September 15, 2005

Not that lucky

My monthly column for India Together, about boats, is here. Comments welcome.

3 comments:

@mit said...
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@mit said...

Dilip - Unrelated comment

Indi Blog Review now has a review on your blog

Read the Review

Regards,
@mit

Sriram said...

Interesting article. Good intentions don't always guarentee good results.

Reminds me of something I read a while ago. Some South American country was struck by hurricanes and large portions of the country were flooded. Some international relief agencies air-dropped free blankets to help the disaster victims. Good intentions.

The problem was that, in those areas, manufacturing blankets was the major economic activity. All the free blankets killed the one surviving industry in that region. So, the situation worsened instead of getting better.

The problem is, basic laws of supply and demand always hold good, regardless of whether there has been a disaster or not. Ignoring this will only make situations worse.

After Katrina, gasoline (petrol) was sold in some affected states for twice the national average (about $6 a gallon). Many of the talking heads on TV and radio were outraged by this and railed against this "gouging". As usual, there was also a call to the state to step in and "regulate" the prices.

However, if we think about it, we can realize that gouging is an excellent way to prevent hoarding and to encourage proper usage of scarce resources.

When will the central planners learn?