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Economists who defend disaster profiteers are wrong

economist.com

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Re: Economists who defend disaster profiteers are wrong

#321

Post by Consultant32452 »

jcranmer wrote: post #316
Consultant32452 wrote: post #309

Earlier quoted context omitted.

>The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything. The guy buying up all the masks and reselling them for 10x the price is making availability, which is highly important in a crisis.

The guy buying up all the masks and reselling them is likely buying them in similar markets to the people who he will be selling them to eventually. His net effect is likely going to be doing diddly squat to the availability.

None are available to purchase at the old, lower price, because demand at the old price outpaced production. The higher price drives some consumers out of the market, meaning there are still some for sale.

Re: Economists who defend disaster profiteers are wrong

#322

Post by Consultant32452 »

treden wrote: post #315
Consultant32452 wrote: post #309

Earlier quoted context omitted.

>The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything. The guy buying up all the masks and reselling them for 10x the price is making availability, which is highly important in a crisis.

He's capturing availability, the manufacturer made the availability. There is no value-adding middle man role with a 10x value here (well value to anyone other than the middle man).

There's none available to purchase at the old, lower price. So he's providing value to me, someone who wishes to buy one.

Re: Economists who defend disaster profiteers are wrong

#323

Post by Symmetry »

Price controls might work within the US but we can't enforce them internationally and they've already been a big problem for US firms making purchases abroad where they're competing with others willing to bid up the prices of masks.

https://www.forbes.com/sites/daviddisalvo/2020/03/30/i-spent...

Re: Economists who defend disaster profiteers are wrong

#324

Post by someguydave »

perl4ever wrote: post #106
someguydave wrote: post #77

Earlier quoted context omitted.

You aren't seeing a "free market" because all of these big corps are scared to death of being accused of "profiteering" on supplies (with potential liability from anti-"gouging" laws), so they can't raise prices. Their only other option is to restrict the buyer's quantities.

They can raise prices moderately on everything to make up for it, and/or stock things that are slightly less appealing in normal times to slow turnover and bias sales towards those more in need. For instance, the pasta section was about 5% full and almost entirely things like whole wheat, cauliflower gluten-free, or turmeric. But that's fine with me. Your tone is that this is not the optimal solution and some misguid…

> how can you ethically defend everyone not getting a minimum ration

To me, the fairest way to distribute any good is to the highest bidder. If someone is truly desperate for food, they will find a way to get the money to pay for it. I would rather that food be instantly available to that highest bidder with a true need, rather than having to jump through some kind of Soviet bread line to get their “ration”.

Are you saying it is “ethically” better to have an empty shelf with government price controls than a full shelf with prices set by your high-bidding neighbors?

With an empty shelf there is no negotiation possible, simply the will of the government bureaucrat or store manager (with a government gun to his head). They don’t have any personal knowledge of the hungry.

With a full shelf the food is right there, and it’s only money. The hungry can communicate their immediate need for food on the spot by forking over the cash.

So hell yes the capitalist system is the most ethical. Hunger is a private matter that affects individuals - not a faceless mass to be treated as robots with a government program.

Re: Economists who defend disaster profiteers are wrong

#325

Post by Nursie »

AnthonyMouse wrote: post #139
yawaramin wrote: post #135

Earlier quoted context omitted.

The assumption here is that 'doctor's offices' have that kind of cash to throw around? I'm wracking my brain trying to understand who these mythical doctors are who need masks more than hospitals which are the actual front lines of treating COVID-19 and are alarmingly low on PPE.

Some doctors treat COVID-19 patients. If they have no PPE, they're more likely to get infected themselves and pass the virus to their other patients. Or they can outbid some hypochondriacs.

Sounds like a wonderful system!

Re: Economists who defend disaster profiteers are wrong

#326

Post by ed_balls »

polskibus wrote: post #296
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…

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.

A repost from my other comment:

You don't need to subsidise anything. > On March 1, 2018, Trump announced his intention to impose a 25% tariff on steel and a 10% tariff on aluminum imports. > Trade Act of 1974 allows the president to impose a 15% tariff for 150 days if there is "an adverse impact on national security from imports

>NAFTA originally required automakers to use 62.5% of North American-made parts in their cars to be imported duty free

You can just require that 25% of PPE purchased by the government has to be made domestically. That would give you 3-4 factories. You make a requirement so they are 1000 miles away from each other and be able to 4x capacity within 2 weeks.

Re: Economists who defend disaster profiteers are wrong

#327

Post by someguydave »

sokoloff wrote: post #266
perl4ever wrote: post #106

Earlier quoted context omitted.

They can raise prices moderately on everything to make up for it, and/or stock things that are slightly less appealing in normal times to slow turnover and bias sales towards those more in need. For instance, the pasta section was about 5% full and almost entirely things like whole wheat, cauliflower gluten-free, or turmeric. But that's fine with me. Your tone is that this is not the optimal solution and some misguid…

I think the core belief is that supply and demand is a force that can actually cause more supply to come into a market where there is imbalance. IOW: rather than curtail the expression of demand via rationing, actually increase the supply. If the marginal profit on TP is $0.10/roll and the price is not allowed to increase in time of excess demand, you’re likely to see factories optimize to squeeze every efficiency ou…

Agreed. It’s deeply scary to me that it this stuff isn’t intuitively obvious to people who have lived in a free market economy their entire lives. The idea that a Soviet bread line is the most “ethical” way to distribute goods is madness.

Re: Economists who defend disaster profiteers are wrong

#328

Post by ceejayoz »

Kaiyou wrote: post #298
nicoburns wrote: post #260

Earlier quoted context omitted.

> 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.

The idea that wealth inequality is just due to it going to "capable hands" is a hell of an unsupported assertion.

"Pissing it away" is also known as buying things, which drives economic growth. The poor spend every penny they make, and this is generally considered good for the economy.

Re: Economists who defend disaster profiteers are wrong

#329

Post by Kaiyou »

duxup wrote: post #33
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…

Would toilet paper only being affordable to the wealthy be "more important uses"? That would seem to be the likely end result if it were greatly restricted. We've already seen that with healthcare in the US. It is expensive, so is it used on more important people?

Willingness to spend reflects how important it is for you. Ability to spend puts a cap on that to incentivize people to create more wealth.

People with the ability to create wealth are more important to a society than people without this ability. Thus, it follows that people with more money are more important.

Re: Economists who defend disaster profiteers are wrong

#330

Post by duxup »

Kaiyou wrote: post #329
duxup wrote: post #33

Earlier quoted context omitted.

Would toilet paper only being affordable to the wealthy be "more important uses"? That would seem to be the likely end result if it were greatly restricted. We've already seen that with healthcare in the US. It is expensive, so is it used on more important people?

Willingness to spend reflects how important it is for you. Ability to spend puts a cap on that to incentivize people to create more wealth. People with the ability to create wealth are more important to a society than people without this ability. Thus, it follows that people with more money are more important.

How do you measure how much someone creates wealth?

If I give a wealthy person $100, and a poor person $100... the poor person will spend it, the rich person generally will not.

This plays out in economic stimulus studies time and again.

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