt Companies||

    As a owner of a asphalt paving company, I agree we need to take care of the community in which we live in. However, it is unfair to make companies out as boogie men when they have to raise prices. Usually there are hard cost involved which unfortunately has to be passed down to the consumer. Most companies are very generous to the community and it is time we put a more positive spotlight on that versus just the big bad corporations that are greedy and don't care about people who are hurting and are in need. We all need to work together to help others in need.

  • Septic Cleanning||

    Thank you for writing this article and creating the Youtube video. It is true many companies including my own(I run a septic cleaning company) try to help the community and charities whenever possible. We need more outlets that show the positives deeds of corporations, both large and small. Business owner tend to be very generous and a lot of giving goes unnoticed as it is behind the scenes.

    Most business owners are not greedy self serving monsters. We seek to serve our customers and our community with great products and services.

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