Over in Public Address, Keith Ng attacks the idea that suppliers in Canterbury should price gouge to ensure a "more efficient" allocation of resources. As he points out, this isn't just pointless - people wanting to flee town, or thinking they might need to will buy petrol no matter what the cost - but also deeply corrosive of social solidarity. And that solidarity has made a real difference in this disaster:
The most remarked upon fact after the earthquake is the way in which people have been helping each other. Many people have acted in complete defiance of economic self-interest, and as a result, housing, labour, transport, equipment, all kinds of goods have been given to people who most need it.Its a powerful reminder that at the end of the day, we live in a society, not just an economy, and that there's more to resource allocation than just economist's "efficiency". But it should also cause us to ask some hard questions about our wider society. In Christchurch at the moment, there are people without homes who are being sheltered, and without food who are being fed. This response is a Good Thing, and its a sign of our fundamental decency and recognition that we can't just leave our neighbours to starve. But there are people outside Christchurch with these problems as well, victims not of a natural disaster but a man-made economic one (but still every bit as blameless). Shouldn't they be receiving the same help? Shouldn't the government be acknowledging that basic duty of care to every New Zealander in need, not just to those in Christchurch?
Somebody can probably wrangle an explanation out of this that's consistent with classical economics. Perhaps helping the community is in their own long-term self-interest, and perhaps helping others means that they get helped in return.
But the bottom line is that a whole lot of people told the rational economic agent to take a hike*, and as a result, they did a much better job of efficiently allocating resources (that's Economistspeak for “helping people and getting shit done”) than the market ever could.
Economists tell us that it is "efficient" to leave people starving and homeless, or with less than their basic needs. It may very well be. But its not decent, its not right, and its not fair. And that applies not just in Christchurch, but in Auckland, Wellington, Dunedin, and Eketahuna as well.
We live in a society, not just an economy. We're seeing that in Christchurch. Its time we saw it elsewhere as well.