Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Wednesday, December 21, 2005

Trade Restrictions and Disaster Relief

What is the best way to amplify the damaging effects of a natural disaster? From The Emirates Economist:
Use the strong arm of the government to prevent foreign suppliers from rushing in when domestic supplies are disrupted.

Who loses? The consumer.
Of course, if foreign suppliers rush in, domestic suppliers will scream about "carpet-baggers" and "foreigners" ripping them off and exploiting them. But these complaints will be smoke to disguise their attempts to protect their local market power.

It is sad, but politicians will tend to respond to the arguments of domestic suppliers, not consumers, and the effects of the disaster are made all that much worse as a result.

As an example, EmEc links to this item, which points out that hurricanes Katrina and Rita severely damaged the U.S. sugar crop, thus shifting its supply curve to the left and nearly doubling the price of sugar. Opening the borders to imported sugar could help reduce the size of this effect...
Who Links Here