by chwolfe on 4/14/20, 1:26 AM with 488 comments
by alexmingoia on 4/14/20, 2:38 AM
An important point the article didn’t address is that high prices direct resources to more important uses. If prices are very high then hospitals may be the only ones who can afford them, versus people on the street.
Outlawing price gauging alone just ensures masks go to people who don’t need them as much as doctors. Price ceilings don’t force masks to go to doctors. That’s why governments are forcing masks to go to healthcare, regardless of price.
by patmcc on 4/14/20, 2:55 AM
by Symmetry on 4/14/20, 1:35 PM
https://www.forbes.com/sites/daviddisalvo/2020/03/30/i-spent...
by mbostleman on 4/14/20, 3:22 AM
by nonidentified on 4/14/20, 3:39 AM
In this article, The Economist is telling governments to force companies to produce "large supplies at fixed prices". Even if governments had that kind of authority in free countries, and they probably don't, that sounds like a policy that could easily cause harm. Companies can't just push one lever to maximum and expect nothing else to change. But most importantly, we don't need it. Yes, we've seen some small-time punks buy up too much hand sanitizer, but the big manufacturers are being decent. As The Economist pointed out, "3M, one of the world’s biggest manufacturers of high-end masks ... has stuck to its list prices and doubled its production." So there's not very good empirical or theoretical support for this idea. But there's hope for economists - "more than half" of economists surveyed about this idea criticized it.
by barney54 on 4/14/20, 2:49 AM
by osrec on 4/14/20, 3:18 AM
by im3w1l on 4/14/20, 2:43 AM
On the other hand, cornering the market for an essential good when there isn't even an underlying production issue is bad.
And increasing production of scarce goods is a good thing.
by quotemstr on 4/14/20, 2:57 AM
The trouble is that when we want something to be true, we find all sorts of specious ways of demonstrating this truth, and in the process, fall afoul of confirmation bias, sampling bias, various statistical errors, and good old-fashioned wishful thinking. Consequently, whenever I see a paper that goes with the grain of internet outrage activism, I apply a very high standard of evidence. It's too easy to believe something that tells people what they want to hear.
by gorgoiler on 4/14/20, 6:29 AM
The rules of the game are that:
(1) If you collude to keep prices up you go to jail.
(2) Citizens must be allowed to move about freely to find the cheapest TP.
(3) It’s also cheating if you own such massive amounts of the economy that what you lose in TP profits you gouge back in cell phone bills.
(4) A basic standard of living has to be upheld by society to stop the TP manufacturers from only hiring 20 somethings, and contriving a social world that venerates business, hustle and money above all else such that their workers have to live with housemates well into their 30s in tiny apartments without gardens which cost them 65% of their salary in rent to landlords whose debt is owned by the TP companies financing subsidiary ok I need a cup of tea and a back rub now.
by treyfitty on 4/14/20, 2:33 PM
It's the same underlying phenomenon of supply and demand, except this time regular people are using it to their advantage rather than hospitals.
by aww_dang on 4/14/20, 1:56 PM
Reading through the comments here, all of the objections to 'price gouging' have been addressed in those articles. I have a hard time squaring HN's mission statement of 'promoting intellectual curiosity' with this contradiction.
by neonate on 4/14/20, 2:31 AM
by 1996 on 4/14/20, 10:34 AM
We certainly don't have empty shelves reminiscent of USSR.
Joke aside, the only things anti price gouging laws have protected are feelings: the feeling that governments control work, and the overall feeling of moral superiority people like to have.
Personally, I'm frightened by the next wave of "feels good" legislation that will ride on that, blind to the real world consequences of destroying free market, in the worst times since 1929
by bo1024 on 4/14/20, 3:09 AM
I'd strongly agree that it's economically harmful for people to collect rents without providing any new value, by accident of being in the right place.
Problematic, but murkier, is the case where someone happens to own a mask factory and was previously happy to sell at $0.1, sees that supply is down and demand up, and raises prices to $1. The factory owner is capturing a lot of the surplus, and one could argue this is basically a rent for being in the right business at the right time rather than any sort of economic incentive to act efficiently. But a capitalist would argue this is reaping the rewards of foresight to invest in mask factories, and the chance of this event helped price and incentivize that investment in the first place. Anyway, on the other side of the market, it's not clear that high prices are helping allocate efficiently if places that need supplies most do not necessarily have the most money available to bid high.
The article does get into some arguments about the most interesting case, where actual changes to production and distribution happen because of the crisis and prices' roles in mediating these changes. I like some of what the article says here, but it more argues that the current system is a problem than price-caps are a good solution -- and they have to be combined with other more draconian measures like seizing and redirecting supplies. Maybe a better solution is the government subsidizing all supply purchases massively, and letting prices go wild. (This wouldn't work in isolation either though, we still need some method for mediating between places who gets what.)
by xapata on 4/14/20, 3:47 AM
When competition exists, the prices will fall to appropriate levels to correctly distribute the emergency goods.
by dpc_pw on 4/14/20, 4:30 PM
People that rush buy this stuff to make a profit, are actually helpful in promptly preserving the limited supply from running out.
by brodouevencode on 4/14/20, 12:52 PM
Click link. Hit paywall. In other words "someone might be ripping you off but unless you pay us we're not going to tell you how". And yes, forced sign ups are a type of paywall.
by lazylizard on 4/14/20, 6:28 AM
And then how to decide how to allocate the product in question. Lottery? First come first serve? My friends and family first?
Why not make everything free and distrbute fairly?
by hartator on 4/14/20, 2:58 AM
by aaron695 on 4/14/20, 2:52 AM
And we have a Texas factory saying if the government will just pay for a long contract they will ramp up supply.
https://www.washingtonpost.com/business/2020/02/15/coronavir...
So this is not about disaster profiteers.
This is about total and utter incompetence of hospitals planning ahead.
Which happens every day, just it's happening to a lot of people at once compared to your grandmother who died last year of a preventable issue because the bureaucrats in the hospital didn't care and doctors are to specialised to know about the world around them.