Even in the face of tragedy, the entrepreneurial spirit is alive and well:
There have already been more than 500 complaints about price gouging during Hurricane Harvey over the weekend, Texas Attorney General Ken Paxton told CNBC on Monday.There are also reports that a woman in a second story apartment was charging people $300 to come upstairs and escape the flood. Natural disasters come and go, but the market is eternal.
That includes reports of up to $99 for a case of water, hotels that are tripling or quadrupling their prices and fuel going for $4 to $10 a gallon, he said in an interview with “Closing Bell.”
The Texas attorney general is threatening to slap these upstanding capitalists with fines of $20,000 or more. Apparently he didn’t get the memo, handed down by Fox News and John Stossel in the wake of Hurricane Sandy: Price gouging is good! It even quoted Milton Friedman, who is second only to Ayn Rand in the right wing’s pantheon of free market divines: “Price gougers save lives!”
There is, of course, a lot of disturbing talk about charity and coming together, but there are also hopeful signs that, once the waters have receded and the rest of the country is looking away, market discipline will reign supreme on the Gulf Coast:
Homeowners suffering flood damage from Harvey are more likely to be on the hook for losses than victims of prior storms — a potentially crushing blow to personal finances and neighborhoods along the Gulf Coast.Many of them might have to pull up stakes and go, where? Detroit? Cleveland? Gary, Indiana? Maybe they can become fulfillment associates at Amazon for $12.50 an hour (or warehouse workers for fourteen, if they have college degrees). Yessir, when God shuts a door he always opens a window. Every disaster is an opportunity. Economists call this creative destruction, and pundits of the George Will/Charles Krauthammer variety, who never have to experience it themselves, always sing its praises when rationalizing the latest outbreak of bank fraud, corporate malfeasance or mass layoffs.
Insurance experts say only a small fraction of homeowners in Harvey's path of destruction have flood insurance. That means families with flooded basements, soaked furniture and water-damaged walls will have to dig deep into their pockets or take on more debt to fix up their homes. Some may be forced to sell, if they can, and leave their communities.
“There’s going to be a huge uninsured economic loss here,” said Pete Mills, a senior vice president at the Mortgage Bankers Association.In other words, they’re screwed. But you know who won’t be screwed? The aforementioned Pete Mills, senior vice president of the Mortgage Bankers Association. That’s because the Mortgage Bankers Association, which “represents originators, servicers, underwriters, compliance personnel, and information technology professionals” in the mortgage industry, is curiously exempt from the laws of the free market, having strategically defaulted on a $75 million loan of their own at one point without any ill consequences to themselves. Verily, some of us are more equal than others in the eyes of the invisible hand (the Daily Show took them down good and hard).
Hunter of the CFA said that homeowners without flood insurance can possibly apply for federal disaster relief benefits, but those come in the form of low interest loans, a burden for those already struggling with too much debt.
“If you have $30,000 in damages, you can get maybe $25,000,” Hunter said. “But there will be interest, and then you have your mortgage. You’ll have two loans on your house.”
So, as you can see, there is reason to hope in this season of despair. Neither rain nor sleet nor snow nor catastrophic flood nor toxic chemical spills can affect the laws of American capitalism. They are always with us.