If We Can't Use Prices to Allocate Resources, What Should We Use?

From Michael Giberson:

Mississippi has a price gouging law which allows the state government to prosecute businesses that raise prices on certain kinds of retail goods and services during a "state of emergency" (as officially declared by the state's governor). Now the Mississippi Attorney General discovered that businesses were working around the legal barrier to price increases during declared emergencies by raising prices in anticipation of a state of emergency being declared.

Solution? The AG plans to propose to the state legislature that the Mississippi Attorney General gain the ability to declare a state of emergency only for the purpose of enforcing price-gouging laws (while continuing the governor's authority to declare emergencies to permit deploying state resources, access federal funding, and streamline local government response).

I guess a few business owners were able to outwit a cumbersome price control law that requires official action by the governor, but business owners won't be able to outwit a cumbersome price control law that requires official action by the AG himself. Or, at least, the AG must think so.

Currently in Mississippi the price gouging law only applies to the counties included in the state of emergency, but the AG has previously urged that price gouging restrictions always apply state-wide.

Michael has more from other states. 

The price system helps allocate resources.  When disasters strike, some resources become even more scarce (hotel rooms, clean drinking water, construction supplies and services, etc.).  The price gouging laws, if effective, blunt the ability of the price system to allocate resources, but they do nothing at all to change the fact that a.  resources are scarce and b. they must be allocated.  How, then, will these resources be allocated?  First come first serve?  Queuing?  Black markets?  As political favors?

Comments

[spencer]

Didn't learn anything from the GMU report you wrote about yesterday, did you?

[spencer]

I challenge you to find one actual example of someone building a hotel room to house refugees from a natural disaster.

[Phil]

Maybe someone can use one of those FEMA trailers... stack them up as a high rise and open a casino.