Economists who defend disaster profiteers are wrong • Hacker News Board

Re: Economists who defend disaster profiteers are wrong

#421

Post by viklove » Tue, Apr 14, 2020, 6:30 PM UTC

numbsafari wrote: post #402

someguydave wrote: post #335

Earlier quoted context omitted.

I’m assuming this is sarcasm. Can you propose an alternative method of measuring need?

It's not sarcasm at all. Does one person with a million dollars in excess liquidity to spend on water represent a greater "need" than one million people with no liquidity to spare? Would it be moral for that person to buy more than they need, solely to inflate prices? Would the resulting spot price in the market be in any way a meaningful gauge of the actual need? Market prices are only one gauge, and they are pretty…

I think one of the facts many HNers struggle with is that the system that makes them wealthy is the same system that is starving people out and denying them access to healthcare. When you're a well-paid engineer you want to believe that you "earned" your position through hard work, but in reality its 90% luck.

Some HNers even have their own successful business, and want to think that everyone below them is just lazy and doesn't deserve access to scarce resources. It's a much simpler way of looking at the world, so you can avoid looking in the mirror.

Re: Economists who defend disaster profiteers are wrong

#422

Post by WalterBright » Tue, Apr 14, 2020, 6:36 PM UTC

michaf wrote: post #270

WalterBright wrote: post #230

Earlier quoted context omitted.

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. Can you provide a source for this claim? Thanks.

Eugene Weber's series of lectures "The Western Tradition".

Re: Economists who defend disaster profiteers are wrong

#423

Post by someguydave » Tue, Apr 14, 2020, 6:37 PM UTC

viklove wrote: post #421

numbsafari wrote: post #402

Earlier quoted context omitted.

It's not sarcasm at all. Does one person with a million dollars in excess liquidity to spend on water represent a greater "need" than one million people with no liquidity to spare? Would it be moral for that person to buy more than they need, solely to inflate prices? Would the resulting spot price in the market be in any way a meaningful gauge of the actual need? Market prices are only one gauge, and they are pretty…

I think one of the facts many HNers struggle with is that the system that makes them wealthy is the same system that is starving people out and denying them access to healthcare. When you're a well-paid engineer you want to believe that you "earned" your position through hard work, but in reality its 90% luck. Some HNers even have their own successful business, and want to think that everyone below them is just lazy…

Please propose a system of distributing goods that is more "moral" or "fair" than the "highest bidder wins".

Re: Economists who defend disaster profiteers are wrong

#424

Post by WalterBright » Tue, Apr 14, 2020, 6:42 PM UTC

badpun wrote: post #291

WalterBright wrote: post #230

Earlier quoted context omitted.

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.

Countries have exported food at least since Roman times. Much of the ancient Mediterranean shipping was transporting food.

Hunger was still a constant specter, though.

Consider the rise in height in Americans after this achievement. This doesn't happen without plenty of food available all the time.

I'm old now. It wasn't until a couple years ago that I EVER went 24 hours without food (I was experimenting with fasting). Historically speaking, that is incredible.

Re: Economists who defend disaster profiteers are wrong

#425

Post by charlesu » Tue, Apr 14, 2020, 6:48 PM UTC

Kaiyou wrote: post #372

stronglikedan wrote: post #366

Earlier quoted context omitted.

> 31% is a finite number, that means scarcity. Scarity doesn't mean finite. It means shortage. Wasted food and vacant homes aren't shortages.

"Scarcity is the limited availability of a commodity", emphasis on _limited_. Scarcity does not mean shortage. It means you do not have infinite of something.

Scarcity: the state of being scarce or in short supply; shortage.

That's the common definition. There's also an economic definition having something to do with limited supply and limitless wants. I'll leave that to the academics. My argument is that there is enough food to feed the hungry and enough shelter to house the poor in the US. If someone has evidence to show otherwise, I'm open to it.

Re: Economists who defend disaster profiteers are wrong

#426

Post by WalterBright » Tue, Apr 14, 2020, 6:48 PM UTC

TeMPOraL wrote: post #255

WalterBright wrote: post #219

Earlier quoted context omitted.

Anti-gouging laws cause sensible people to hoard at the first sign of trouble.

They also arguably make people hoard less. If you can't resell for a large profit, there's no point in buying more than what you feel hedges your risk. So you'll buy 200 masks instead of 20 000. Disposable PPE is also funny in a way that it makes no sense to buy it unless you buy in bulk. If you can get 200 N95 masks for $20, it's OK. If you can buy 2 masks for $20, then you'd better spend $1000 or don't buy at all.…

> They also arguably make people hoard less.

There's no need to theorize or argue, the historical evidence is that price fixing (anti-gouging) leads to shortages (or gluts).

https://www.amazon.com/Forty-Centuries-Wage-Price-Controls-e...

Re: Economists who defend disaster profiteers are wrong

#427

Post by MisterBastahrd » Tue, Apr 14, 2020, 6:49 PM UTC

Consultant32452 wrote: post #419

MisterBastahrd wrote: post #385

Earlier quoted context omitted.

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 w…

Your position is moot. Without the emergency, there would be no incentive for the gouger to source and acquire the product. By acquiring the product, the gouger removes the product from the market for those who are following ethical guidelines, so he's not providing a service at all. You can't disentangle the moral or legal aspects of this just when it suits your whim.

Re: Economists who defend disaster profiteers are wrong

#428

Post by WalterBright » Tue, Apr 14, 2020, 6:54 PM UTC

downerending wrote: post #389

wpietri wrote: post #364

Earlier quoted context omitted.

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.

Disagree. Gasoline is perhaps the quintessential example of disaster price "gouging". Ask anyone in a hurricane zone. Personally I have mixed feelings: If the prices don't go up, the incentive to ramp up production is pretty weak. It does, though, seem inhumane that increased prices can have an outsized bad effect for the very poor in disaster situations.

What happens in a hurricane zone (or used to happen until laws were passed against it) is everyone outside the zone with a pickup truck and a gas can would fill the can with gas and drive it into the zone and sell it at a profit.

This caused a huge hue and cry about how terrible it was. So the law clamped down on it.

Now people in a hurricane zone get no gas while they wait around for the government to provide some.

So, which is better:

1. gas at a higher price

2. no gas

?

Re: Economists who defend disaster profiteers are wrong

#429

Post by bhupy » Tue, Apr 14, 2020, 6:54 PM UTC

h0l0cube wrote: post #91

nonidentified wrote: post #76

Speaking as an economist, I tend to get nervous when other economists talk about circumstances where "morality trumps economics." As a profession, we have a miserable track record on morality. Economists widely endorsed eugenics in the first half of the 20th century, for example. And many modern economists endorse a minimum wage, as eugenicists did then, but with even less regard for the harm it causes. Personally, I…

> And many modern economists endorse a minimum wage, as eugenicists did then, but with even less regard for the harm it causes. What are the harms of a minimum wage? Do you have any empirical sources to back that up?

I think most people agree that minimum amount of money should be a basic right of every working person, but a minimum wage isn't the only way of accomplishing this — a guaranteed basic income or a negative income tax are superior alternatives to accomplishing the same goal. The US already has the Earned Income Tax Credit.

When you institute minimum wages (wage floors), businesses pass on those costs to the customer, resulting in inflated prices.

Imagine a pizza maker's market value is (say) $5/hour. They are able to produce (for simplicity's sake) 5 pizza's per hour, or $1/pizza. Including other operating costs + 3-5% profit margin (that's the average for most restaurants), let's say that the pizza sells for $5. Thus the pizza maker can expect to earn $40/day, on the market. Suppose the "livable minimum wage" should be $15/hour, or $120/day. There are 2 ways to guarantee this:

A) The government deposits an extra $80 to the worker, allowing them to make $120 that day. They can buy a pizza for $5, which is about 4% of their daily wage.

B) The government mandates a minimum wage of $15/hour, which means that the labor portion of the pizza cost goes up from $1 to $3 per pizza. The pizza now sells for $7 so that the shop doesn't go out of business. The worker makes $120/day, and can buy a pizza for $7, which is about 6% of their daily wage.

Notice that in (B), the worker is actually worse off, even though they have the same amount of money in their pocket. The worker has to pay a higher percentage of their pay to afford to eat, but this $2 extra means absolutely nothing to a billionaire, it's pennies to a rich person. This is functionally a regressive tax. In scenario (A), the worker is better off, and the welfare system that sustains it can be funded through progressive taxes, which targets rich people.

We as a society (rightly) demand a minimum standard of living for everyone, and we collectively pay for that one way or the other. Either we pay taxes to fund a welfare state, or we pay inflated prices for goods and services to maintain wage floors.

Paying taxes for welfare is more progressive, as the burden falls on richer people. Paying inflated prices for goods and services is regressive as it's a burden that falls equally on the rich and the poor.

Re: Economists who defend disaster profiteers are wrong

#430

Post by jcranmer » Tue, Apr 14, 2020, 6:55 PM UTC

Consultant32452 wrote: post #420

jbay wrote: post #417

Earlier quoted context omitted.

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…

What you're missing is that, in the timescales at issue with price-gouging, both supply and demand are inelastic. So at, say, $10, you'd have 100 units of supply and 200 units of demand, while at $20, you have... 100 units of supply and 200 units of demand.

Higher prices don't discourage hoarders, because a fair fraction of the hoarders are going to be people who are planning on reselling them to desperate people, so they're virtually guaranteed a profit. If you want to discourage hoarders, then enact purchasing limits: limit 1 per person.