Sweatshops are nice, but not because poor workers prefer them to the alternative. After all, poor workers will also work in diamond mines or banana plantations, if the alternative is starving. But an economy based on diamond mines or banana plantations will always stay poor with bandits on top, while countries with sweatshops (trading their labor instead of extracting stuff from the land) get massive economic growth and “graduate” from sweatshops pretty fast.
About price gouging, I’m not sure this is even the right question. Disaster recovery is the perfect situation where planned economy beats market: there’s a known need, affecting a known set of people equally, and the government has tax money specifically for this need.
From what I remember form my history of Finland classes, the 19th/early 20th century state project to build a compulsory school system met some not insignificant opposition from parents. They liked having the kids working instead going to school, especially in agrarian households.
Now, I don’t want to get into debate whether schooling is useful or not (and for whom, and for what purpose, and if the usefulness has changed over time), but there is something illustrative in the opposition: children rarely are independent agents to the extent adults are. If the incentives are set in that way, the parents will prefer to make choices about their children labor that result in more resources for the household/family unit (charitable interpretation) or for themselves (not so charitable). Number of children in the family also affects the calculus. (One kid, it makes sense to invest in their career; ten kids, and the investment was in the number.)
Seconded. If a child going to school is better for the child but a child working in a sweatshop is better for the parents, some children are going to end up in sweatshops.
It’s not necessarily clear that disaster relief is better handled by the government. A few things to keep in mind:
It’s not a choice between markets or government. You can have both. (e.g: The army and rescue services organizing huge logistics efforts to resupply effected regions/clear roads. At the same time supermarkets are allowed to sell goods at inflated prices, incentivizing them to store a surplus in future cases where disasters may happen as they can make a profit large enough to offset the cost of keeping excess stock in inventory.)
The same incentive problems that apply to gov’s generally also apply here. A shop owner, assuming price gouging is allowed, is incentivized to keep a small surplus of disaster items in stock even though they won’t sell in normal times because of the small chance of an extraordinary profit if a disaster strikes. The government, even thought it should ideally keep track of and prepare for disasters, often won’t due to it being in no individual’s interests to do so. e.g: Lack of food stockpiling in New Orleans prior to Katrina.
Sweatshops are nice, but not because poor workers prefer them to the alternative. After all, poor workers will also work in diamond mines or banana plantations, if the alternative is starving. But an economy based on diamond mines or banana plantations will always stay poor with bandits on top, while countries with sweatshops (trading their labor instead of extracting stuff from the land) get massive economic growth and “graduate” from sweatshops pretty fast.
About price gouging, I’m not sure this is even the right question. Disaster recovery is the perfect situation where planned economy beats market: there’s a known need, affecting a known set of people equally, and the government has tax money specifically for this need.
From what I remember form my history of Finland classes, the 19th/early 20th century state project to build a compulsory school system met some not insignificant opposition from parents. They liked having the kids working instead going to school, especially in agrarian households.
Now, I don’t want to get into debate whether schooling is useful or not (and for whom, and for what purpose, and if the usefulness has changed over time), but there is something illustrative in the opposition: children rarely are independent agents to the extent adults are. If the incentives are set in that way, the parents will prefer to make choices about their children labor that result in more resources for the household/family unit (charitable interpretation) or for themselves (not so charitable). Number of children in the family also affects the calculus. (One kid, it makes sense to invest in their career; ten kids, and the investment was in the number.)
Seconded. If a child going to school is better for the child but a child working in a sweatshop is better for the parents, some children are going to end up in sweatshops.
It’s not necessarily clear that disaster relief is better handled by the government. A few things to keep in mind:
It’s not a choice between markets or government. You can have both. (e.g: The army and rescue services organizing huge logistics efforts to resupply effected regions/clear roads. At the same time supermarkets are allowed to sell goods at inflated prices, incentivizing them to store a surplus in future cases where disasters may happen as they can make a profit large enough to offset the cost of keeping excess stock in inventory.)
The same incentive problems that apply to gov’s generally also apply here. A shop owner, assuming price gouging is allowed, is incentivized to keep a small surplus of disaster items in stock even though they won’t sell in normal times because of the small chance of an extraordinary profit if a disaster strikes. The government, even thought it should ideally keep track of and prepare for disasters, often won’t due to it being in no individual’s interests to do so. e.g: Lack of food stockpiling in New Orleans prior to Katrina.