As Texas continues to face the life-or-death aftermath of Hurricane Harvey, a Forbes writer courted controversy by penning a piece in favor of price gouging to direct “scarce resources” to “their most valuable uses.”
British-born writer Tim Worstall, a Senior Fellow at the Adam Smith Institute, argued that price gouging serves an important purpose during disasters or times of want and even went so far as to say, “My own version of dealing with price gougers would be to thank them for the good work they’re doing.”
Worstall’s essential argument in his August 28 article is that price gouging serves as a market-based system of rationing to prevent waste of scarce resources. It also precludes government having to step in to serve that role.
The Forbes writer went on to insist that price gouging is the fastest way to increase the supply of any item that might find itself inflated by the gouging.
“We also want something else to happen — we want supply to increase as fast as we can manage that,” Worstall wrote. “As we know from our basic Econ 101 supply and demand curves the way to increase supply is for the price to increase.”
“We want people to use less of the scarce resource, we want people to supply more of the scarce resource, allowing the price to rise is the one known way of achieving both those goals,” he wrote.
As many states do, Texas has a law against price gouging in a time of crisis, but Worstall was critical of the law saying that the “terribly, terribly simple” rules of economics proves that gouging is good in the long run.
Regardless of the academic argument over the merits of price gouging, Forbes came under quick attack on Twitter by those who felt the article was insensitive and was at the very least published at the wrong time.
Not long after the negative reception of the article became clear, the money magazine took the story offline.
Breitbart News contacted Forbes, but the magazine declined to comment on the story or its decision to pull it from its website.
For his part, the author did make a brief Twitter comment on his piece being pulled.
Yep, editors edit, that's their purpose.
— Tim Worstall (@worstall) August 28, 2017
Follow Warner Todd Huston on Twitter @warnerthuston