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Economists who defend disaster profiteers are wrong

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Re: Economists who defend disaster profiteers are wrong

#151
post #45

Increased production doesn’t occur because the economics don’t work, it doesn’t occur because there’s just no way to physically ramp up production that fast. That’s not really a critique of the economics. If production could be increased that fast the manufacturers would. 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 m…

> An important point the article didn’t address is that high prices direct resources to more important uses. Neither do high prices. Those direct them to people with more money to spend. Confusing "richer" with "more important" is always a bad idea, but especially so with goods like medical supplies. A billionaire who wants to stockpile a million masks just in case definitely not "more important" than a million poor…

Isn't your comment a critique of all free markets?

Food is largely a free market in the US. A billionaire could buy a billion dollars worth of beef tomorrow. But they don't, because why would they?

And in fact, markets have done a better job of feeding people than any centralized planning system has. I don't see why masks would be any different.

Re: Economists who defend disaster profiteers are wrong

#152

Increased production doesn’t occur because the economics don’t work, it doesn’t occur because there’s just no way to physically ramp up production that fast. That’s not really a critique of the economics. If production could be increased that fast the manufacturers would. 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 m…

> high prices direct resources to more important uses I don't think that that is always true. High prices will redirect scarce resources to those who have the means and desire to pay for them. That doesn't necessarily mean that those uses are more important, regardless of how one defines what it means for the resource usage to be important.

It doesn't map to desire perfectly, but it does generally.

If anyone truly needs a mask, (e.g. a delivery driver delivering packages to customers, a doctor, a nurse), that represents an economic need for whatever service they provide.

Their employer will be able to charge a high price for their service, and afford to pay a high price for PPE for them.

Even when the mapping is imperfect, the fact that the rich guy was able to afford a mask while others weren't does some social good: it increases the reward for being wealthy, which promotes more productive behaviour from society at large.

Re: Economists who defend disaster profiteers are wrong

#153

Earlier quoted context omitted.

And a lot of people would just have to go without, As opposed to everyone getting a little with price controlled rationing.

I think this is the biggest flaw in your argument. If toilet paper was $20/roll, that wouldn't deter someone who has none in the slightest bit. They'd buy one roll and pay $20 in a second. But that guy who was trying to buy a thousand? He's thinking twice.

"But that guy who was trying to buy a thousand? He's thinking twice."

Why wouldn't he just borrow the money to pay for it, hoard the supply and then flip it back onto the market when the price hits $40?

You're assuming a finite amount of money, but the monetary system is necessarily elastic.

Then the hoard, because it has gone up in value, becomes collateral for more loans.

Whereas rationing necessarily solves the distributional conflict instantly.

Price auctions only work when the demand is optional and the supply is elastic.

Re: Economists who defend disaster profiteers are wrong

#154

Earlier quoted context omitted.

The argument you're making requires that you are making a significant personal investment in yourself at that $4 an hour job, which I have yet to find such an example of. I'd be happy to hear about some. Internships for lucrative fields where knowledge experience/investment pay off have no issues existing in economies with minimum wages as very clearly demonstrated by the fields of software engineering, businesses, a…

How would you expect to you hear of some when they're prohibited by law? Try it like this. Federal minimum wage comes out to around $15,000/year. This is in the same ballpark as college tuition -- which is generally regarded as costing a lot of money. If you go to an institution where you're a novice and it takes half your hours to learn the trade and the other half is productive but effectively unskilled work for th…

> Try it like this. Federal minimum wage comes out to around $15,000/year. This is in the same ballpark as college tuition -- which is generally regarded as costing a lot of money. If you go to an institution where you're a novice and it takes half your hours to learn the trade and the other half is productive work for the employer, you would expect these two to net to approximately zero, right? So why is it at all unexpected that it would frequently net to a number which is slightly positive but less than minimum wage?

Again, you are missing the point. Either that job is an internship (non-permanent and I already addressed it) or you will quickly become a fully productive worker (this is literally just training/ramp up and is not a significant cost to employers). These are not the jobs/pay structures minimum wage laws are affecting nor are people discussing, this is just a straw man.

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> How would you expect to you hear of some when they're prohibited by law?

Legality does not define what concepts exist in the world, so let's hear them! You have yet to even mention a single example.

Companies can and do regularly lobby for laws. They don't appear to be using this line of reasoning because if large minimum wage employers like McDonalds or Walmart tried this they would be laughed at even in political spheres.

> Probably the large majority of them

I suspect we're gonna have to agree to disagree here on what's going to happen without a minimum wage.

> because otherwise why would anybody take those jobs?

People take badly paying jobs because if you're faced with bad and really bad, you'll take bad. Companies are free to exploit this without minimum wage laws in place. This type of exploitation only works in a buyers (if we put employees here as "buyers" of jobs) market, and immediately pushes wages significantly lower in a sellers market, which we have seen for quite a good deal of the past few decades. We can't have economics that are only moral when things are going well.

> Taking those options away makes peoples lives worse, not better.

The flaw here is that you're looking at only one side of the equation. You are improving the lives of every job that has a raised salary as a result. Now the calculus on how many jobs that removes vs raises, what kind, and where is a valid debate, but again, this tradeoff is a moral one. Economists are doing studies to get numbers so that then we as a society can make the moral decision on the tradeoff. That moral question however is not one that economists can answer. They can only study and communicate the effects.

> And it's why most of the jobs that would pay less than minimum wage are ones that offer the workers something else in its place -- education, more flexible hours, a shorter commute etc. Taking those options away makes peoples lives worse, not better.

Big citation needed here.

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I'm not looking to get into the weeds here frankly, that is not the point of my original comment. There are many studies on both sides of the minimum wage debate, and that's just going to turn into a linking war between people who are not economists and are also not likely to change their minds on the internet. I have my beliefs based on the data I have seen but again, this doesn't seem fruitful to go down this route.

The point I am making here which none of your points address is that minimum wage legislation is very much tied to moral considerations, and economics aids in giving numbers for those. At the end of the day, the viability rests on morality as interpreted based on data produced by economics.

Re: Economists who defend disaster profiteers are wrong

#155

Increased production doesn’t occur because the economics don’t work, it doesn’t occur because there’s just no way to physically ramp up production that fast. That’s not really a critique of the economics. If production could be increased that fast the manufacturers would. 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 m…

I was able to get kleenex and paper towels saturday because the grocery store is now limiting people to one purchase per day. I am sure there are people who need more than that, and any system of rationing should allow for exceptions. But when people insist that a "free" market is inherently correct, it's no different from insisting that your OS scheduler is perfect even though some processes never get to run https:/…

Per store limits prevent arrangements like one person purchasing supplies for large numbers of people.

Re: Economists who defend disaster profiteers are wrong

#156
post #89

Earlier quoted context omitted.

If they had allowed dynamic pricing then people who needed more would probably be willing to pay $10/roll of paper towels Vs the fixed $2/roll. They aren’t necessary for life, so setting fixed prices are why they need hard limits. Seems crazy to me we aren’t seeing a “free market” at play, where both inherently the stores “win” and the people receive the goods they need / can justify.

We will all suffer if masks and basic hygiene products aren't allocated well. There is not enough time to solve the coordination problem (or, more accurately, we solved it in advance). The government elected by most market participants steps in (or threatens to step in) to help maintain order. This seems like a less crazy idea than seeing how many nurses will pay $500 for a mask.

Market participants are unable to deliberate on every policy position of every candidate that they have to choose from in elections.

Elections as currently administered are highly limited in their ability to produce good collective judgments, so the fact that politicians support sonething is no indication that it's socially beneficial. If the democratic process produced socially optimal governance decisions, no democracy on Earth would institute rent control for example, and we see the opposite in practice.

And yes, if the shortage for masks is so severe, that they would fetch $500 in a free market, we need prices to spike that high, to spur massive rapid restructuring of the economy to ramp production of masks and alleviate that shortage.

Capping the price doesn't solve the fundamental problem, which is the shortage. It interferes with the process of solving the shortage.

Re: Economists who defend disaster profiteers are wrong

#157

Earlier quoted context omitted.

> high prices direct resources to more important uses I don't think that that is always true. High prices will redirect scarce resources to those who have the means and desire to pay for them. That doesn't necessarily mean that those uses are more important, regardless of how one defines what it means for the resource usage to be important.

It doesn't map to desire perfectly, but it does generally. If anyone truly needs a mask, (e.g. a delivery driver delivering packages to customers, a doctor, a nurse), that represents an economic need for whatever service they provide. Their employer will be able to charge a high price for their service, and afford to pay a high price for PPE for them. Even when the mapping is imperfect, the fact that the rich guy was…

The issue about how much the rewards for being wealthy promote productive behavior reminds me of the remark by David D. Friedman that

> My imaginary capitalist has capital because he worked hard clearing part of the boundless forest while his employee to be was being lazy and living on what he could gather--so it is entirely just that the capitalist gets part of the output of his land and his employee's labor. But the leftist doesn't like that hypothetical. His imaginary capitalist inherited his capital from a father who stole it. I don't like that hypothetical.

http://www.daviddfriedman.com/Libertarian/My_Posts/My_View_o...

I often suspect Friedman is right that a lot of normative disagreements boil down to different intuitions about what people typically do to become wealthier.

Re: Economists who defend disaster profiteers are wrong

#158
post #34
post #15

It's very interesting to me that (nearly) everyone agrees that reselling disaster supplies like masks, hand sanitizer, etc. for a large profit is terrible, but somehow selling literal essentials like food, housing, and healthcare for profit is just fine.

The difference, generally, is who the gains go to. Societally, we want there to be an incentive and reward to those who will produce the things we need so that they get produced. Giving gains to hoarders who artificially lower supplies and then resell when disasters spike demand does nothing beneficial for society. It's rent seeking at its worst. As an expansion on this, the thing you should _really_ be upset with is…

I think you are missing the point about housing. Quite the opposite if I understand what you are suggesting. The main problem is that somebody who doesn't own your land can say what you can build or cannot. That's why developers cannot build housing. From that perspective, best incentive would be to leave the housing development for markets instead of politicians. Now politicians with town's majority favor can decide who benefits making it non-fair for the minority of voters.

About Tokyo housing development deregulation and its impacts [0]

[0] - https://www.wsj.com/articles/what-housing-crisis-in-japan-ho...

Re: Economists who defend disaster profiteers are wrong

#159

Earlier quoted context omitted.

> And many modern economists endorse a minimum wage, as eugenicists did then, but with even less regard for the harm it causes. What are the harms of a minimum wage? Do you have any empirical sources to back that up?

This line of online questioning is the lazy dismissal of the 21st century. This comment has a positive score and even a child that agrees with it and yet it's akin to asking any theorist "do you have sources for that?" in response to them saying something wildly uncontroversial within their domain. It adds nothing to the discussion and only shows that the respondent is so wildly out of touch with the relevant mainstr…

> Hacker News supposedly has a rule against shallow comments and yet for some reason knee jerk requests for sources with no additional substance to drive the dialogue forward are considered 'reasonable'.

There's also a rule that you are aware of, having read the rules, about not creating throwaway accounts routinely. Though to be fair to you, it doesn't specifically say don't create a throwaway because you don't want to abuse other posters under your regular account.

That seems like a strange thing to do, though, when your side of the argument is "wildly uncontroversial".

Re: Economists who defend disaster profiteers are wrong

#160
post #45

Earlier quoted context omitted.

> An important point the article didn’t address is that high prices direct resources to more important uses. Neither do high prices. Those direct them to people with more money to spend. Confusing "richer" with "more important" is always a bad idea, but especially so with goods like medical supplies. A billionaire who wants to stockpile a million masks just in case definitely not "more important" than a million poor…

> A billionaire who wants to stockpile a million masks just in case definitely not "more important" than a million poor people getting 1 mask each. Real people don't behave like this. A billionaire can't make personal use of a million masks and there is no point in stockpiling them during a crisis just in case there is some future crisis. They're not going to be worth more a year from now than they are today because…

My hyperbole aside, real people do behave like this. Look at the guys buying up all the hand sanitizer. Look at all the hoarding and panic buying that went on. It's 18 months or so before we get a vaccine. There's plenty of incentive to hoard PPE.

And even taking your clinic example, you see the same issues there. If rich clinics outbid poor clinics for a limited supply, we'll see rich places stocking up and poor places going without.

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