$5000 per violation of price-gouging in CA • Hacker News Board

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

#181

Post by logicchains » Sat, Mar 14, 2020, 4:45 PM UTC

EdgarVerona wrote: post #174

logicchains wrote: post #168

Earlier quoted context omitted.

>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 pro…

> 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. So what you're saying is, they wouldn't have scaled production, so your entire proposition about why the price increase would be an effec…

>So what you're saying is, they wouldn't have scaled production, so your entire proposition about why the price increase would be an effective means to alleviate the problem was false.

Scaling production is not a binary yes/no thing; they wouldn't scale it so much that scaling back hurt them more than the profit they made from scaling gained them. Or to look at it another way, only the producers who could scale without "too much" cost would scale.

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

#182

Post by mattlutze » Sat, Mar 14, 2020, 4:46 PM UTC

syshum wrote: post #161

mattlutze wrote: post #141

Earlier quoted context omitted.

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, Ho…

Actually I took the gas price bit from specific experience and saw enough examples in a quiet Midwest area growing up to expect my experiences weren’t unique.

The other issue is people, like in the article, just buying up a bunch of stuff so that other people literally can only buy from the opportunist. Consider the battle for concert tickets, which the band might sell for $20 but a scalper would buy and try to resell for $100. Yes it’s technically possible, but it’s fine for a society to determine it’s better for everyone if you’re not allowed to take advantage of people’s needs or vulnerabilities like that (when it comes to health supplies, for example).

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

#183

Post by robomartin » Sat, Mar 14, 2020, 4:47 PM UTC

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 hope you are not proposing such a dystopian future.

I am not.

I don’t know how one might implement something like this or if it is even possible. Not an easy problem.

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

#184

Post by logicchains » Sat, Mar 14, 2020, 4:48 PM UTC

daveFNbuck wrote: post #143

rahimnathwani wrote: post #138

Earlier quoted context omitted.

"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." People hoarding aren't trying to create artificial scarcity. They are buying because they anticipate scarcity, and want to either (i) be prepared, or (ii) profit from resale. Hoarding has caused shortages which, in turn, justify the original hoarding. This…

Higher prices may encourage hoarding, as people might see the higher prices as a sign of scarcity and want to buy as much as possible before prices increase further or stores run out.

But they also decrease hoarding in that the higher the price, the fewer items people can afford to buy and hoard.

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

#185

Post by logicchains » Sat, Mar 14, 2020, 4:50 PM UTC

CaptArmchair wrote: post #153

whatshisface wrote: post #129

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." If the people want to hoard toilet paper, who are we to deny them?

"No, you can't have more pie. You have had enough already." Literally any exasperated parent who has to deal with little children having a tantrum because they can't get what they want. Yes, that sounds harsh, but it's exactly how this works. Your statement is simply saying that society - you, me and everyone - should obediently and without criticizing enable those who can't cater to their own emotional needs; those…

>Literally any exasperated parent who has to deal with little children having a tantrum because they can't get what they want.

>Yes, that sounds harsh, but it's exactly how this works. Your statement is simply saying that society - you, me and everyone - should obediently and without criticizing enable those who can't cater to their own emotional needs; those who don't know how to deal with their own drive towards self-gratification; those who haven't learned to not indulge in their own irrational fears.

So other people should do what you want, not what they want, because you know better than them? How would you feel if people compared you to "little children having a tantrum" just because your values differed from theirs?

>That's why your comment is not constructive nor even remotely funny.

Having so little respect for other human beings that you compare them to little children is not constructive foundation upon which to base policy making.

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

#186

Post by EdgarVerona » Sat, Mar 14, 2020, 4:51 PM UTC

smallnamespace wrote: post #123

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 price of an item is a very blunt instrument. It doesn't distinguish between producers and scalpers/hoarders. Both of those parties are equally incentivized to produce stock and sell it if the price goes up. From the point of view of a potential buyer, toilet paper straight from the factory, and toilet paper from the guy next door who bought some ahead of time are equally good. > This is a case of consumers attemp…

> To a very good approximation, the marginal impact of any hoarders on the scarcity of a product is zero. Hoarders are not trying to drive scarcity themselves, they are trying to buy a product now because they think the price will rise, but they're not trying to make the price rise by buying it. The distinction is important!

Are you sure? https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...

"Mr. Colvin said he had posted 300 bottles of hand sanitizer and immediately sold them all for between $8 and $70 each, multiples higher than what he had bought them for. To him, “it was crazy money.” To many others, it was profiteering from a pandemic."

> This completely ignores the fact that the cost to produce a product is not a fixed amount, but rather that higher prices induce producers to make more product sooner.

How will they make more product sooner? By expanding their businesses - making new factories, procuring new manufacturing machinery, hiring new workers? What happens when demand reduces, and they're back to not only having a normal amount of demand, but having that further reduced by the glut of supply - supply of a nonperishable good in particular?

We have certainly fallen back on rationing during times of emergency in our society - even here in America. If it comes to that, I know many people will find it distasteful, but your point of:

> The higher price means that those who demonstrate a higher desire for an item (by their willingness to pay) end up getting it.

Is unfortunately the truth (though it's interesting that you chose to phrase "ability to pay" as "willingness to pay" - that discounts the fact that many people have a high desire for these items, but could be forced to choose between them and other items needed for basic survival), and left unchecked it will result in a pretty quick reversal of the "rising tide lifts all boats" argument for Capitalism if this situation continues long enough. It'll be pretty hard to argue that the free markets help all Americans when only people who can afford to do so can wipe their ass, or have access to basic health necessities.

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

#187

Post by daenz » Sat, Mar 14, 2020, 4:52 PM UTC

EdgarVerona wrote: post #146

daenz wrote: post #131

Earlier quoted context omitted.

>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. You neglected to mention that demand is increased. If it wasn'…

You neglected to mention that when people see fake headlines about toilet paper scarcity, there's a nontrivial percentage of people who see that as an opportunity for said arbitrage. There's two kinds of hoarding happening here: fear-alleviating and profit-seeking, which allows the profit seeking form of acquisition to be possible. Several weeks ago, it wouldn't have been feasible for someone to scoop up the entire m…

>So is your solution "good on them, they're taking advantage of people's fears to help make the rumors true?"

My solution is we should do all that we can to decrease the latency that prices respond to supply and demand. It will help everyone.

>Just what price do you think toilet paper should be right now in stores?

That's not up to me to decide, because I don't presume to speak for the individual wants and needs for all participating suppliers and consumers, which is how a price is determined.

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

#188

Post by justinmeiners » Sat, Mar 14, 2020, 4:52 PM UTC

amiga_500 wrote: post #139

newbie578 wrote: post #97

Earlier quoted context omitted.

Absolutely, I cannot fathom how people are so anti-government that they cannot see the forest from the tree. These types of situations are textbook explanations for WAR PROFITEERING (except we are in a crisis instead of war).

It's because the default mindset is that everyone is horrible and motivated solely by profit.

That's a bit of and extreme characterization of "tend to look out for the well being of your family/people you care about"

So who's model accounts for hoarding behaviors like this?

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

#189

Post by forkexec » Sat, Mar 14, 2020, 4:52 PM UTC

EdgarVerona wrote: post #146

daenz wrote: post #131

Earlier quoted context omitted.

>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. You neglected to mention that demand is increased. If it wasn'…

You neglected to mention that when people see fake headlines about toilet paper scarcity, there's a nontrivial percentage of people who see that as an opportunity for said arbitrage. There's two kinds of hoarding happening here: fear-alleviating and profit-seeking, which allows the profit seeking form of acquisition to be possible. Several weeks ago, it wouldn't have been feasible for someone to scoop up the entire m…

The Lottery ticket folks who see this as their one miraculous "opportunity" to become "billionaires" based on toilet paper, hand sanitizer, Lysol and powdered milk hoarding and selling individually on eBay at 10000% of retail.

All stores had to do was limit quantities, but they didn't.

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

#190

Post by zozbot234 » Sat, Mar 14, 2020, 4:53 PM UTC

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…

> "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper.

Stock it somewhere, and release it gradually over the following months, perhaps at a loss. Some hoarders will actually stock it as a reserve for the next emergency and brief price spike, which is socially beneficial behavior. Think of it as a kind of insurance.

This would be more of a problem if we were talking about perishable products, but we're not. Toilet paper and personal protective equipment (masks) are not perishable. Canned food and lysol are only mildly perishable.