As is always the case, the economically ignorant trot out the broken window fallacy. And you can bet that there will also be idiotic complaints about “price gouging” in the coming days. I dealt with that one years ago.

[Update a while later]

Amazingly, Matt Yglesias gets it:

…more price gouging would greatly improve inventory management. There is a large class of goods—flashlights, snow shovels, sand bags—for which demand is highly irregular. Maintaining large inventories of these items is, on most days, a costly misuse of storage space. If retailers can earn windfall profits when demand for them spikes, that creates a situation in which it makes financial sense to keep them on hand. Trying to curtail price gouging does the reverse.

None of which is to say that people should be greedy all the time. Disasters really are times when people pull together and we see large and small acts of kindness that rightly inspire us. But consider that declining to raise prices in the face of spiking demand and inelastic supply is a very odd form of charity: It doesn’t create any new resources, just allocates them arbitrarily to whoever shows up first. If you feel bad about the idea of earning windfall profits off the misfortunes of others, then donate the money to charity. If that seems too impersonal, give your employees a bonus for showing up under difficult circumstances. But storm or no storm, the best practice is to try to set prices that balance supply with demand. State governments shouldn’t be trying to stop you.

Amen.