More wrong-headed libertarianism

I seem to spend all my time on this blog attacking my own side, but oh well. Like most people I read more sources that agree with my general outlook than don't, and unlike most people I'm pretty honest about that.

Today The Freeman comes up for a beating, specifically this wantonly obtuse article from Steven Horwitz on price gouging. Here's an excerpt:

At least as important is the dynamic effect of rising prices. Higher prices signal to other suppliers of the good that it is more scarce, indicating that supplies need to move to the affected area. And this signal is wrapped in an incentive: The higher prices provide the profits to lead other suppliers to want to bring goods to the affected area. Coercively preventing sellers from raising prices only exacerbates the very shortage the distressed area is experiencing and eliminates the incentive for people to use the good for only the most important purposes.

But what is perhaps most interesting about gouging is that the charge is only selectively applied. Right now, just a week or two after the tornadoes in the South, carpenters, plumbers, electricians, roofers, and trash removal workers are seeing wages well above their pre-disaster levels since the demand for their services is extremely high. We saw the same thing after Hurricane Katrina, not to mention pretty much every major natural disaster you can think of. Yet not once has any of those workers been prosecuted for price gouging. In fact, you pretty much never even hear the accusation made against them.

To which I respond thusly: Come on, seriously?

First, let's dispose of the supposedly insightful claim that price gouging accusations are rarely made against carpenters and electricians. Who are they made against? People selling bottled water and food, usually. Let's take three goods: water, food, and carpentry services. One of these things is not like the other! One of these things is not the same! Horwitz at the head of the piece invokes his expertise as an economist; here I will invoke my expertise as a member of good standing of Homo sapiens: Without food, you die. Without water, you die. Without carpentry services, you... get wet? Are cold? Get a nasty splinter?

Moving along to the less obviously stupid part of this argument, Horwitz invokes the typical Hayekian claim that prices act as signals, and that higher prices for a good signal that more of that good as is needed there. And while that's perfectly reasonable, Horwitz completely ignores another stupidly obvious fact: prices are set by people.

Prices don't descend from the heavens and land on bottles of water like tiny white stickers made of God's own wisdom. When there's a disaster and clean drinking water is scarce, someone makes a conscious choice to raise bottled water from a dollar a bottle to ten dollars a bottle. That person is an asshole. People need clean water to live. Most of the time- in fact almost all of the time- a pure price mechanism is the most efficient and most humane way to distribute any scarce resource, to include water and food. But when there's an exogenous supply shock, as economists say, just letting the market work on the necessities of life is a terrible idea.

People die pretty swiftly without water to drink, and they can die even faster when driven to drink dirty water. Different people are more at risk than others, and these differences are not accounted for by a pure price mechanism. An infant will quickly die from a diarrhea that an adult might find a minor inconvenience. Instinctively, we recognize this difference, and hence we have customs like "women and children first," rather than auctioning off spaces on lifeboats.

Hey, there's a question: all you hardcore Austro-libertarians, how do you feel about holding auctions for spaces on lifeboats? You're on a cruise, and the boat starts to sink. The ship's captain announces that he is taking bids for spaces on the lifeboats. Do you make a bid? Or do you rush the captain with your fellow passengers, chuck him over the side and hop in a lifeboat? I can give you my answer, and I can tell you that if my son needs water in an emergency and you try to charge me some outlandish price for the water, I'll stove your head in and take it.

Libertarians need to stop trying to override these sorts of instincts. If you really think property rights and Hayekian prices should override the need for water, you're a moron. You're the reason why libertarians are so often dismissed as pie-in-the-sky fruitcakes.