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Economists who defend disaster profiteers are wrong

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Re: Economists who defend disaster profiteers are wrong

#181

Post by bb88 »

neilwilson wrote: post #153
AnthonyMouse wrote: post #118

Earlier quoted context omitted.

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 di…

> 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?

Interesting data point: about three weeks ago a guy was selling single rolls for $5 a piece outside our development. He put his kids in gas masks and had them prance around with a big sign. I'm sure he wasn't doing it for the kindness of his heart.

Re: Economists who defend disaster profiteers are wrong

#182

Post by dehrmann »

outlace wrote: post #79
patmcc wrote: 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.

I don't think the price is the problem. I couldn't get toilet paper for a week, not because some enterprising con-man had purchased it all and was selling it for 10x as much outside my door, but because ordinary folk at the tail of the distribution bought it all at its normal (low) price and we temporarily ran out of supply. What we needed was immediate rationing policies, the price was never the problem. Stores even…

Toilet paper is interesting because the home and commercial markets are separate, so while overall demand remained similar, demand for the home product massively exceeded supply.

Re: Economists who defend disaster profiteers are wrong

#183

Post by qeternity »

mywittyname wrote: post #83
quotemstr wrote: post #63

Earlier quoted context omitted.

Re #1: yes it does. For example, during Katrina, high prices encouraged people to drive long distances to bring supplies from other states. Re #2: low prices, not high prices, encourage hoarding. Why not buy 20 multi-packs of toilet paper if it's cheap? If toilet paper is expensive, you buy what you need. The alternative to price gouging isn't everyone getting what he needs: that's a fantasy. The actual alternative i…

1) people were also shipping water and other supplies to Katrina for free . I literally spent hours during the aftermath of Katrina filling aid packages for people affected by the storm. These aid packages were not sold, they were given away to people who had lost everything. These supplies are already being produced as fast as possible. Even people with 3d printers are making these masks to give away #2) bubbles for…

Nice red herring at the end there. Nobody is arguing whether or not price gouging is illegal in many or most jurisdictions. That’s a matter of fact. There are no proven economic issues with price gouging, just moral ones.

Re: Economists who defend disaster profiteers are wrong

#184

Post by dehrmann »

mywittyname wrote: post #83
quotemstr wrote: post #63

Earlier quoted context omitted.

Re #1: yes it does. For example, during Katrina, high prices encouraged people to drive long distances to bring supplies from other states. Re #2: low prices, not high prices, encourage hoarding. Why not buy 20 multi-packs of toilet paper if it's cheap? If toilet paper is expensive, you buy what you need. The alternative to price gouging isn't everyone getting what he needs: that's a fantasy. The actual alternative i…

1) people were also shipping water and other supplies to Katrina for free . I literally spent hours during the aftermath of Katrina filling aid packages for people affected by the storm. These aid packages were not sold, they were given away to people who had lost everything. These supplies are already being produced as fast as possible. Even people with 3d printers are making these masks to give away #2) bubbles for…

> If the state has a responsibility to maintain order, then they have a responsibility to combat price gouging, because failing to do so is a failure to maintain order.

Expensive goods or shortages: pick one, but neither "maintains order."

Re: Economists who defend disaster profiteers are wrong

#185

Post by dimva »

AnthonyMouse wrote: post #103
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…

> 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…

As is often the case, the problem is millions of millionaires instead of a handful of billionaires.

There are 18.6 million millionaires in the US. If each of them bought 10 n95 masks just in case, or for themselves + family + friends, that's 186 million masks. They could easily pay $20 / mask (that's only $200 per millionaire), which would significantly push up the cost to hospitals of acquiring masks.

Hospitals might not even be able to afford the masks they need. They are having budget shortfalls due to the ban on elective surgery. Cuomo was complaining about paying $7/mask, and NY state is going to have budget shortfalls as well due to the recession.

Re: Economists who defend disaster profiteers are wrong

#186

Post by rndmio »

gorgoiler wrote: post #165

If TP costs $1 a roll to make and is currently selling at $10 a roll, the store selling for $9 wins the game. Then the store selling for $8, ...$7, etc. all the way down to the point where no one is left who is willing to compromise their living standards by dropping their profit margin below a certain percentage. The rules of the game are that: (1) If you collude to keep prices up you go to jail. (2) Citizens must b…

When demand outstrips supply by a large margin (and supply cannot be increased) there is no need for collusion for prices to be high, and no incentive to lower your own prices to compete because you can't sell any more of a good you've sold out of.

Re: Economists who defend disaster profiteers are wrong

#187

Post by roenxi »

neilwilson wrote: post #153
AnthonyMouse wrote: post #118

Earlier quoted context omitted.

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 di…

Because they are running an enormous risk of a 50 crates of toilet paper being driven up in a hastily hired farm truck direct from a commercial factory at $19 a roll. Then they lose money per roll and that has a crippling effect on their finances because debt magnifies gains and losses.

We know that the amount of toilet paper being produced matches how much is being consumed because it did pre-crisis and consumption/production aren't really changing. Any ramp up at all from the factories will quickly lead to a glut of the stuff. The problem is the commercial-private shift causing a mismatch between the orders for consumers and the supply for commercial toilets. If the price goes high enough someone will figure out how to match the two and it will happen really quickly. The price isn't going to climb after the initial spike; it is going to fall.

Re: Economists who defend disaster profiteers are wrong

#188

Post by notauser »

roenxi wrote: post #179
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…

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. Entrepreneu…

Given that poor people can't afford to hoard because of the cost of storage (especially in cities) and financing, isn't it better that rich people are encouraged to hoard when supply is plentiful?

The problem arises when rich people start hoarding at times when supply is constrained, because they can do it so much more rapidly and create a much greater shock to the system.

It was notable in London that severe shortages only really existed at stores you can drive to. Stores that you can only walk to have been much better stocked.

Re: Economists who defend disaster profiteers are wrong

#189

Post by h0l0cube »

4773ueudjj wrote: post #143
p1necone wrote: post #141

Earlier quoted context omitted.

Again: parent said that minimum wage is a bad idea period , compared it with eugenics and added nothing else to clarify. They didn't say it's a bad idea if chased with tunnel vision, or that it's a bad idea if used in isolation (I don't think that statement even makes sense - having a minimum wage is always going to be one decision amongst the context of a lot of other decisions being made). I am questioning the part…

They didn't actually compare it with eugenics though, they compared the nature of the discourse around eugenics to discourse around minimum wage with the penultimate point of explaining a mix of why/how they distrust economists, specifically economists, to handle discussions about ethics. They weren't making a direct comparison between the topics themselves and yet most of the replies are reacting as if they had, ill…

> these sorts of talks with laymen are bad ideas

Condescension by experts is one means by which bad ideas can promulgate, and lead to bad policy. Everyone you speak with is a potential voter, and at the end of the day, badly or uninformed voters are bad for democratic outcomes.

To go back to your original criticism, asking for background information is a lazy dismissal wasn't a fair assessment. Is wasn't a dismissal but a request for more information. It's important than when you make an assertion that a lay-person might have some misgivings, that you provide some real evidence, or qualify your statement as opinion. An appeal to one's own authority isn't enough, at least it ought not to be in HN, where it would seem many people really care to know more, and want to engage in real discourse.

Edit: qualified some statements..

Re: Economists who defend disaster profiteers are wrong

#190

Post by roenxi »

danans wrote: post #116
nonidentified wrote: post #76

Speaking as an economist, I tend to get nervous when other economists talk about circumstances where "morality trumps economics." As a profession, we have a miserable track record on morality. Economists widely endorsed eugenics in the first half of the 20th century, for example. And many modern economists endorse a minimum wage, as eugenicists did then, but with even less regard for the harm it causes. Personally, I…

> And many modern economists endorse a minimum wage, as eugenicists did then, but with even less regard for the harm it causes. You are comparing the moral stance of supporting eugenics with the moral stance of supporting a minimum wage? Are those just the first two random moral stances taken by economists that you recall, or are you trying to color the perception the latter with the true horror of the former?

Eugenics had wide scientific support; it wasn't a horror when they proposed it.

A seriously high minimum wage ($100,000/year for example; no other policy changes) would probably lead to a period of horror and mass unemployment. Possibly famine, I don't know what would happen if it no longer made economic sense to employ people to transport food around. Maybe they are already high earners, what do I know.

A minimum wage is saying "this work isn't worth doing if you can't justify paying someone $minimum". That isn't a morally positive or morally negative position without more information. And it is certainly not more morally sound than "we should be proactive in making sure that children are born with the best chance at life" which is the positive spin on eugenics.

Economists should not be making moral arguments. They get them wrong too readily.

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