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

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

#321

Post by cannaceo » Sat, Mar 14, 2020, 7:07 PM UTC

jbay808 wrote: post #298

cl0rkster wrote: post #191

Earlier quoted context omitted.

Seems to me that it's unlikely the toilet paper producers are perpetually running at 100% factory output. Something tells me they will respond by increasing production. Why? Because they are seeing enormous sales currently. Of course they want more. With some of the supply chain troubles we are having with everything closing, though, the delay might be slightly longer. I highly doubt this shortage will last longer th…

If I owned a TP factory I wouldn't increase production. Consumption has not increased, this is a distribution issue. If I increase production now, I'll spend a bunch of money on overtime and then have to shut my whole factory down next month as the glut from all the hoarding makes its way through the system and everyone stops buying TP.

As a manufacturer myself my strategy right now is go full tilt increasing batch sizes because I may have a labor shortage in the near future and I know demand is high. If customers aren’t buying my products they’re buying competitor products. It’s also a great way to get storefronts to order more from us than they would typically because our competitors are low on inventory.

Worst case scenario I made too many products and I cut back on shifts next month and run a few less productions.

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

#322

Post by eigenvector » Sat, Mar 14, 2020, 7:07 PM UTC

jbay808 wrote: post #290

koheripbal wrote: post #254

Earlier quoted context omitted.

The best solution is to increase production to the point where all those hoarders are left with tons of worthless inventory.

People are saying this like they just walked out of an econ 101 class. It's expensive to tool up your production line for extra production when you'll just have to shut it down again a few weeks later as the surplus makes its way through the system. Why would a toilet paper plant operator do that? They know that average consumption of toilet paper hasn't increased whatsoever.

Evidently people would rather ramp up entire supply chains of toilet paper (which include, let's remember, actual people cutting down actual trees and involve capital-intensive facilities like pulp mills that take years to build) than admit that there's a market failure and punish the handful of bad actors who are hoarding.

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

#323

Post by nerfhammer » Sat, Mar 14, 2020, 7:10 PM UTC

saghm wrote: post #299

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…

> 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 How would (ii) be a profitable activity if buying in bulk wasn't creating artificial scarcity? I mean, I guess you could argue that the scarcity isn't "artificial", but like, when someone is literally buying more hand sanitizer than they could…

it's difficult for speculators to create artificial scarcity for products that are being actively produced. producers will always be able to undercut them making the whole matter pointless.

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

#324

Post by eigenvector » Sat, Mar 14, 2020, 7:12 PM UTC

jbay808 wrote: post #309

altacc wrote: post #197

Earlier quoted context omitted.

The idea that the correct solution to this is that supermarkets should be charging the same as the profiteering hoarders (say $20 for a small hand sanitiser and $40 for a pack of toilet rolls) is totally insane to me. This isn't some mythical free market model in a textbook, this is the real world, where real people live. Luckily society in general, through its laws, social judgement, etc... agrees to some extent tha…

Also, supermarket operators are not irrationally leaving free money on the table. They have their own reasons for not adjusting prices -- all the free market advocates lecturing the supermarket managers about econ 101 principles should try running a supermarket themselves, and see how kindly the market reacts to their strategy.

Yes, unlike price-gougers supermarkets plan to still be in business after this crisis passes, and would prefer not to be known as "that company that screwed us all on basic goods during COVID-19". The money they could make today from profiteering is peanuts compared to torching their image and brand.

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

#325

Post by jbay808 » Sat, Mar 14, 2020, 7:12 PM UTC

cannaceo wrote: post #321

jbay808 wrote: post #298

Earlier quoted context omitted.

If I owned a TP factory I wouldn't increase production. Consumption has not increased, this is a distribution issue. If I increase production now, I'll spend a bunch of money on overtime and then have to shut my whole factory down next month as the glut from all the hoarding makes its way through the system and everyone stops buying TP.

As a manufacturer myself my strategy right now is go full tilt increasing batch sizes because I may have a labor shortage in the near future and I know demand is high. If customers aren’t buying my products they’re buying competitor products. It’s also a great way to get storefronts to order more from us than they would typically because our competitors are low on inventory. Worst case scenario I made too many produc…

Shows what I know! Good luck, and I hope your company does fine next month too in the slow period.

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

#326

Post by nerfhammer » Sat, Mar 14, 2020, 7:12 PM UTC

chrisseaton wrote: post #285

koheripbal wrote: post #254

Earlier quoted context omitted.

The best solution is to increase production to the point where all those hoarders are left with tons of worthless inventory.

> all those hoarders are left with tons of worthless inventory How can toilet paper become worthless? You're always going to need to use it yourself even.

worthless in that it won't be worth more than they bought it for.

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

#327

Post by nerfhammer » Sat, Mar 14, 2020, 7:17 PM UTC

cannaceo wrote: post #321

jbay808 wrote: post #298

Earlier quoted context omitted.

If I owned a TP factory I wouldn't increase production. Consumption has not increased, this is a distribution issue. If I increase production now, I'll spend a bunch of money on overtime and then have to shut my whole factory down next month as the glut from all the hoarding makes its way through the system and everyone stops buying TP.

As a manufacturer myself my strategy right now is go full tilt increasing batch sizes because I may have a labor shortage in the near future and I know demand is high. If customers aren’t buying my products they’re buying competitor products. It’s also a great way to get storefronts to order more from us than they would typically because our competitors are low on inventory. Worst case scenario I made too many produc…

the key here is that what you're making doesn't go bad, worst case is it wastes space in storage but you don't have to make as much of it later

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

#328

Post by cheerlessbog » Sat, Mar 14, 2020, 7:17 PM UTC

gwright wrote: post #267

EdgarVerona wrote: post #210

Earlier quoted context omitted.

This is how I feel, precisely. There are real, human consequences to these price increasing theories. It will be felt by people who are, by a large margin, not the target audience of Hacker News. It'll be felt by people who have to choose between having basic healthcare supplies and paying rent, or eating. Indeed, at that point I think rationing - either by the companies selling the product, or by the government (as…

Letting the price float is the fastest way to discourage the hoarders and let the market come back to a sane equilibrium. By not allowing the price to float you can see that the result is empty shelves. The empty shelf is also a "real, human consequence".

Or just enforce limits and price increases and we all have TP.

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

#329

Post by grecy » Sat, Mar 14, 2020, 7:18 PM UTC

magnusss wrote: post #292

Come on, guys. Hoarding a commodity in order to corner a market and thereby profiteer is immoral, (often) illegal, and a distortion of the free market. It’s bad behavior. Please stop.

I agree that it's immoral, but I do have to wonder if there's much difference between what these people are doing vs Nike making a pair of shoes for $2 then selling them for $400, or hospitals in America marking stuff up 500 or 1000%.

By definition capitalism is about making a profit. Sell things for as much as you can, and win.

I find it fascinating how where there isn't a "crisis" then maximizing profit is just what we're all supposed to be doing, and we accept it but somehow in a "crisis" it's suddenly evil and horrible.

Suddenly capitalism itself starts to feel mighty immoral, doesn't it?

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

#330

Post by stale2002 » Sat, Mar 14, 2020, 7:18 PM UTC

geofft wrote: post #310

stale2002 wrote: post #306

Earlier quoted context omitted.

> I'm not claiming that manufacturers are at 100% capacity. Cool. So that means that manufactures have spare capacity which they can use to make more product. So, there is no real problem here with everyone buying a bit of extra toilet paper. Manufacturers, will just use that spare capacity, to fulfill that demand. > the cause is something other than a need for the per-unit price to go up. Ah, here is the mistake. Th…

> The extra capacity that I am talking about, still costs extra money to activate You're claiming that both a) not enough toilet paper exists to satisfy genuine demand b) in order to meet that demand, they need to raise prices I agree that it is theoretically possible that not enough toilet paper exists, and I agree that there exist ways to increase production that involve spending more money. Both of those are diffe…

> a) not enough toilet paper exists to satisfy genuine demand

> b) in order to meet that demand, they need to raise prices

I am claiming that there is not enough local capacity to satisfy a very very short term local demand. And that an increase in prices can help satisfy the local capacity issue.

IE, if there is a bunch of supply in a different place, transporting that is possible, but costs money.

(I should have just talked about transportation, now that I think about it. The "problem" is actually way more short term than something where factory hours matter at all)

> Do you disagree with that?

My main argument that I attempted and failed to communicate is actually more that freaking out about "hoarders" is really silly, and that none of this is actually a big deal.

The amount of time that these local shortages last, is measured in days, before the next shipment arrives.

Which is why enforcement of this law is misguided. It is making a huge deal of an extremely minimal issue.

Worst case scenario, some people have to wait a couple days for the store to get the shipment in, or they have to travel a half hour to the nearest Costco. Not a big deal.