The Dirty Capitalism Of The American Disaster Economy
Price gouging in the wake of disaster disproportionately affects the less privileged. So why do so many people continue to defend it?
When I arrived at the Miami Greyhound bus terminal, signs of distress radiated through the squat, glass waiting room. A man and his friend told me they’d been waiting there for over 48 hours to try and snag a coveted seat on a bus out of Miami; another woman lamented about how her bus scheduled for that evening was already three hours late.
There was nowhere to sit in the overcrowded waiting room, and the less desirable benches outside in the thick Florida humidity were occupied as well. I spent my first hour sitting on the curb with around 20 of my fellow travelers, waiting for any bus to come and clear out the waiting room so we could swarm in and cool down.
I did not embark on a 36-hour bus ride (that actually turned into 53-hour bus ride) from Miami, Florida, to Pittsburgh, Pennsylvania, for fun. As Hurricane Irma climbed to a record-breaking Category 5 storm with its eye set on Miami, mandatory evacuations were issued around the city, and in places like South Beach, we were told to get out or expect no help if things turned nasty after we’d chosen to stay in town.
Naturally, this caused a bit of a panic — and airlines and gas stations and grocery stores were quick to capitalize on this fear. I’d been living in Miami for only 12 days when my family back home in West Virginia called and urged me to evacuate the Magic City. Even though I started looking for an escape plan three days before the mandatory evacuation would be put into effect, I soon learned that if I were going to flee from Irma, it wouldn’t be comfortable, and it wouldn’t be quick.
Airlines and gas stations and grocery stores were quick to capitalize on the fear.
In the end, I chose to go with Greyhound. My family purchased my bus ticket for me, and while the price hadn’t yet been significantly affected (it cost around $95, a fairly standard price), the same couldn’t be said for airlines. By that point, plane tickets to Pittsburgh had already more than doubled. A ticket to New York—where most of my college friends live—would turn out to be even more outrageous; one Twitter noted the cost of a ticket surged 900%, from $358 to $3,578. Gas prices, meanwhile, increased by 33 cents a gallon in Florida, and I saw stations charging as much as $4 in parts of Miami — about $1.50 more than what was typical throughout 2017. Under the circumstances, a bus ticket was my only feasible option.
My experience was hardly an anomaly — in the wake of natural disasters, evacuation options that should be regarded as basic human rights often become available exclusively to the wealthy. Meanwhile, low-income individuals are left with two options: Take an unsavory, multi-hour bus ride to higher ground, or risk their life because they cannot afford basic safety.
It all amounts to a crude form of economic Darwinism — an unequal system I directly suffered under.
The principles of economics are fairly simple: By serving as a broker between consumers and goods, corporations are able to churn a nice profit. In times of crisis, economists’ common defense for price gouging is that it boosts the local economy by relying on supply and demand principles to dictate where vendors should set their prices in order to turn the highest profit.
It’s not just conservatives who vigorously defend the practice. Even Slate’s leftist Matthew Yglesias has argued for gouging in the wake of natural disaster, on the grounds that it “creates much-needed incentives for people to think harder about what they really need and appropriately rewards vendors who manage their inventories well.”
But this ideology, though logically grounded, is ethically flawed; by serving as a gatekeeper between impending victims of a natural disaster and resources that can potentially save their lives, businesses create a veritable human rights crisis.
As a Time article put it post-Superstorm Sandy:
“…the economics of [price gouging] make perfect sense. It’s just that right now, with so many people suffering, the cold logic of capitalism seems callous and morally suspect, an affront to basic notions of fairness. Price gouging might, at least in theory, help shrink lines and reduce shortages. But I think most people would rather wait in line than have someone make a windfall profit off their desperation.”
When pundits clinically espouse the virtues of price gouging, they conveniently forget how real lives are impacted by the practice. Sure, gouging makes sense in theory — but in reality, it causes the less privileged to suffer more, and this is empirically unjust. To quote an excellent recent Miami New Times piece:
“As anyone who’s ever been broke or met a poor family knows, charging $50 for water or gasoline means only the richest, most well-off human beings buy those goods, while needier, poorer people are forced to make harrowing, impossible decisions of whether to use their last $50 to buy an extra week of spare diapers for their children or a few more jugs of water to take a shower if they lose access to clean water.”
Fortunately, there are laws in place to protect against egregious abuses. To date, 34 U.S. states and the District of Columbia have anti-price-gouging legislation on the books, including the states hit hardest by hurricanes Harvey and Irma. In Florida, store owners can be fined $1,000 per price-gouging complaint, with a maximum fine of $25,000; Texas charges violators $20,000, or $250,000 if the victim is 65 or older; in Louisiana, the crime is punishable by a fine of up to $500 and six months in prison, as well as civil fines and restitution to victims; and Alabama fines up to $1,000 per violation.
Typically, consumers are asked to send complaints directly, which in the aftermath of the recent hurricanes quickly surfaced troubling abuses. Following Hurricane Harvey, for example, some 500 price-gouging complaints were filed over the course of a single weekend in Texas, documenting cases of $99 cases of water and tripled or even quadrupled hotel rates.
For $5 a month, gain access to our new online community and bonus content — all while supporting independent media.theestablishment.co
It’s undoubtedly helpful that so many states maintain anti-price-gouging laws; one imagines the situation being that much worse if Harvey and Irma had impacted states without such regulations in place. At the same time, existing legislation is far from perfect. For one thing, scope tends to be limited; Florida’s law, for example, applies only to dwelling units, self-storage facilities, and “essential commodities” like food, ice, gas, and lumber. Flights don’t fall under this jurisdiction as well (thought it’s worth noting that a few airlines, including American, JetBlue, United, and Delta, implemented price caps after consumers complained of gouging as Irma approached).
Additionally, there’s more the government could be doing to protect people during states of emergency. For example, price-gouging laws could be paired with government-provided subsidies to support retailers keeping essential items in stock. As the Harvard Business Review notes, this “combination of price controls and subsidies yields a best of both worlds scenario during emergencies. Prices are kept in-check and just as importantly, there are financial incentives for retailers to entrepreneurially boost stocks.”
I wish I could say that my country came together to support innocent lives that were in jeopardy as Hurricane Irma marched toward South Florida. But I can’t. What I can say with confidence is that I live in a country where increased demand motivated by fear of death and destruction at the hands of a catastrophic storm is a perfectly defendable reason to hike up prices for basic necessities — leaving people who can’t pony up the cash vulnerable to suffering and even death.
By about 1:00 a.m., when a bus finally rolled in and the driver disappeared into a back room, the Miami Greyhound station had devolved into total anarchy. The front desk workers had already vacated their positions, leaving anxious, irritable travelers with no word about when we would be leaving. Overwhelmed by uncertainty and fatigue, over a hundred travelers swarmed the bus the moment it pulled into the station, desperate for answers and a way out of Miami.
At one point, a woman nearly fainted, then vomited across the floor, with an ambulance called in to help her. After around 20 minutes of staring at the bus without being told we could board, word came down that we weren’t moving because Greyhound had oversold their seats, and we were waiting for another bus to come and accommodate the abundance of passengers.
In the end, nearly 14 hours were added to my trip back to West Virginia; when all was said and done, I spent approximately two full days fleeing from Irma.
It was a brutal experience, but relatively speaking, a privileged one. Looking back on my time spent evacuating, I keep reflecting on a particularly chilling scene. As the second surplus bus rolled into the Greyhound station, the patriarch of a three-generation family cried silently in the corner. Without tickets, their entire family had been told to come to the station and wait to see if any buses had enough vacant seats to accommodate them. The mother, who only spoke Spanish, told me she had no back-up plan. The Greyhound was their only direct way out of South Florida. By then, there was a region-wide disaster alert.
These are the people — the families — who are impacted in a very real way by the openly discriminatory price-gouging so many still advocate for.
In my seven hours waiting, I never saw the family leave the station.