David R. Henderson  

Report from Naples

A Taste of Bastiat... A Poll of Economists on Price ...

Former star student Thomas Strenge wrote me an interesting email and gave me permission to quote. What follows below is my slightly edited version of what he wrote.

My Mom lives about 10 miles inland from Naples and her experience of Hurricane Irma offers great economics lessons. And yes, she holds popular misconceptions on price gouging, even though I try to explain it to her.

. Gas stations ran out as early as Wednesday (Hurricane didn't approach until late afternoon on Saturday). My guess is that the panic making by media and public officials combined with the lack of price increases depleted supplies. I'm sure truckers were unwilling to make deliveries down South without a risk premium, which couldn't be paid without price increases.

. Supermarkets also experienced panic buying.

. Collier County (which includes Naples) announced mandatory evacuation, but Mom decided to stay. She was on the inland side, at least 10 miles from shore, but even predicted storm flooding never reached more than 5 miles. Also, she built her house soundly and her roof line is lower than the surrounding trees of the adjacent nature preserve. Many of her neighbors opted likewise. (Local knowledge versus central planning)

. Also, the government shelters either did not accept pets or required them to be caged. Apparently, Florida authorities are now pursuing legal charges against those who abandoned their pets. (Kafkaesque?)

. The storm stayed offshore, but was plenty scary. Mom suffered damage to her yard, but the house was fine. She lost power and cell phone coverage.

. On Monday, after driving for an hour, she was able to call us and let us know she's OK.

. Today, cellphone coverage continues to improve and she was able to call repeatedly.

. Anecdotally, the old style wooden power line poles appear to have survived better than the newer style concrete power line poles. Wood can bend in the wind. Concrete snaps at some point. Electricity is not expected until some time next week.

. The local police department refused to let her charge her phone. Apparently, citizens able to report an issue is not important to the government. Luckily, the local fire department was much more helpful.

. Ironically, Mom noticed that government utility vehicles were idle, apparently due to lack of gas.

. Both McDonald's and Publix Supermarkets opened today with generator power. McDonald's offered a slimmed down menu of chicken mcnuggets and cheeseburgers. No special orders, but you could get as much as you wanted. Drive-thru only. Publix did experience panic buying and people bought everything, including detergent (if you have no power, then you can't do laundry!). (Bounded rationality?)

. Mom learned of openings/availability through private conversations. Little useful government communication.

. Things are hot, but all in all not bad, and improving rapidly. Main roads are passable. And neighbors are helping each other clear debris from roads/houses/driveways. Private sector is outperforming government.

Thomas (from comfy Kansas City)

Note from DRH: Today or tomorrow I will post about some interesting survey results on laws against price gouging.

Comments and Sharing

COMMENTS (11 to date)
Khodge writes:

No...that just cannot be right. Only government can keep roads open.

john hare writes:

I just got power back on an hour ago and haven't checked this out properly. One person mentioned that all those utility workers that swarmed in from out of state to restore services were racking up overtime and getting excellent expenses paid.

It will be interesting to find out if it's true that the same linemen that people are praising to the skies are technically gouging for 50-100% more than their standard rate, for which the same people are up in arms about.

For me personally, pay and shut up, do without, or find an alternative.

Alan Goldhammer writes:

John Hare writes, "It will be interesting to find out if it's true that the same linemen that people are praising to the skies are technically gouging for 50-100% more than their standard rate, for which the same people are up in arms about."

I have also wondered how this works. In the mid-Atlantic states we occasionally get large power outages that require linemen and equipment from neighboring states to help get the grid back on-line. I suspect that the power utilities build this into their fee structures as I have never seen any 'special' assessment following such disaster repairs.

WalterB writes:

You absolutely can do laundry without electrical power. Drying might take a while, especially if it's still raining.

TMC writes:

Alan, I'm guessing John just means the overtime the workers will get. Walter, right! and it's especially useful in floods that are often quite dirty.

John hare writes:

I did mean the overtime. I think pay it. I would like to see the reaction of those bitterly opposed to gouging confronted with their hero's being guilty of this heinus offense.

John hare writes:

I just checked. The linemen expect a month or so of 16 hour days 7 days a week. Time and a half over 40 and double time on Sunday. Mostly union at$50.00 average normal time, $75.00 on overtime, and $100.00 an hour on Sunday. Some expect to make $30,000.00 in a month.

I wonder how this rates on the gouging scale.

Thomas L. Knapp writes:

"Gas stations ran out as early as Wednesday (Hurricane didn't approach until late afternoon on Saturday). My guess is that the panic making by media and public officials combined with the lack of price increases depleted supplies."

There may have been some of that, but there was also a supply problem. After Harvery shut down refineries in the Houston area, the main pipeline bringing gasoline to the southeast was shut off the Thursday before the Wednesday in question. So gas was having to be trucked further than usual, even before Irma panic began.

Ben writes:

Utility guy here. Linemen absolutely love storm work. Many contractor crews do storm work exclusively for the higher pay. Local utilities don't care- it is all repaid by FEMA or collected via special rate adder under PUC approval.

John hare writes:

A personal annoyance with federal response. I can see out front a line of cars about two blocks long waiting to get free water to drink and MREs to eat. The stores in the area have been open for days now a week after the hurricane went through. While I don't have power, I never lost water pressure and my stored drinking water lasted until the stores had it back in stock.

Why should your tax dollars go to supply people in my area that are only in need by choice?

Lex writes:

I was in Naples the week before and week after Irma. A few of my impressions (having surveyed some two-plus dozen retail establishments, from downtown Naples to the edge of Bonita Springs):

The same time that bottled water was going for unseemly amounts on Amazon, 24-packs of water *bottles* were available $10.

Wednesday was the latest one could call for an evacuation given Florida's demographics (and only certain parts of Naples and Collier county had mandatory evacuation). You can't have 7+ million drivers at once on the two routes north as evacuees invariable will get stuck in areas not equipped to handle the overflow.

Some gas stations in Naples experienced shortfalls on Wednesday evening, but many reopened — albeit with lines or limits on Thursday. Those who fled has similar experiences, but gas was generally available within a few miles of the highway.

Post-Irma, many of the surviving stations tended to open in the afternoon/evening only. 60-90 minutes seemed to be the usual wait.

Despite intermittent shortages* (of bottled water especially) at the major chains, I could have strolled through Publix on Friday evening and gotten everything I’d need for the next week.* (Whether the situation would have been different later in snow-bird season is an interesting question.)

I didn't notice a run on detergent, or even bleach. Maybe people (as I did) just wanted their laundry done before the hurricane and/or saw that detergent was on sale. (Obviously, you only need a bucket and water to do laundry. Gennies, R.V.’s, hotels, and laundromats are other alternatives before home power is restored.)

Curiously, the meats and other perishables were not on sale even Friday evening (when Publix closed).

Unfortunately, perhaps the most useful area store — Rural King — wimped out on Tuesday before the storm. Also, anyone who went to Home Depot or Lowe's looking for dehumidifier or generators after the storm would have been confronted with Christmas bric-a-brac.

There were myriad public and private pet-friendly shelters available. Under the circumstances — hundreds of strangers and their pets confined inside during a hurricane — kenneling is an obviously necessary and pretty minor expense. The only “Kafkaesque” thing is imagining the situation from the POV of a dog chained to a tree during a hurricane** (which is what almost leads to charges).

I didn't notice many downed utility poles — wood or concrete — on the major roads. (The choice between wood/composite/metal/concrete/burying is the sort of shiny thing that probably would attract Tyler’s momentary. attention. I suspect the benchmark in Florida is less how many lose power, and more how efficiently it can be restored.)

Across florida has some of the most stringent building and development codes (or, if you prefer, “centrally planned”) in the country. Everyone’s roofs are lower than the surrounding trees. As for local knowledge, are the myriad obviously poorly chosen, planted, and maintained trees in private communities and businesses — which resulted in some road blockages and downed power — an example?

Landscaping and trash services were working up till Friday. Homeowners had something of a dilemma: Is it worth the $700 or whatever to trim trees that might get blown over regardless?

Speaking of trees: For a few hundred dollars investment, enterprising high school and college students could have easily cleared $20K removing down trees during their week off without ever leaving the community.

Also: I’m grateful for the free movement of labor (it's gotta be Christmas for tree/power/roofing guys from elsewhere), but (very anecdotally) there is an obvious difference between the tree clearing services provided by the out-of-state business vs. the locals. The former left the trunks mostly uncut, often sitting in the gutters.

Public services —the police, fire departments, and hospitals, for example — aren’t there to be charging stations, particularly for those with a working car and/or neighbors, or who are otherwise unprepared.

I didn't notice government utility vehicles sitting idle (though I fail to see anything slightly ironic if they were). The private and government sectors had different responsibilities, so I’m sure how you compare performances (this orange is a better orange than this apple is an apple?). In any case, city, county, state, and federal agencies have gotten generally high marks.

Locally, communication (via text and social media) was actually pretty solid, between texts, tweets, and the newspapers. One notable failure was not anticipating and/or immediately addressing the lack of lights at major intersections.

*At least shortages at the major chains. Gas stations, smaller stores, etc. all had pretty consistent supplies. And while the hardware section of Wal-Mart had bare spots, the craft aisle had all the Duck Tape and paracord could want.

**"What’s Kafkaesque … is when you enter a surreal world in which all your control patterns, all your plans, the whole way in which you have configured your own behavior, begins to fall to pieces, when you find yourself against a force that does not lend itself to the way you perceive the world…You don't give up, you don't lie down and die. What you do is struggle against this with all of your equipment, with whatever you have. But of course you don't stand a chance. That's Kafkaesque.” Kafka, FYI, was a dog lover.

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