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Economists who defend disaster profiteers are wrong

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Re: Economists who defend disaster profiteers are wrong

#361

Post by wpietri »

AnthonyMouse wrote: post #199
wpietri wrote: post #160

Earlier quoted context omitted.

My hyperbole aside, real people do behave like this. Look at the guys buying up all the hand sanitizer. Look at all the hoarding and panic buying that went on. It's 18 months or so before we get a vaccine. There's plenty of incentive to hoard PPE. And even taking your clinic example, you see the same issues there. If rich clinics outbid poor clinics for a limited supply, we'll see rich places stocking up and poor pla…

> My hyperbole aside, real people do behave like this. Look at the guys buying up all the hand sanitizer. Look at all the hoarding and panic buying that went on. But then they're not price-insensitive billionaires, so if the price goes up it deters them from hoarding (and gives them a financial motive to unload their existing hoard), which is exactly what you want. > It's 18 months or so before we get a vaccine. Ther…

Panic buying is definitionally price insensitivity. You can also look at people like preppers, who consider hoarding a positive virtue. Despite a spike in demand, they won't be arbitraging. These are common human behaviors in a crisis.

> but not before anybody can start manufacturing more PPE

I think you really aren't coming to grips with how people think and behave differently in crises. Possibly having more PPE in a few months is only valuable for reducing hoarding and profiteering now to the extent that people are confident that will happen.

> What allocation process are you proposing that would avoid things like that happening?

Letting local and state public health officials allocate scarce medical supplies is the obvious start. Point-of-sale purchase controls are another one that's easy to implement. In the long term, transparent rationing where needed. Fining, arresting, and imprisoning disaster profiteers are all excellent options when it's severe.

Re: Economists who defend disaster profiteers are wrong

#362

Post by jmcqk6 »

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…

>An important point the article didn’t address is that high prices direct resources to more important uses.

I think it's important to recognize in this case that "important" is being passed off as the same as "ability to pay."

>Outlawing price gauging alone just ensures masks go to people who don’t need them as much as doctors. Price ceilings don’t force masks to go to doctors.

This is such a non-sequitur, it almost feels disingenuous. If you remove controls, you're just going to guarantee that the masks go to the people with the highest ability to pay. And that may or may not be doctors and medical personal. In fact, I don't see any evidence anywhere that it would actually lead to more medical personal actually getting these supplies at all.

Re: Economists who defend disaster profiteers are wrong

#363

Post by MisterBastahrd »

Consultant32452 wrote: post #322
treden wrote: post #315

Earlier quoted context omitted.

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.

Because he bought them all. This is why, in states where disasters are probable due to natural issues (hurricanes, earthquakes), price gouging is a crime. Not only is it a crime, but it is one where there is full bi-partisan support for the continuance of the law. If you want to put a smile on the face on someone suffering from calamity, first help them, and then arrest the bastard who tried to profit off of it. The first smile will be gentle and gracious, and the second will be of pure glee.

Re: Economists who defend disaster profiteers are wrong

#364

Post by wpietri »

WalterBright wrote: post #217
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…

> Neither do high prices. Sure they do. Look at what happens when an oil refinery blows up (happens now and then). Price for gas goes up until demand matches supply. Billionaires don't hoard gas. Gas prices fluctuate daily. This is all from matching supply with demand. The same goes for airline seats and the price of oranges. I don't think I ever pay the same price twice for oranges at the supermarket.

Gas and oranges are hard to hoard; airline seats are impossible. And your examples are all from normal times, not major disasters. None of what you say is relevant to disaster profiteering.

Re: Economists who defend disaster profiteers are wrong

#365

Post by wpietri »

ric2b wrote: post #285
wpietri wrote: post #162

Earlier quoted context omitted.

Free markets are not magic sparkle ponies. They're good at certain kinds of optimization. They're bad at others. Disasters are a known case when markets fail.

Fail as compared to what? Is there a system that handles disasters so well that no one complains? Or that does much better without sacrificing in other relevant areas?

Market failures are a rich literature: https://en.wikipedia.org/wiki/Market_failure

There is no single system that does better universally, but there are plenty of narrow fixes that do fine. As an example, scarce donor organs are not allocated based on ability to pay, but in other ways: https://optn.transplant.hrsa.gov/learn/about-transplantation...

Re: Economists who defend disaster profiteers are wrong

#366

Post by stronglikedan »

Kaiyou wrote: post #358
charlesu wrote: post #351

Earlier quoted context omitted.

The USDA’s Economic Research Service estimates that 31% of food is wasted[1] while 1 in 8 families are food insecure[2]. About half a million people are homeless any given night[3], while 16 million homes are vacant [4], many of them perfectly liveable. Where's the scarcity? [1] https://www.usda.gov/foodwaste/faqs [2] https://www.ers.usda.gov/topics/food-nutrition-assistance/fo... [3] https://endhomelessness.org/home…

It's right there in what you have written yourself. 31% is a finite number, that means scarcity. 16 million homes is a finite number, that means scarcity. In a world without scarcity you'd have infinite food and infinite houses. We do not live in such a world. You don't give people without the ability to pay for things stuff for free because you don't want to absolutely wreck your economy. If I'd get food and housing…

> 31% is a finite number, that means scarcity.

Scarity doesn't mean finite. It means shortage. Wasted food and vacant homes aren't shortages.

Re: Economists who defend disaster profiteers are wrong

#367

Post by throwanem »

DuskStar wrote: post #332
TheOtherHobbes wrote: post #234

Earlier quoted context omitted.

That is absolutely factually wrong. Mask prices on Amazon were already inflated back in February, and stocks were already very low. But the most annoying thing about this thread is how it has turned into some kind of let's-forecast-the-markets game, instead of dealing with the underlying reality - that the markets failed to provide an essential good when it was needed, resulting in a significant number of avoidable d…

> There should be a special word for the moral delusion that markets exist in an abstract philosophical vacuum and price signals are somehow more important than people's lives. From my perspective, there should be some word for the delusion that equitable distribution of a smaller, price-fixed supply is better than prioritized distribution of a larger, price-gouging supply. The lack of masks that not allowing higher…

In an abstract philosophical vacuum, where manufacturers can instantaneously increase production of arbitrary goods to an arbitrary extent, such an argument makes sense.

In the real world, which recently has provided an ample sufficiency of evidence that manufacturers can do no such thing because the process depends on specialized machinery that takes considerable time to manufacture in its own right, such an argument can most kindly be described as struggling to achieve relevance.

Somewhat less kindly, one might note that such an argument equates to saying that, well, actually you can produce a baby in one month by getting nine women pregnant, as long as you pay all the women enough.

Re: Economists who defend disaster profiteers are wrong

#368

Post by mrguyorama »

DuskStar wrote: post #332
TheOtherHobbes wrote: post #234

Earlier quoted context omitted.

That is absolutely factually wrong. Mask prices on Amazon were already inflated back in February, and stocks were already very low. But the most annoying thing about this thread is how it has turned into some kind of let's-forecast-the-markets game, instead of dealing with the underlying reality - that the markets failed to provide an essential good when it was needed, resulting in a significant number of avoidable d…

> There should be a special word for the moral delusion that markets exist in an abstract philosophical vacuum and price signals are somehow more important than people's lives. From my perspective, there should be some word for the delusion that equitable distribution of a smaller, price-fixed supply is better than prioritized distribution of a larger, price-gouging supply. The lack of masks that not allowing higher…

The price is not limited right now, and yet production is barely ramping

Re: Economists who defend disaster profiteers are wrong

#369

Post by stronglikedan »

hartator wrote: post #21
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.

Maybe free circulation of good and services are a good thing.

But it's never truly free, since someone will have paid for it at some point. Essential goods and services should be made freely available to those who need them, and are in a lot of places.

Re: Economists who defend disaster profiteers are wrong

#370

Post by MisterBastahrd »

quotemstr wrote: post #63
mywittyname wrote: post #57

Earlier quoted context omitted.

Price gouging is wrong because not helpful at all. 1) it doesn't increase the supply of goods. Everyone is very aware that there's a shortage and they are working hard to produce more. Jacking up the price does not achieve this goal. 2) it encourages hording of critical supplies. People don't want to sell now in hopes of getting a better price tomorrow. They continue to do so until the next batch of supplies come ont…

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…

Scarcity forced people to drive to other states. Gouging is illegal in Louisiana and it's always outsiders who are completely shocked when everyone from the bleeding heart to the die-hard GOP supporter will call the cops when they see it. Anyone who gouges in the state can fully expect to receive a lawsuit from the state AG.
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