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$5000 per violation of price-gouging in CA

caloes.ca.gov

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Re: $5000 per violation of price-gouging in CA

#161

Post by syshum »

mattlutze wrote: post #141
geofft wrote: post #37

Earlier quoted context omitted.

Isn't price-gouging usually (and definitely in this context) about someone who bought an item at a standard wholesale price and is reselling it at a markup? That's not about the reward for producing it, that's about the reward for being in the right place at the right time. You can still try to argue that it's economically reasonable to reward people for being in the right place at the right time (to incentivize peop…

Price gouging is the supply side artificially raising prices significantly above normal to take advantage of a temporary imbalance in the anxiety vs actual threat being experienced by the demand side. The day congress declares war on Iran, if you significantly raise fuel prices at your gas station but the wholesale supply hasn't changed, you're generally trying to take advantage of the consumer's fear. We're for some…

While that is in fact the stated reason for the law against price gouging, that rarely happens in the real world

What does end up happening is something (like a outbreak or natural disaster) causes a regional shortage of a good, which is often extended because there is no real incentive to divert goods to fill the shortage.

Today that if often mitigated because of large national companies like CVS, Walmart, Lowes, Home Dept, etc who will move their supplies around based on normal prices

But in some situations Mr. Bill that owns the local store may have an excess supply of Good X, and would be incentivized to move them to an area of shortage if the price was higher. With Price gouging laws he will not bother.

Further Increasing in prices also in some ways allows for people with the greatest NEED for the items to actually get them, and discouraging hoarding.

Re: $5000 per violation of price-gouging in CA

#163

Post by EdgarVerona »

yjftsjthsd-h wrote: post #154
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

> The fuck are we going to do with that much toilet paper. It's not like it goes bad (on a meaningful timescale); it'll get used eventually.

But if we created it at the dramatically and artificially increased demand that it has right now, it would be disastrous for that industry once this panic subsides. Imagine the increase in infrastructure these companies would have to build to keep up with this fake supply. The workers, the real estate, the building of supply chains and machinery. Now imagine what happens to that industry when suddenly the market's demand tanks back to a reasonable level, and there's suddenly not only far more capacity for production that is now unprofitable, there's a huge backlog of supply already in the hands of consumers.

This situation is just as bad for the manufacturer as it is for the consumer.

Re: $5000 per violation of price-gouging in CA

#164

Post by geofft »

logicchains wrote: post #125
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

>We would be doing our entire society a severe disservice if our solution to this problem is simply "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper. If people want that much toilet paper, the only solution that's going to satisfy them is producing all the toilet paper they want. Society is just an aggregate of people, and if enough of them want for wha…

You could, alternatively, convince them that they don't want that much toilet paper. For instance, convince them that stores will not run out of stock and that they will be able to go to stores. This is the normal state of the toilet paper market. The problem here is not that we've suddenly been possessed by demons who want infinite toilet paper, the problem is that people are making rational decisions based on actual facts on the ground changing. Some of those rational decisions are "I'm worried I won't be able to get what I need because I hear that stores are running out." Other rational decisions are "I think I can make a profit on this because of upcoming scarcity." ("Rational" is not a value judgment.) If you can prevent people from believing those "because" clauses, they'll stop demanding it.

Also, price-gouging laws do not "stop the market from giving them what they want." If anything, price gouging does - if someone who has $100 in savings wants a year's worth of toilet paper, they're less able to successfully get it if the market can run unchecked. It's true that an unregulated free market is good at getting products sold at the best price for the sellers - that's very different from giving people what they want.

Re: $5000 per violation of price-gouging in CA

#165

Post by CaptArmchair »

syshum wrote: post #145
robomartin wrote: post #134

Earlier quoted context omitted.

I agree with the points you are making. I will add that hoarding does increase the cost of producing goods. If the toilet paper manufacturer needs to produce at 10x normal capacity because people are filling their car with the stuff, they will need to increase staff, work more shifts and maybe even buy/rent/build more production equipment. Does this double, triple or quadruple costs? Likely not. Yet costs do increase…

>Perhaps the law we need is one to control hoarding behavior or the rate of change. Aside from an authoritarian system of governance where all purchases are tracked, and one must only purchase their "allotted" amount of goods, how exactly would one control hoarding? i hope you are not proposing such a dystopian future.

I suggest you google "rationing" because that's exactly what happened in during World War II.

https://en.wikipedia.org/wiki/Rationing_in_the_United_Kingdo...

Not just in the U.K., rationing was also introduced in the United States during wartime:

https://en.wikipedia.org/wiki/Rationing_in_the_United_States

Re: $5000 per violation of price-gouging in CA

#166

Post by jayd16 »

daenz wrote: post #111
ardit33 wrote: post #33

Earlier quoted context omitted.

Because a lot of the short term price gouging is artificial/predatory: "Vancouver couple exploits pandemic by hoarding Lysol wipes and charging double to resell them." https://www.thestar.com/news/canada/2020/03/12/were-hustlers... They are not raising prices to produce more, but just hoarding and then reselling it at higher prices. "Price Gouger Unable to Sell 17,700 Bottles of Hand Sanitizer after Amazon Crackdown"…

I would argue that the supply/demand pricing isn't responding fast enough to the hoarders. If the price was fully elastic, as people began to hoard lysol wipes, prices would rise on the hoarders and make it much less profitable for them. But prices aren't rising correctly, much like an artificial price ceiling would do, making it possible and profitable for hoarders to create a shortage.

>I would argue that the supply/demand pricing isn't responding fast enough

Yes, that's a failing of the real free market we live. It already failed so I don't see why suggesting the status quo is useful. In the real world we're not all omniscient, rational actors. Protections like this are useful in the short term.

Re: $5000 per violation of price-gouging in CA

#167

Post by seibelj »

geofft wrote: post #130
seibelj wrote: post #108

Earlier quoted context omitted.

You are on another planet. The USSR collapsed, east Germany collapsed, Cuba is a joke, China is capitalist, you are living in fairy land. The government may support a lot of research but the government’s tax base derives from entrepreneurs who create a healthy free market. No socialist utopia exists and you live in a good society because of economic freedom. None of this is news to most people, and me telling you thi…

> The government may support a lot of research but the government’s tax base derives from entrepreneurs who create a healthy free market. Wouldn't the free market be healthier if the government stopped taxing those entrepreneurs so much?

That’s a debatable point but the fundamental economic structure of society is sound. Free market capitalism won, wins, and will continue to win.

But like I said - Venezuela and Cuba are hurting a lot. They need good comrades to help them. Please emigrate there and help fix their societies by donating your labor and knowledge. I just don’t understand why more people don’t move there to help! You seem like an ideological comrade that could help them, please go there quickly.

Re: $5000 per violation of price-gouging in CA

#168

Post by logicchains »

EdgarVerona wrote: post #149
logicchains wrote: post #125

Earlier quoted context omitted.

>We would be doing our entire society a severe disservice if our solution to this problem is simply "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper. If people want that much toilet paper, the only solution that's going to satisfy them is producing all the toilet paper they want. Society is just an aggregate of people, and if enough of them want for wha…

Really? Regardless of the consequences? What becomes of that toilet paper when this fear has subsided? What becomes of the companies that had to scale production, create new factories, hire new workers etc... when the existing glut of supply is not only so much that those new facilities are hurting them, but also that it has decreased the demand for their product even with normal production capabilities?

>What becomes of that toilet paper when this fear has subsided?

It doesn't expire? People just use it up, and don't buy more until they've used all their store.

>What becomes of the companies that had to scale production, create new factories, hire new workers etc... when the existing glut of supply is not only so much that those new facilities are hurting them, but also that it has decreased the demand for their product even with normal production capabilities?

They only would have made the decision to scale production if they estimated the profit from filling this short-term demand would make up for the cost of having to eventually scale back the temporary investment. It's not exactly hard to predict that the demand won't last forever.

Ultimately the amount of toilet paper bought/consumed isn't going to change significantly, just the purchase dates will cluster together.

Re: $5000 per violation of price-gouging in CA

#169

Post by yjftsjthsd-h »

robomartin wrote: post #134
EdgarVerona wrote: post #95

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to pro…

I agree with the points you are making. I will add that hoarding does increase the cost of producing goods. If the toilet paper manufacturer needs to produce at 10x normal capacity because people are filling their car with the stuff, they will need to increase staff, work more shifts and maybe even buy/rent/build more production equipment. Does this double, triple or quadruple costs? Likely not. Yet costs do increase…

> Perhaps the law we need is one to control hoarding behavior or the rate of change.

You know what would control hoarding? Higher prices.

Re: $5000 per violation of price-gouging in CA

#170

Post by geofft »

rahimnathwani wrote: post #160
geofft wrote: post #147

Earlier quoted context omitted.

> The higher price means that those who demonstrate a higher desire for an item (by their willingness to pay) end up getting it. The hoarding profits are a charge to the rest of society for a more efficient distribution of the item compared to 0. > What bothers people here primarily is that hoarders made money while everyone else is suffering. No, what bothers me is the assumption that "higher desire" means "more wil…

"use the government's influence to artificially prevent the price of the product from rising" How would that work? If Dollar Tree were fully stocked with hand sanitizer, I would go there right now and buy 10 bottles. But so would 99 other people. So we 100 would get all the 1000 bottles, and everyone else would be SOL.

Why would you buy 10 bottles? What are you going to do with them?

Are you afraid they're going to run out? Why? (Put another way, why aren't you buying 10 bottles of drain cleaner right now?)

One of my local pharmacies had hand sanitizer in stock for $3 and no obvious limit on purchases. I bought one, because I needed one, and I expected that (because my locality had announced anti-price-gouging laws) I could go back and buy another one if I needed it. But it kind of lasts for a long while.

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