Economists who defend disaster profiteers are wrong • Hacker News Board

Re: Economists who defend disaster profiteers are wrong

#291

Post by badpun » Tue, Apr 14, 2020, 12:24 PM UTC

WalterBright wrote: post #230

badpun wrote: post #216

Earlier quoted context omitted.

A counterexample: After WWII in Poland, Moscow installed a communist government in Warsaw, which promptly started implementing communist policies. One of the biggest ones was collectivization of farming - taking pieces of land and joining them into massive, state-run farms. After around 10 years of this, the studies started showing that this collectivized farming is so much less efficient than private farming (which…

Every economy that has tried collective farming, from small to large, has never been able to achieve self-sufficiency in food. The US economy around 1800 was the first economy in history to produce a consistent food surplus. You can see the results of this in the astonishing increase in the average height of Americans throughout the 19th century. In the Great Depression, the government ordered the slaughter of millio…

> The US economy around 1800 was the first economy in history to produce a consistent food surplus.

Poland was a big exporter of food (mostly grain) around XV and XVI century. There was also no hunger in the country, which means that the exported grain constituted a pretty consistent surplus.

Re: Economists who defend disaster profiteers are wrong

#292

Post by lukas099 » Tue, Apr 14, 2020, 12:32 PM UTC

michaelmrose wrote: post #232

roenxi wrote: post #227

Earlier quoted context omitted.

> This assumes that people actually behave rationally. There isn't an alternative. If you assume people behave irrationally you may as well send the army in straight away. People are often stupid but rarely irrational given what they can understand. There is pretty solid evidence that people with money are the ones who spend it rationally. And besides a private buyer's opinion of what is rational is just as valid as…

People are actually usually irrational. Predicting how people behave always involves building an elaborate mental model of the exact way that their own model diverges wildly from observable reality. The fact that they are rational by their own model doesn't mean they even kind of are objectively. The point is not that you desire to be able to buy TP its that you are willing to sacrifice the general well being for you…

When prices of a thing go up, people buy less of that thing. If that were not true, I think somebody would have noticed by now.

Re: Economists who defend disaster profiteers are wrong

#293

Post by bryanlarsen » Tue, Apr 14, 2020, 12:35 PM UTC

paranoidrobot wrote: post #193

AnthonyMouse wrote: post #103

Earlier quoted context omitted.

> 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…

> nobody would be buying a million masks to hoard in a bunker right now. No, that's correct, because you can't (profitably) buy a million masks to hoard them right now. If you'd done it on January 1 though, you'd have been able to buy as many masks as you liked. Selling them now? Is this the height of the crisis? Perhaps. > Real people don't behave like this. They do, but most people don't have millions of dollars to…

> This is why I've not seen a roll of toilet paper on shelves in my local supermarkets or stores for three months now.

Whereas my local Costco has had continuous stock of massive piles of toilet paper available for over 2 weeks now. That's an arbitrage opportunity that's not being exploited because of the difficulty travelling.

Re: Economists who defend disaster profiteers are wrong

#294

Post by auggierose » Tue, Apr 14, 2020, 12:36 PM UTC

AnthonyMouse wrote: post #225

dimva wrote: post #185

Earlier quoted context omitted.

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 migh…

But then you're still expecting something implausible to happen, because everybody knows there is a shortage of masks and they're needed by healthcare workers, so the chances that 100% of millionaires will disregard that and buy masks they don't need is negligible.

I guess you disregard the nature of millionaires :-D

Re: Economists who defend disaster profiteers are wrong

#295

Post by XorNot » Tue, Apr 14, 2020, 12:36 PM UTC

koheripbal wrote: post #287

wccrawford wrote: post #274

Earlier quoted context omitted.

Actually, there was a post on HN from a guy who makes medical masks that isn't ramping up production as much as he can. The article's headline was basically just that, trying to get as many clicks as possible. The real story was that last time there was a shortage, he did ramp up production. But after the shortage ended, his customers dried up immediately and he was left with paying unemployment for all the new worke…

Yeah, it's kind of impossible to argue that production costs haven't gone up for manufacturers. I have an employee who we need to still go into the office for some manual work 2x a week - he asked that we pay for an Uber for him because he doesn't want to ride public transport. That's just one of many additional costs companies that struggle to continue working are paying. Some degree (within reason) of increased pri…

There's a difference between price gouging and covering expenses.

The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything.

If a manufacturer ramped production and billed the current inventory to cover costs, then that's a very different thing. Of course all of this is why the Defense Production Act even exists.

A perfect use of the DPA would be a mask manufacturer ramping up local production - if they had predictability of pricing beyond the current crisis, then it would let them forecast what they could and could not make, or get subsidized at the higher rate to ensure their business could ramp down gradually (or be retained at the subsidy price to ensure local availability for the next time).

Re: Economists who defend disaster profiteers are wrong

#296

Post by polskibus » Tue, Apr 14, 2020, 12:36 PM UTC

wccrawford wrote: post #274

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…

Actually, there was a post on HN from a guy who makes medical masks that isn't ramping up production as much as he can. The article's headline was basically just that, trying to get as many clicks as possible. The real story was that last time there was a shortage, he did ramp up production. But after the shortage ended, his customers dried up immediately and he was left with paying unemployment for all the new worke…

So the 8c is the price of economic independence from China and stability in times of crisis, could be subsidized just like agriculture is in many countries.

Re: Economists who defend disaster profiteers are wrong

#297

Post by lukas099 » Tue, Apr 14, 2020, 12:37 PM UTC

notauser wrote: post #188

roenxi wrote: post #179

Earlier quoted context omitted.

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 shortag…

Plenty of poor people are hoarding, at least here in the US. They make room.

Re: Economists who defend disaster profiteers are wrong

#298

Post by Kaiyou » Tue, Apr 14, 2020, 12:39 PM UTC

nicoburns wrote: post #260

roenxi wrote: post #227

Earlier quoted context omitted.

> This assumes that people actually behave rationally. There isn't an alternative. If you assume people behave irrationally you may as well send the army in straight away. People are often stupid but rarely irrational given what they can understand. There is pretty solid evidence that people with money are the ones who spend it rationally. And besides a private buyer's opinion of what is rational is just as valid as…

> There isn't an alternative. There is an alternative: distribute wealth. On aggregate people tend to behave a lot more rationally than individuals do. So if you spread the buying power as widely as possible then you get a more rational market.

Not really, individuals may make mistakes, but it's nothing to the insanity a mass of people is capable of. (Source: Mass Psychology, by Gustave LeBon)

Distributing wealth is self-destructive behavior. Generally, you want wealth in capable hands, who can use this wealth to create more wealth. You don't just want to piss it away.

Re: Economists who defend disaster profiteers are wrong

#299

Post by roenxi » Tue, Apr 14, 2020, 12:40 PM UTC

Leherenn wrote: post #277

roenxi wrote: post #259

Earlier quoted context omitted.

You're not considering what I feel to be the most important point here. The immediate result of price signals is huge amounts of money will become available to anyone who is producing a scarce good. If something in your scenario (government, public pressure, whatever) interferes with the market then the people who produce food will no longer be awash with money and will not produce more anywhere near as fast. Even if…

But you can't grow wheat or raise chicken in 2 weeks, no matter how much money you pour into it. I think our divergence in opinion comes from how much extra incentives to produce there is between the normal margins and the supply-constrained margins and how helpful that incentives is. My hunch is that as long as there is a profit to made, extra demand will be met as soon as possible. Massively increasing the profit w…

> But you can't grow wheat or raise chicken in 2 weeks, no matter how much money you pour into it.

I can get a lot more for sale though; at some point it becomes cost effective for people to start moving chickens over from other countries by air freight.

There is a price where people will start going out and hunting too. In Australia if the price of meat went up enough we'd start harvesting kangaroos, for example. The meat is a bit tougher than chicken but it is pretty good.

The argument in that sentence, and I don't mean this unpleasantly, is that you are a limited human who can't imagine a way of getting food on the table quickly that costs a lot of money. That is a fault in your imagination rather than a real limit. And if the situation is so dire that no food can be found at any price, people are going to starve whatever is tried so it isn't like it makes much difference in the big picture of this hypothetical. But anything up to that and more people working on the problem will help.

> Massively increasing the profit would help only...

There is a price point where Goldman Sachs employees stop trying to figure out how to screw over the little guy and start trying to get food to people. Until prices have reached that point, more profits will help increase production ASAP.

There is ample evidence that a shortage problem is better solved with subsidies rather than quotas. The main complaint is that subsidies are too effective at triggering oversupplies. There is no faster way of going from shortage to sufficient than throwing money at the problem - so the suggestion here is maybe at least try throwing money at the problem. People don't have to starve; governments can step in and buy them food - but if we need more food paying more to food producers for food is the single most effective way to get it.

Re: Economists who defend disaster profiteers are wrong

#300

Post by ric2b » Tue, Apr 14, 2020, 12:47 PM UTC

adjkant wrote: post #210

imtringued wrote: post #208

Earlier quoted context omitted.

I think you misunderstand what a minimum wage does. A minimum wage doesn't increase the bargaining power of an employee. It means the employee has to have a minimum amount of bargaining power to get hired in the first place. It doesn't actually prevent any exploitation. Imagine you are an exploited worker. You hate your boss, your job and the pay sucks. Do you really need a minimum wage law to be allowed to leave the…

I never said it increased the bargaining power of an employee. A minimum wage ensures that employees are paid enough to survive at a human level. I think you misunderstand my use of the word "exploit" here. The underpayment is the exploitation, not work conditions here. I'm not sure where someone wanting to quit their job factors into my argument.

> A minimum wage ensures that employees are paid enough to survive at a human level.

If they remain employees, that is.