The damage wrought by Hurricane Harvey has been rightfully lamented by folks all over the spectrum as Houstonians and others suddenly find themselves without food, water, housing, etc (fortunately, according to a report I heard on 106.7 The Fan yesterday, electricity still appears to be available as the storm in Houston has been mainly rain).
However, there is one group who should be out celebrating the scarcity brought on by the storm (and no, I’m not talking about the “disaster relief creates economic growth” people):
The whole argument for
protectionism is that it is scarcity, not abundance, that fuels economic growth. Scarcity (in this case, preventing the inflow of goods from foreign producers), they claim, promotes growth by giving companies more profits. This trickles down to us normal people in the form of jobs and higher wages (so they claim), which offsets any price increases.
So, why aren’t scarcityists celebrating Harvey? The storm has created enormous scarcity of many goods and services, sending prices skyrocketing. According to the scarcityist theory, this should be quite the boon to the economy! The profits reaped by those who have the resources will surely trickle down to the rest of the Houstonians and make them all better off than before! Furthermore, the scarcityists must be denouncing the (metaphorical) flood of bottled water, clothing, and other necessary supplies that charities are sending and distributing to the area (it’s just unfair price competition, you see. These goods are being subsidized so they can be sold/given away below market price, and some even by the government!).
The scarcityist may object that I am strawmanning his argument, but I refute that charge. I am not strawmanning, but rather taking it to its logical conclusion. If the argument applies to trade with China, it also applies to trade with Houston. Hurricane Harvey is just the scarcityist’s argument writ large and with the scarcity concentrated, and we see the folly of his claims as clear as crystal. Fundamentally, there is no difference between tariffs erected and a flooded city.