Economists who defend disaster profiteers are wrong • Hacker News Board

Re: Economists who defend disaster profiteers are wrong

#171

Post by closeparen » Tue, Apr 14, 2020, 6:54 AM UTC

Der_Einzige wrote: post #150

closeparen wrote: post #68

Earlier quoted context omitted.

Suppose a farmer or a developer relinquishes his handsome profits by switching to less efficient techniques. Or the price of one of his inputs sharply rises, and he doesn't have the market power to pass it on. Now he only makes a narrow living. Has the world become a better place?

Yes, because the marginal utility gained by the people who don't have to pay extra for products during a crisis is significantly more than the marginal utility lost by a (comparatively wealthy) farmer or developer. Remember that most farming done today is factory farming by big shots. Same with property or business development.

>don't have to pay extra

I think we agree that consumer prices are important. The point of this example is to compare two situations where the prices to the consumer are the same, and only the profit differs, to tease out whether profit really matters.

Re: Economists who defend disaster profiteers are wrong

#172

Post by redis_mlc » Tue, Apr 14, 2020, 6:55 AM UTC

nostromo wrote: post #151

wpietri wrote: 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…

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.

> markets have done a better job of feeding people than any centralized planning system has.

I wish HN would take their ECON101 lesson and shove it.

All functioning governments susbsidize local farmers.

The US pays farmers to produce milk and corn, amongst other things. The extra milk is often stockpiled as 5 pound cheese bricks. I've seen them.

There is no "free markets with only comparative advantage" for food.

How's the free market in ventilators and PPE working out for you? Hope you don't queue behind the wrong person at the grocery store.

Re: Economists who defend disaster profiteers are wrong

#173

Post by CryptoPunk » Tue, Apr 14, 2020, 6:57 AM UTC

dahart wrote: post #92

xapata wrote: post #82

Monopoly pricing causes a lower supply quantity than competitive pricing. The issue is the monopoly, not the price. The government should address the underlying issue: Why does someone have a de-facto monopoly in some markets? When competition exists, the prices will fall to appropriate levels to correctly distribute the emergency goods.

> Why does someone have a de-facto monopoly in some markets? In this case, and in the case of any disaster, that question has an answer, and there’s no problem that a government or anyone can solve. People who happened to make masks and sanitizers, or happened have them in stock, by luck, suddenly became de-facto monopolies. And it will just as suddenly go away. > When competition exists, the prices will fall to appr…

What the free market does is incentivize the correct degree of stockpiling behaviour, by maximizing profits for those who stockpiled a correct amount of the correct goods. Sufficient stockpiles equates to sufficient supply during emergencies, which is exactly what society needs.

When prices for goods during a crisis are astronomical, that indicates that the market did not work effectively in producing stockpiles, either because there was a general lack of awareness that a particular good could see a spike in demand, or because anti-price-gouging laws prevented profit-motivated individuals from acting on their awareness.

A lack of laws against price-gouging incentivizes the behaviour of identifying potential future demand spikes, and acting on that information, both of which are socially beneficial.

Re: Economists who defend disaster profiteers are wrong

#174

Post by mieses » Tue, Apr 14, 2020, 7:02 AM UTC

aaron695 wrote: post #12

This article is garbage, we had hospitals wasting supplies at the start because they assumed their price fixed PPE supply would last forever. Now they use plastic bags. 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 in…

your comment will get downvoted but this article will never get flagged.

Re: Economists who defend disaster profiteers are wrong

#175

Post by h0l0cube » Tue, Apr 14, 2020, 7:05 AM UTC

logicchains wrote: post #119

pm wrote: post #108

Earlier quoted context omitted.

Agreed, what harm does a minimum wage cause? We have a reasonable minimum wage in Australia (though I don't think it's been adjusted for inflation for a while) and it facilitates time for education, which in turn facilitates social mobility. On the other hand, you can have no minimum wage, and end up with a class of working poor who have no time to educate themselves, thus condemning them to a life of constant work w…

Australia has relatively high youth unemployement, a predicted effect of a high minimum wage: https://www.statista.com/statistics/811644/youth-unemploymen... . Having difficulty finding work after graduating high school or university is a common complaint among Australian youth, in my experience. The hardest part is getting the first job, getting the foot in the door, and this is because a minimum wage prevents many…

> Imagine for instance the stereotypical Frankston junkie.

I'd like to see data comparing minimum wage to drug abuse, but there's a few problems with trying to make that correlation. E.g., social welfare measures would largely factor in here, but I imagine that both minimum wage and welfare measures typically go hand in hand. But by naive comparison, just this wiki article seems to show that opiates abuse is about 5 times greater in the US vs Australia.

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

Re: Economists who defend disaster profiteers are wrong

#176

Post by dehrmann » Tue, Apr 14, 2020, 7:06 AM UTC

perl4ever wrote: post #16

alexmingoia wrote: post #4

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:/…

> I was able to get kleenex and paper towels saturday because the grocery store is now limiting people to one purchase per day.

Maybe, but depending on where you are, you might be 3 weeks into this and demand is subsiding.

Re: Economists who defend disaster profiteers are wrong

#177

Post by dehrmann » Tue, Apr 14, 2020, 7:10 AM UTC

barry-cotter wrote: post #114

h0l0cube wrote: post #91

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?

People whose labor is worth less than the minimum wage become unemployable. Being unemployed means you can’t acquire skills or experience and is bad for your mental health and social attachment. If you want to look at the literature you can start with Card and Krueger, which shows minimal effects for a small minimum wage discontinuity, I believe on the NJ/NY border. The Seattle minimum wage study showed a reduction i…

> People whose labor is worth less than the minimum wage become unemployable

Or you get into the awkward situation the US is in with immigrants working farming, janitorial, etc. jobs off the books with no protections.

Re: Economists who defend disaster profiteers are wrong

#178

Post by pfranz » Tue, Apr 14, 2020, 7:12 AM UTC

logicchains wrote: post #136

pfranz wrote: post #130

Earlier quoted context omitted.

> Having difficulty finding work after graduating high school or university is a common complaint among Australian youth, in my experience. Those numbers don't look all that different from the US. Are people pursuing minimum wage jobs after graduating high school or university? Even high school graduates with no intention of pursuing higher schooling seem to pursue a vocation at something higher than minimum wage.

Before corona, it was around 12-13% in Australia compared to 8-9% in the US, 3-4% is a non-trivial difference. In rural areas it's worse ( https://www.abc.net.au/triplej/programs/hack/youth-unemploym... ), which is expected as even if minimum wage is set "properly" for the cities, where most people live, it may be relatively too high for rural areas where cost of living and wages are lower. >Are people pursuing minim…

> Before corona, it was around 12-13% in Australia compared to 8-9% in the US, 3-4% is a non-trivial difference.

I was looking over the past 10-20 years (I have no idea how long Australia has had a high minimum wage...I figured that wasn't a recent development). Around 2008 the discrepancy had the US 10% higher.

> Not everybody is able to find a higher-paying job, that's why we still see people at age thirty working in checkouts or McDonalds.

I agree. What I had (incorrectly) drawn from your statement was graduating implied they were pursuing a field--not the average person. I just saw that the US has 44% working low-wage jobs.

Re: Economists who defend disaster profiteers are wrong

#179

Post by roenxi » Tue, Apr 14, 2020, 7:13 AM UTC

wpietri wrote: post #45

alexmingoia wrote: post #4

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…

Mr. Mouse has a good take on this but there is a second perspective that is worth considering:

If we set up a dog-eat-dog world where only money matters, why would a billionaire hoard unneeded masks? They know that they can just buy what they need when the need it. The only people with incentive to hoard are poor and vulnerable people because they know they won't be able to afford masks when they run out. Entrepreneurial types looking for arbitrage will probably cause weird things to happen in the short term, but after a month or two things will rebound sharply to whatever the new normal is going to look like.

If this crisis has taught me anything, it was a mistake not to hoard. I assumed I would be able to buy what I needed at outrageous prices, instead I ran the risk of running out of toilet paper because prices stayed unreasonably low.

If bankrupting hoarders with high prices is going to be unacceptable, I'm going to become a hoarder out of necessity next time I see a crisis inbound. I'll stock up on much more toilet paper than I need because I can't predict when governments/major supermarkets/public at large will let me buy the stuff at market price; which is clearly a bit higher than what the supermarkets are charging.

Re: Economists who defend disaster profiteers are wrong

#180

Post by arcticbull » Tue, Apr 14, 2020, 7:13 AM UTC

AnthonyMouse wrote: post #81

arcticbull wrote: post #32

Earlier quoted context omitted.

Not to mention, charging hospitals at the front-line of saving us all exorbitant rates (just to stop masks from going to randos on the street who don't need them) is grotesque. You're gouging our first responders just so people who don't need masks don't get them? Are you kidding me? There must be a more effective answer in a pandemic. This has to be one of the most late-stage capitalist things I've heard all pandemi…

The point isn't for "first responders" to be paying for masks out of their own pockets, it's for the healthcare system (i.e. ultimately insurance companies) to pay higher prices so that more masks are made available to first responders, either by stimulating new production or reallocating existing masks. If you just start confiscating them then anyone who did something we very much would like them to have done right…

> The point isn't for "first responders" to be paying for masks out of their own pockets, it's for the healthcare system (i.e. ultimately insurance companies) to pay higher prices so that more masks are made available to first responders, either by stimulating new production or reallocating existing masks.

Yeah, that's grotesque. Everyone who works on the front lines of providing care to COVID patients is a first responder, and whether they or their employers pay, is irrelevant.

It is the moral imperative of leadership to do what it takes to resolve the situation now, and figure out the details later.

Not to mention, I've always said we need more expensive health insurance in America.

> If you just start confiscating them then anyone who did something we very much would like them to have done right now -- stockpiled a lot of such equipment to profit in just such an emergency, thereby causing such a stockpile to actually exist -- would see what you've done and choose not to do it anymore. And then next time the shortage is worse.

That's not true, the government can learn from this catastrophe and not disband the entire pandemic preparedness department a few months before a pandemic. It could therefore create a national stockpile of gear first responders might need in a pandemic, and fill it at contracted prices. As they have done with oil. And helium. And raisins.