For those schooled in economics, the gasoline shortage during Hurricane Sandy last November was no surprise. Demand for gas goes up. Supply lines are disrupted. It’s the old supply-and-demand thing. The price goes up. Higher prices attract new supplies from unconventional paths. Prices respond and fall back again. The market handles it just fine.
All is well except for one thing: There were anti-gouging laws on the books. These laws restrict the upward path of prices. Plus, most people anticipated exactly what happened. By executive order, governments at all levels impose even more restrictive controls. These controls prevented prices from being licitly raised at the onset of the crisis.
The markets became very sophisticated very fast. People were including delivery in their price at premiums. Within hours, the terms became more complex, varying by quantity purchased and service provided ..
Earle calls the sellers of gasoline and other essentials “disasterpreneurs” — business people who know how to make a buck while providing the services people need. We think of black markets as consisting of sketchy people selling to sketchy people, but this was not the case. Absolutely the whole population was involved.
Did any of the controls make any difference at all? According to Earle, they managed only to drive legitimate markets underground. They slowed markets and distorted them, but did not end them. From the point of view of what was actually being bought and sold, they made no difference whatsoever. People from all walks of life threw themselves into the black market to survive.
People never imagine that they will openly defy the powers that be. Americans like to think that they are law-abiding people and that their government has their best interests at heart. But matters change when your refrigerator stops working, your house is freezing, cellphones die, and your car has no fuel to get to the store or the hospital.
Suddenly, regular people in New Jersey and New York found themselves having to make the decision between obeying and surviving. They chose surviving. You probably would too.