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$5000 per violation of price-gouging in CA

caloes.ca.gov

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

#51

Post by sollewitt »

logicchains wrote: post #13
sollewitt wrote: post #9

Earlier quoted context omitted.

That's just poor reasoning on multiple levels: it assumes supply, the argument that it prevents hoarding misses that as prices are driven up the incentive to hold increases, and it overlooks that some populations night need the good immediately so real harm is being done. The gain is personal, the harm is social, this is ethics 101 and solipsistic pseudo-libertarion reasoning doesn't make it right.

>solipsistic pseudo-liberation reasoning Basic economics is solipsistic pseudo-liberation reasoning now?

Should have been libertarian, autocorrect. But this isn't basic economics, is the point: this is about what to do with limited resources in the social context of an emergency. Ignoring the context to justify the economics is just dishonest.

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

#52

Post by logicchains »

nostrademons wrote: post #35
anikan_vader wrote: post #16

From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.

From a political standpoint, I see the point. Price gouging makes people extremely mad, and it redirects goods from poor people to wealthy people. When tempers are already fraying and maintaining social order is already difficult because of an emergency, the last thing a government needs is a nucleus for lots of pissed-off people to rally around. Remember that the first priority of any government is to keep itself in…

>it redirects goods from poor people to wealthy people.

In this case it's arguably something desirable, as the most at-risk group, the elderly, on average are much wealthier than young people. Someone over 80 is around 100x more likely to die from the virus than somebody under 40.

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

#53

Post by vikramkr »

logicchains wrote: post #29
vikramkr wrote: post #24

Earlier quoted context omitted.

I think governments would rather that people that get it first have access than the peoplwnehat can't afford it. If you're going to have to essentially have some people not get supplies, basing it off of wealth and income is not politically optimal

If we look at who it's most dangerous too, elderly people, then basing it off wealth would actually be in their favour compared to basing it off who can get to stores quicker to hoard it.

There are poor elderly people too. I think the best response in cases of true need like this is some sort of government intervention and rationing based on need as well as some sort of subsidy to make scaling production profitable. Politically the let the market decide ideology is utterly infeasible - not only are most politicians fundamentally good people that care about their constituents and simply aren't the type to stand by while there's a shortage, there's also the political consideration of how your relection chances will be impacted by attack ads detailing that time you stood by as an elderly individual saw a shelf stocked with purell but couldn't afford the gouged price who then went on to pass away due to the virus. Externalities might not be priced, but they can vote.

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

#54

Post by whatshisface »

geofft wrote: post #37
whatshisface wrote: post #4

Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those…

Isn't price-gouging usually (and definitely in this context) about someone who bought an item at a standard wholesale price and is reselling it at a markup? That's not about the reward for producing it, that's about the reward for being in the right place at the right time. You can still try to argue that it's economically reasonable to reward people for being in the right place at the right time (to incentivize peop…

Well, from the perspective of the buyer it doesn't matter if you're buying it for 20x the price from CVS or from Joe Schmoe Markup Inc. It matters to CVS, but that's their problem.

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

#55

Post by XorNot »

logicchains wrote: post #11
briandear wrote: post #3

An argument supporting gouging: https://reason.com/2019/01/31/price-gouging-is-supply-and-de...

You'll find a similar argument in any basic econ textbook. Put a cap on prices, then when demand rises for something (which normally leads to an increase in price, all other things being equal), the lack of an accompanying rise in price means there is no incentive to produce more of the good (no incentive for more producers to enter the market), so there isn't a corresponding increase in supply. Might work okay in Ch…

And like most things, basic econ is not the be all and end all of how the world works otherwise we wouldn't have those all-important second year econ classes.

Price gouging is not an efficient market result for anyone - the goods aren't actually, in real terms, worth the temporary price (the costs of manufacturer's switching over production is going to wind up much higher then any profit they can make once they're tooled up) nor does their value represent efficient allocation of resources - the guy with 11,000 bottles of hand sanitizer has no use for them, outside of the extremely limited window of people panicking due to uncertainty.

But really, whether anyone believes this can be viewed through a very different lens: multiple times in the past week, US exchanges have ceased trading due to automatic circuit breakers from 7% drops in the market. Surely if the market is all knowing we shouldn't trigger these mechanisms and instead just let the invisible perfect hand let people sell stocks freely. After all, if we don't allow sudden plunges, what incentive will there be for investors to properly allocate their risk in the future?

But, no one's making that argument. Nor is anyone questioning why it was suddenly urgent that the government put $USD1.5 trillion of liquidity into the market.

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

#56

Post by daenz »

yladiz wrote: post #26
anikan_vader wrote: post #16

From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.

No, it ensures that companies (and individuals) won't increase the price unnecessarily just to profit additionally from something like a pandemic.

...by placing an artificial price ceiling that will ensure a shortage of goods.

In a pandemic, prices go up, rightly or wrongly, because there is an increased demand. This price scales as the difference between supply and demand grows, in order to decelerate how fast the shortage occurs relative to the speed of creating the good. The price ceiling just means the shortage happens immediately.

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

#58

Post by ikeboy »

Dangeranger wrote: post #27
whatshisface wrote: post #4

Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those…

When people charge 10-20X more for something that could have been purchased in a local store before the “arbitrage” businesses purchased all the inventory, that is clearly price gouging.

It depends on the details. The recent NYT article about buying in stores and selling online mentioned that more than 50% of the sale price could be eaten up in shipping and other fees.

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

#59

Post by mindslight »

What is everyone experiencing for price gouging / shortages on the west coast?

Even though I stocked up myself, I feel like shortages of food and general supplies are going to be temporary. The immediate goal is to avoid having to go back to stores before everybody else figures out the new normal (eg don't fucking stand there coughing in the middle of the store).

Hand sanitizer/IPA seems easy to produce in industrial quantities, and it feels like that will sort itself out in a week or two.

Respirators/masks seem the only thing that are and will continue to be in short supply. But it feels like government (including health providers) is going to have to get them into everybody's hands eventually. But maybe that's overly optimistic.

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

#60

Post by dmix »

nostrademons wrote: post #35
anikan_vader wrote: post #16

From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.

From a political standpoint, I see the point. Price gouging makes people extremely mad, and it redirects goods from poor people to wealthy people. When tempers are already fraying and maintaining social order is already difficult because of an emergency, the last thing a government needs is a nucleus for lots of pissed-off people to rally around. Remember that the first priority of any government is to keep itself in…

Pictures of empty shelves on social media is causing panic and driving more shortages. This is a lose-lose situation for gov interference. This sort of punitive response will always be far too late or too little to be effective anyway.

The markets will respond far faster with supply than setting price ceilings and fining random opportunists will.

So few people question whether it will actually work in the real world before asking if in an ideal scenario it is an effective idea.

I mean what’s going to happen next time? Are they going to lock up all the TP and ration it out on first signs of any sort of epidemic or other causes or panic? Because that’s when the hoarders and grey market guys were already stocking up.

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