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Economists who defend disaster profiteers are wrong

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Re: Economists who defend disaster profiteers are wrong

#411

Post by someguydave »

perl4ever wrote: post #394
sokoloff wrote: post #266

Earlier quoted context omitted.

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…

"I think the core belief is that supply and demand is a force that can actually cause more supply to come into a market" Everybody believes that, in general. But in the short term, the elasticity of supply with respect to price approaches zero. If we ramped up production though, it would be too late, and then there would be a glut.

How about we let the suppliers and buyers figure that out, rather than having the government get between them with restrictions on how they can contract?

Re: Economists who defend disaster profiteers are wrong

#412

Post by nec4b »

nicoburns wrote: post #357
dsfyu404ed wrote: post #313

Earlier quoted context omitted.

>On aggregate people tend to behave a lot more rationally than individuals do. Just delegating responsibility for resource allocation to groups of people is not a silver bullet. "Aggregate people" tasked with distributing wealth (or taking wealth and converting it to some resource and distributing that) seems to be highly succeptable to holding onto more and more of that wealth over time for trickle down distribution…

I don't think you're quite grasping what "distributing the wealth" would look like. I have in mind something like a Universal Basic Income. Reducing the involvement of large organisations (including governments, non-profits and corporations), as well at high-net worth individuals is entirely the point. It's basically democracy for economic power. And you're right, it's not a silver bullet. But I believe it could be a…

Why would you redistribute wealth into the hands of irrational people?

Re: Economists who defend disaster profiteers are wrong

#413

Post by xorcist »

XorNot wrote: post #307
catherd wrote: post #282

Earlier quoted context omitted.

Probably because despite how the media is portraying things, people are concerned and can actually act out of altruism. Plus, individuals who are practicing social distancing probably don't need to go through PPE like you would in an intensive care ward. I'm in China and have sold over 30,000 masks to the US (not for profit, but I don't have the cash to just donate them). We've sold to hundreds of different individua…

Citizens shouldn't be buying gloves at all - they're close to completely useless. What's on your gloves...stays on your gloves and promptly travels to everything you touch. SARS-CoV-2 doesn't penetrate the skin. You'd be ubiquitously better off using hand sanitizer.

s/hand sanitizer/soap/g

Re: Economists who defend disaster profiteers are wrong

#414

Post by xorcist »

hamandcheese wrote: post #42
jimmaswell wrote: post #18

Earlier quoted context omitted.

Exactly this. Why is Scrooge McDuck buying the entire supply of something somehow better than evenly distributing it? I can't believe people actually think making toilet paper $20 a roll is the correct outcome instead of rationing with price controls. Maybe it's the Ferengi mentality of people seeing themselves as the exploiters.

If toilet paper was $20/roll, people would think twice before hoarding, and would probably also use less squares overall.

> If toilet paper was $20/roll, people would think twice before hoarding,

The rational response to $20/roll is to buy as much as possible. It will be worth $40 soon.

Re: Economists who defend disaster profiteers are wrong

#415

Post by downerending »

XorNot wrote: post #295
koheripbal wrote: post #287

Earlier quoted context omitted.

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 manufactur…

This posits a simplistic economy where everyone can predict the future. The real world has risk and unknown effects. If someone stockpiles a lot of masks on the chance that they'll be needed, hoping to thereby profit, they're taking significant risk, and reward for that is not unreasonable.

This is essentially how finance, banking, markets, and pretty much our whole economy work.

The idea that producers should only be able to charge a modest margin over their "costs" is pernicious nonsense. Furthermore, if you punish this sort of risk-taking intensely enough, producers will just shut down during unusual times (the exact opposite of what is needed).

Re: Economists who defend disaster profiteers are wrong

#416

Post by dahart »

CryptoPunk wrote: post #379
dahart wrote: post #371

Earlier quoted context omitted.

The problem with this oft-used dogmatic argument is that it’s pure claim and no evidence. It’s a specious theory, it sounds great on paper but only comes true once in a blue moon. I happen to work for a company that got stuck with a stockpile after a bubble, a company that actually tried not to get caught up in oversupply, and it was not “socially beneficial”. Your explicitly stated assumption in your argument above…

>>The problem with this oft-used dogmatic argument is that it’s pure claim and no evidence. The anti-money position you're espousing is the one that's dogmatic. It ignores what a century of economic scholarship says about how prices work to measure shortages and direct resources to alleviate them. It belies an anti-profit cognitive bias: https://digest.bps.org.uk/2017/08/04/we-have-an-ingrained-an... >>The problem wi…

I appreciate the reply and the links. FWIW, I think trying to paint my views as anti-money and anti-profit is a straw man that is extreme and doesn't effectively respond to what I said. I believe that competition and profit does do what you're saying sometimes. I know there's evidence that it works sometimes. I may be perfectly comfortable saying it works most of the time. But there's also historical evidence that it fails sometimes. You're glossing over that by ignoring externalized health and environmental concerns, among other things. The market might be stronger if it's left unchecked, but that's not the same thing as slowing down the spread of a disease. Free Market theory simply does not guarantee that we'll have the safest outcome in the shortest time. Even if we assume it does work as advertised, the best we can say it economic inputs and outputs balance at some local optimum some time in the future.

> We can get closer to the correct amount when people are incentivized to calculate the correct amount

I think that's wishful thinking when you're talking about unforseen crises, and history has shown this over and over.

> Price caps paradoxically lead to higher prices.

Ah yes, you're right and it's true this can happen on the black market under price controls. In your thinking, why is that worse than unrestrained price gouging? What is the meaningful difference in outcome? Does it matter how much higher? Does it matter what the balance is between price-capped sales, and black-market overpriced sales?

Bigger picture, my more fundamental question is why free-market thinking is diametrically opposed to slowing down changes in pricing during spikes, if we were to assume that prices will be uncapped eventually?

Even under ideal conditions, the market takes time to respond to changes in demand. When spikes in supply are price-capped, let's assume not that it'll be price-capped forever and all time, but that either it will be price-capped during a time period that is too short for the market to respond to, or that changes in pricing will be rate limited rather than value limited.

If price changes are rate limited, instead of hard-capped, then in theory nothing changes in the limit, the market can still optimize eventually, right? What does it matter if a market takes a little longer to balance?

Re: Economists who defend disaster profiteers are wrong

#417

Post by jbay »

Consultant32452 wrote: post #321
jcranmer wrote: post #316

Earlier quoted context omitted.

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.

Demand at the old price from people who bought them to resell at the new price?

Re: Economists who defend disaster profiteers are wrong

#418

Post by tristor »

jbay wrote: post #417
Consultant32452 wrote: post #321

Earlier quoted context omitted.

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.

Demand at the old price from people who bought them to resell at the new price?

Mostly, because the guy buying them all up to resell at 10x the price is a scumbag just like ticket scalpers, except worse because whether you pay $500 or $200 to get a ticket to a rock concert won't potentially kill you.

The availability is primarily negatively impacted because of hoarders and gougers.

Re: Economists who defend disaster profiteers are wrong

#419

Post by Consultant32452 »

MisterBastahrd wrote: post #385
Consultant32452 wrote: post #378

Earlier quoted context omitted.

If the gouger actually bought them all then you have a monopoly, which is a different problem. The gauger, instead, bought some. So did many other people. The difference is he's willing to sell his. That's the value to me he's providing. Could you retry your analysis with this corrected information?

Doesn't matter if he bought all or some. If he is attempting to profit off of a disaster, he will be seeing a fine or jail time in plenty of states.

I think we're talking about two different things. I'm talking about whether or not a price gouger provides the service of making some product available on the market, albeit at a higher price. I feel that fact is indisputable and I personally find that valuable. You seem focused on whether or not you consider this action of making something available to me is moral/legal. That's a different question altogether. One which I'm explicitly not commenting on.

Re: Economists who defend disaster profiteers are wrong

#420

Post by Consultant32452 »

jbay wrote: post #417
Consultant32452 wrote: post #321

Earlier quoted context omitted.

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.

Demand at the old price from people who bought them to resell at the new price?

Do you believe that, absent price gougers, I would be able to walk into Home Depot, CVS, Walmart, etc. and buy some N95 masks for my personal use? I don't think that's likely, so wherever you were heading with that is irrelevant.

I want to be clear I'm intentionally separating two things. The gouger is making product available on the market where otherwise there would be none. The higher price discourages hoarders or others with lower needs. This is clearly a valuable service that some, perhaps many, are willing to pay for. I feel like these are indisputable facts.

There is a separate topic of moralizing about the issue, whether or not you think the gouger is a bad actor or whatever. You can keep going on about that, but I won't address it because I don't care about your feelings regarding my personal health.

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