> What gouging does in an emergency is allocate the needed supplies to where they are needed the most
This statement is disconnected from reality.
The concept you're thinking of is that the supplies will go to the people who will pay the most for them.
Who will pay the most for them is unrelated to who needs them the most. It has more to do with who has disposable income.
If everybody is panicking, then the goods go to the panicking people who have the most disposable income. This has absolutely nothing at all to do with where the goods are most needed.
E.g. the ultra wealthy can easily outbid hospitals for PPE. You are free to argue that the ultra wealthy need PPE more than hospitals, but it's going to be a hard sell.
> If everybody is panicking, then the goods go to the panicking people who have the most disposable income.
Higher prices often discourage people from over-buying an item.
For example, at the beginning of the pandemic, people sensed toilet paper might soon become hard to find. Its not perishable, so when they found it at a normal price, they stocked up. Why not? They know they'll use it eventually and they don't want to be hunting for it a month later. You don't need to be a super wealthy person to pre-purchase a years worth of TP.
But, if TP had been selling for double the normal price, they would have bought less. There's no need to pay pandemic prices for TP that you'll be using next year.
And the doubled price would keep people who are least able to pay from getting necessary resources, also potentially encouraging them to continue working in risky conditions to earn extra income to do so, helping in some small way to perpetuate the pandemic itself.
If you're looking for a market-based solution to hoarding, there are others besides price gouging. Amazon's approach, at least in areas where they have complete control like their pantry, fresh, and whole foods services, can serve as an example: They want happy customers. Happy customers return and buy more stuff. Customers who can't buy what they need because it's sold out due to hoarding are not happy. Amazon institutes a policy for orders through fresh/pantry/whole foods that limit TP purchases to a single package. More customers get needed supplies, stay happy return to buy more, make Amazon more money in the long term.
Supply/Demand price curves & price elasticity are not the only rational market-based methods of price discovery. More subtle and long-term considerations breed other strategies.
A doubled price of TP isn't going to prevent almost anyone from not having enough. (Yes yes, I know there are edge cases where $5 matters, but weigh that against the alternative.)
On the other hand, a doubled price of TP means that hoarding 10,000 packages becomes far more expensive, and less profitable.
You have likely never been in a situation where you have to weigh the purchase of food against the prospect of eviction. I grew up that way, and labelling those circumstances "edge cases" is a tidy way of dehumanizing the situation that many millions of people find themselves in. I won't do the work for you: lookup how many people are on SNAP programs. These are not edge cases.
Think market forces can solve all economic problems? Fine. But don't let that blind you to the fact that they have not done it yet and large numbers of people live in poverty and misery at the bad end of the economic scale.
While not perfect free market/capitalism pulled up more people from poverty than any other system. It is usually about who you compare yourself to. If you compare yourself to 1% of the most wealthy country in the world then you are most likely going to look poor. But if you compare yourself to the bottom 1% of the poorest country you most likely going to turn out sickly rich. And when you do the same comparison to the poor in the far past then it gets even more crazy.
>While not perfect free market/capitalism pulled up more people from poverty than any other system
Nope not true - that award goes to communist China
>China lifting more than 800 million people out of poverty since the start of its economic reform is a "great story in human history", World Bank President Jim Yong Kim said today, underlining that there is "lessons to be learned" from this Chinese experience.
>Over the past three decades, China has successfully led the greatest poverty alleviation program in the history of the world. During that time, an estimated 500 million Chinese were lifted out of extreme poverty.
If it actually were exceedingly rare for the price of toilet paper the make a significant difference in people’s financial situation, then I suspect toilet paper manufacturers/retailers would realize that this means they’re leaving profit in the table, and they would raise prices.
That is not how markets work. As long as there is competition, prices drop to the bottom. It would take concerted effort to rise prices, e.g. by forming a cartel. That's illegal for that reason.
You can also calculate the situation for yourself. How much does a unit of toilet paper cost and how long does it last?
To me, the situation looks more like GP could be right and doubling the price of toilet paper doesn't kill people but rather stabilizes the situation. Besides, it's always possible to substitute the usage.
The 'edge cases' amount to probably at least hundreds of thousands of people in the US alone. Unless you're saying they're not "people who need toilet paper", dismissing them as outliers not to be worried about is just blatantly cruel.
"if TP had been selling for double the normal price, they would have bought less"
When people are panicking, I think the price elasticity of demand sharply declines, and the price elasticity of supply is small in the short run. Which in turn means that the time value of money skyrockets. This seems like it might be a clue as to why allocating stuff by price in crises is a bad idea.
> For example, at the beginning of the pandemic, people sensed toilet paper might soon become hard to find
No, it actually became hard to find quite rapidly, and remains so (with some relief as reopening progresses), because people stopped going out and using facilities that use commercial paper and therefore were using lots more home paper, and commercial and home-use toilet paper are different products with different supply chains, neither of which has much excess capacity above normal levels and which cannot easily shift to the other.
Hoarding was an overblown factor to which too much was attributed early on by observer’s who don't understand the relevant supply chain dynamics; higher prices would perhaps have reduced it (OTOH, they might not—rapidly rising prices often spur stockpiling-before-it-gets-higher the same way as anticipated or perceived unavailability), but it wouldn't have made a significant difference in the dynamics except that everyone who was able to get toilet paper would have paid even more.
To be fair, toilet paper is in a very special product category. It is used by everyone (sudden interest in bidettes notwithstanding), is pretty cheap, weighs very little and takes up an absolutely enormous amount of shelf space relative to its unit cost.
When the panic buying started here in the UK, people were stocking up 2x or 3x the amounts they'd normally buy. You don't need that many customers hauling out multiple 24-roll bags to completely exhaust the in-store stock. Sure, the managers would be stocking up as fast as they could, but even with 80+ pallets per restocking round, customers going locust will have them wiped out in no time.
This resulted in the very predictable photos of empty supermarket shelves. Toilet paper shelves were particularly empty because they couldn't hold that many sales units in the first place.
No wonder the stores imposed limits on how many units of product, or even category, you could buy.
> Higher prices often discourage people from over-buying an item.
Sure if prices are stable. But prices lie on a curve over time. And because prices are on a curve, the price itself is not what the market sees, but instead the curve of the change in price over time.
Price hikes cause FOMO. If you need something, and you're worried about the price going up, you're going to buy it now. This has most commonly happened with gasoline. During 9/11, the government had to tell gas stations, e.g., to not hike their prices, because that would cause even more panic -- there was no supply shortage.
The second aspect is those that can afford the risk see the sudden spike as an investment opportunity. One of our neighbors in the development used it to buy toilet paper and sell it at $5/roll. They're expecting the price to continue to rise. This is not much different than buying stock when the price of a stock is rising.
So yes, in if a market is rational and prices are stable (but high), then you're right. But lately, price spikes seem to be causing fear -- which, btw, people seem to like to game.
What actually appeared to happen is that people bought up as much toilet paper (and hand sanitizer etc) they could to resell on craigslist/kijiji at extortionary prices because there is demand inelasticity for these things. Doing this made people panic even more, and even more people got in on the gouging, etc.
Toilet paper started becoming available at stores again pretty much immediately after those sites started cracking down on this practice. There was plenty of supply, it was just being hoarded.
Hell, aggregate demand had not even actually changed. People don't suddenly use more toilet paper in quarantine for no reason.
>Toilet paper started becoming available at stores again pretty much immediately after those sites started cracking down on this practice
It's premature to assume that the return of normal supply was due to crackdowns of reselling on online marketplaces. There were a bunch of other factors that changed in the same timeframe
* stores imposed per-customer limits
* prices went up (both in terms of absolute prices, and discounts disappearing)
* as hoarders stocked up, their demand also went down(if you just bought 18 month's supply, you'd be less inclined to buy more)
* people were being assured by the media that there won't be a TP shortage, which probably decreased the amount of panic buying
Aggregate demand for home toilet paper rose as consumption of industrial toilet paper fell. Increasing supply of toilet paper is expensive and would not be profitable before toilet paper demand normalizes.
E.g. the ultra wealthy can easily outbid hospitals for PPE.
Sure. Jeff Bezos could also purchase and set on fire entirety of this year's agricultural production of California. Will he? Unlikely, as he has no need for it. Same with PPE: if there are so few PPEs that the ultra wealthy can buy up all supply just to cover their needs, or even 10 times their needs, the hospitals are screwed either way, because 10 times the needs of ultra wealthy is a few days of needs of a single hospital.
I think the GP post was a bit overzealous when they said "ultra wealthy", because even the more-or-less middle class (I'm assuming virtually everyone posting on HN) could afford to pay the ridiculous rates for hand sanitizer and toilet paper. I would complain about the prices but it wouldn't bankrupt me.
However, imagine a single parent who just lost their job because of COVID, and thus living on a very restricted income. Is this person less important than me? I don't think so, the world needs service workers a lot more than they need yuppie software engineers like me, but I'm still more likely to be able to afford the necessities.
This is always my problem with people who defend price gauging; there's always this hidden implication that a rich person is more deserving of something vital than a poor person. You are entitled to that opinion, but I fundamentally and completely disagree with you.
Consider the problem you're having. We'll stipulate this person isn't less important than you. But there isn't enough supply for both, so one of you will go without. If we use pricing to determine who it is, the result is arbitrary -- not based on importance. But if we sell at the non-shortage price until we run out, the result is still arbitrary -- you haven't improved it, it's still not based on importance and someone equally deserving still goes without. The arbitrary method used is different, but it's neither worse nor better.
Meanwhile the higher prices deter the person who was going to go in and buy out the entire store, because they can't afford to do that at the higher price, and then the supply is at least more evenly distributed even if it isn't perfectly evenly distributed.
Better yet, the person who had foresight and spent resources to create a stockpile ahead of time then has a large financial incentive to distribute it instead of continuing to hoard it, and people have a greater incentive to do that again next time (which is good).
Stores can and have limited the quantity one can purchase during this pandemic which is arguably a better method for preventing hoarding.
Many of the supplies issues aren’t due to actual limited supply but due to behavior patterns that stem from either fearing that something would run out or people taking advantage of the situation buy all the toilet paper in town and set your own price on the black/grey market.
The problem isn’t people having the foresight to spend resources it’s people creating artificial shortages. This isn’t the type of behavior you want to encourage.
This is also not a free market, the free market doesn’t work at short time frames and emergency situations.
> Stores can and have limited the quantity one can purchase during this pandemic which is arguably a better method for preventing hoarding.
At which point you're assuming everybody has the same need, which is completely wrong. Someone walks into the store to buy on behalf of six dozen people because their ordinary supplier is out of stock and you won't give them any more than what you will a single individual. Requiring every individual to come into the store one by one is both highly inefficient and, in this context, the exact opposite of social distancing.
Meanwhile every individual who comes into the store for unrelated reasons then also buys the individual limit on the scarce good even when they don't need it, because the price is still low.
> Many of the supplies issues aren’t due to actual limited supply but due to behavior patterns that stem from either fearing that something would run out or people taking advantage of the situation buy all the toilet paper in town and set your own price on the black/grey market.
Which higher prices prevent, because hoarding large quantities is very expensive when the price is high, and arbitrage is unprofitable because you can't buy low and sell high if you have to buy at the higher price.
> The problem isn’t people having the foresight to spend resources it’s people creating artificial shortages. This isn’t the type of behavior you want to encourage.
You can't corner the market on a global commodity by buying out local stores. If it's selling for $50 where you are and $5 in other places then enterprising people will get in their cars and undercut you until the price is much closer to uniform.
Meanwhile to make money the hoarders would essentially need to act as a cartel (not selling in order to keep the prices even higher), but with uncoordinated actors everybody has the incentive to defect and sell as soon as the price is above fair market value. If you're keeping prices high by hoarding that means somebody is going to be left holding the bag because the price came back down before they unloaded their hoard, and everybody has the incentive to sell first and not be that guy. The hoarder's greatest risk is a container ship full of product comes into port and resolves the shortage overnight -- and the higher the price the more likely that happens.
> This is also not a free market, the free market doesn’t work at short time frames and emergency situations.
There is no evidence for this. The amount of time it takes for people to respond to price signals and arbitrage opportunities is measured in hours, not days or weeks.
> At which point you're assuming everybody has the same need, which is completely wrong. Someone walks into the store to buy on behalf of six dozen people because their ordinary supplier is out of stock and you won't give them any more than what you will a single individual. Requiring every individual to come into the store one by one is both highly inefficient and, in this context, the exact opposite of social distancing.
The assumption that everyone has the same need is less wrong than a system that implicitly assumes need is proportional to disposable income. Someone walking into a retail store to buy on behalf of six dozen people is theoretically possible, but definitely is not common, and almost certainly less common than someone trying to hoard excess supplies for personal use.
> less wrong than a system that implicitly assumes need is proportional to disposable income.
you keep mentioning disposable income, as tho that's a measure that determines buying power. It's not. The measure is available funds, regardless of source.
A person with a lot of available funds _do_ have a higher claim than someone who doesn't. The source of the funds may be their prior work and savings (aka, disposable funds), or it could be funds collected from many people (such as donations, or family pooling funds). It is not clear how you can make a distinction between many people pooling their funds, vs somebody who has collected large amount of funds prior (from income or wealth). This is why price fixing doesn't work well, except under quite exceptional circumstances (e.g., all transport infrastructure is disrupted), in which case, rationing by decree works better than price fixing.
I've yet to see any evidence or plausible explanation for how pooling funds to have one person buy a large quantity of necessities could be a widespread strategy in this situation. It seems like this is just a red herring, and that the vast majority of people tying to buy large quantities of eg. TP, hand sanitizer or masks are either irrationally hoarding excess supplies for personal use, or planning on scalping.
But even if shopping on behalf of the entire neighborhood is common, is protecting that strategy more important than deterring hoarders and preserving the ability of underprivileged people to buy what they need for themselves?
> Stores can and have limited the quantity one can purchase
It's easier to game, (eg. buy going to multiple stores or at different times of day) and it only solves the hoarding problem.
Price increases solve hoarding, allocation, and encourage new production.
> Meanwhile the higher prices deter the person who was going to go in and buy out the entire store
Yes, if prices are stable. But the market is not a vacuum of nothing but prices.
If the price is high and dPrice/dt has been zero for a year, then yes, what you're saying is true.
But if dPrice/dt is positively high, the market can overreact to the change from fear of missing out on the current price, and fear of missing out on an investment opportunity.
It's very similar to the price of a stock crashing. People don't know where the bottom is. Fear takes over. And the price will stop dropping when the fear stops.
I don’t defend price gouging because the rich are more deserving. I defend price gouging because it can help create supply.
Next time your area is hit with a widespread electric outage and all the generators are sold out, call Home Depots 500 and 1000 miles away. Chances are they’ll have a normal supply on-hand. Maybe some of those will find their way into your area, but I can be pretty damn sure it would happen faster if they were selling at 1.5x the normal price in your area.
Covid made this very clear. Countries that limited price gouging had far less panic buying and far fewer actual shortages than countries that ignored it.
Far from "creating supply" price gouging is read as a signal that supplies are precarious and may run out at any moment. So buyers tend to stock up, just in case. The result is widespread shortages.
And of course generators are useless if they're >500 miles away. No affordable markup is going to get essential goods into an emergency zone if they have to be trucked a long way.
Bottom line is you're going to get much better results from organised community preparedness and intelligent collective response than from a few random spivs hoping to make some extra dollars.
Where I live (NYC) there was pretty extreme panic buying despite laws against gouging. It’s only recently become easy to find toilet paper, masks, etc.
The markup doesn’t have to “affordable meaning cheap”; it just has to “affordable meaning someone wants to pay it”. 500 miles is a one day drive away for a truck full of generators. 1000 miles is a team drive and still arrives the next day with a truck full.
> a rich person is more deserving of something vital than a poor person.
Consider if there's a fixed supply X and Y people. (Y - X) people aren't going to get it. With rationing, the government is going to decide who is more deserving. Naturally, those government officials are going to decide that themselves are the most deserving.
This happens under every socialist system.
When the US government built nuclear shelters, who were they built for? Not you and me. They were built for government officials, and built with every luxury.
The next tier of the "deserving" will be the supporters of those government officials. Next will be the politically popular groups of people who will be more deserving.
Is that fair?
But without rationing, the supply of X will increase to the point where everyone can afford it.
> When the US government built nuclear shelters, who were they built for? Not you and me. They were built for government officials, and built with every luxury.
And here I thought they were built for everyone. Oh wait, that was on the Soviet side, where you could expect to find a shelter in any given neighborhood (at least in larger cities). They likely weren't anywhere near as luxury, though.
> But without rationing, the supply of X will increase to the point where everyone can afford it.
That's an assumption that works long-term. In an emergency, you can consider supply as fixed. Ramping up production takes many weeks at best, and producers are unwilling to invest in it anyway, unless they can expect the emergency to last for all these weeks. There's no point in upgrading your manufacturing capacity if, by the time you're done, the demand will be back to normal. It's a point that was explicitly raised by at least one US medical supplies manufacturer in the last two months (probably many more, but I remember that one interview).
In an emergency, your choices are to either a) ration the goods, b) let speculators hoard all the supply and make it unavailable until pretty much the last minute (and a big chunk of it not even then), or c) freeze prices, preventing hoarders from speculating on them while still maintaining basic market mechanisms.
> In an emergency, you can consider supply as fixed.
You could, but that would be a mistake.
Consider gas rationing. Everyone gets 5 gallons. But everyone's utility for gas is different. Some need 10 gallons, some need 1 gallon. This reduces availability of gas, because the 1 gallon person is going to hoard the extra 4 "just in case".
Don't believe me? Check out gas rationing in the US in WW2.
Letting the price float means gas is reallocated from the least useful to the most useful uses, effectively increasing the supposedly "fixed" supply. (Hoarding is the least useful of the least useful uses, even if you're just hoarding the part of your ration you don't need.)
As for the Soviet Union, it was notorious for housing shortages. I bet if the supply of air raid shelters had been tested in an emergency, you and I both know it would be insufficient for those who weren't Party members.
> speculators hoard all the supply and make it unavailable
Speculators don't profit if they don't make it available.
> Don't believe me? Check out gas rationing in the US in WW2.
Need to read up on that. I'd assume you'd get your allotment in form of a token, which you could trade for something else if you didn't need it. While this wouldn't solve the problem of the price gougers, it would at least ensure a baseline minimum for everyone.
> Speculators don't profit if they don't make it available.
Speculators profit best when they make it available at the point when they can command the highest price, not at the point where it could do most good to mitigate the crisis that's driving the prices up.
> I'd assume you'd get your allotment in form of a token, which you could trade for something else if you didn't need it.
Black market gasoline was illegal, but of course that didn't stop a black market from happening, and at much higher prices than the market price would have been.
> Speculators profit best when they make it available at the point when they can command the highest price, not at the point where it could do most good to mitigate the crisis that's driving the prices up.
For any system, one can always construct scenarios where resources are allocated sub-optimally or unfairly.
We don't have to like capitalism, sometimes even its proponents refer to it "the worst system except for all the others."
But usually the alternative to capitalism isn't perfection, it's something worse. Like a political boss who abuses his power to seize the goods and hand them out as political favors.
The big mistake with COVID-19 was telling individuals to boycott masks and that it was wrong to buy or wear them. We could have opened whole new factories for producing them by now, if only demand had been encouraged rather than suppressed.
> The big mistake with COVID-19 was telling individuals to boycott masks and that it was wrong to buy or wear them. We could have opened whole new factories for producing them by now, if only demand had been encouraged rather than suppressed.
Classic market economics in a vacuum.
Without the suppression of masks, mass chaos and social unrest would have ensued. The societal fear and unease was easily diverted towards non-essentials (TP, hand sanitizer) - proper public health advice could be given long after shelter-in-place, and thus societal order was established. People would have died had authorities came out the gate stating masks were critical to one’s health.
So many people forget that you have to control the population in times of exceptional fear and anxiety or at any stage you risk a partial or complete societal collapse.
I'm not a socialist, I more or less support capitalism, but there's a reasonable middle ground between Laissez-faire capitalism and Stalin-esque socialism.
It's not like I found this really obscure edge case. Almost 30% of America has lost their job in some capacity; this isn't just some weird contrived example, and it's dishonest to act like it is.
Service workers, at least in the US (I haven't lived anywhere else) are pretty damn vital to the US economy, but are also less likely to be able to afford price-gauged supplies like masks and hand-sanitizer than a yuppie like me. If we don't have some form of regulation to stop price guaging, we are sending a signal to 30% of America that they are simply less deserving of life than the yuppies that depend on them.
I don't particularly care about people hiking up the price of bread machines and video games and whatnot, but I cannot in good conscience defend people who do things that will lead to poor people dying.
It doesn't matter who could theoretically afford them at centrally-planned prices. Where I live the shelves at hardware and drug stores had been empty of masks since mid-February.
While Americans were being told not to buy them, organized groups were buy them out of American supply channels and shipping them to mainland China.
It would have been better if Americans had bought them and kept them around. They could have been used here by individuals, donated to care providers, or even (horrors) sold for a profit.
> The big mistake with COVID-19 was telling individuals to boycott masks and that it was wrong to buy or wear them.
> While Americans were being told not to buy them
They didn't tell people to "boycott" masks, they said that they weren't effective at stopping COVID and that people in hospitals needed them more than the average citizen.
The initial research for masks indicated that they weren't helpful, due to Coronaviruses showing up on the outside of the masks after asking an infected person to cough. It wasn't until a few weeks later when they noticed that the petri dishes that the patients had coughed into had substantially more virus reproduction without masks than with the masks. The people doing the research weren't lying, it was a very logical sequence of events. Sometimes initial research implies an incorrect conclusion, that's why it's called "initial research" and not "conclusive research", which is why they "changed their minds" afterward. This is well documented and is not controversial [0]. The way you frame it, and the use of the word "boycott" is incredibly disrespectful to the people studying this.
I have absolutely no problem with being considered 'disrespectful' of anyone who told Americans not to wear masks during a respiratory pandemic. (Go ahead downvoters, do your thing.)
One cannot claim that both A) masks are "not effective at stopping COVID" and B) "people in hospitals needed them more than the average citizen". It's a laughably obvious contradiction.
This is a lie (sorry, yeah, it is) pushed by people who wanted to bully individuals out of their own PPE in a misguided attempt to make up for the failure to plan by the larger organizations (government, healthcare orgs) that were responsible for doing so.
The reality is that masks are effective in stopping the transmission of coronaviruses and every country in Asia knew this from experience with SARS-1.
> One cannot claim that both A) masks are "not effective at stopping COVID" and B) "people in hospitals needed them more than the average citizen". It's a laughably obvious contradiction.
It's not a complete contradiction. Masks are required by hospitals for many reasons other than Covid. The initial logic was if everyone bought out masks there may not be a supply for even these other cases.
Though, I agree this was needed because of their failure to plan. If there was better planning the mask supply would be a lot better. I personally believe they held off on recommending the general public to wear masks because they knew they didn't have supply for medical staff.
Also, come on, don't taunt people to downvote you. That's really not productive. It's also against the HN guidelines.
> One cannot claim that both A) masks are "not effective at stopping COVID" and B) "people in hospitals needed them more than the average citizen". It's a laughably obvious contradiction.
One can claim that N95 masks are effective at reducing infection rate of hospital staff when properly fitted, changed regularly and worn by people who are trained not to move them around, touch their faces etc etc.
One can also claim that masks which are not well fitted, worn by untrained individuals, who may wear them wrong and who may touch their faces more as a result of wearing them, could cause more harm than good.
> One cannot claim that both A) masks are "not effective at stopping COVID" and B) "people in hospitals needed them more than the average citizen". It's a laughably obvious contradiction.
Of course you can, and it's not a contradiction. It's true for surgical masks, whose purpose is to prevent the wearer from spreading the infection around; you can apply social distancing in lieu of these masks, which is not possible for medical staff. It's also true for respirators, which require specialized training to be worn correctly, which is something the medical staff has, and regular citizens don't. And again, most people can use social distancing as a substitute.
The problem with masks was always that there just wasn't, and isn't, enough of them available to equip everyone. So governments had to prioritize, and healthcare workers need PPE more than most people not in healthcare. That doesn't justify downplaying the actual effectiveness; if it were up to me, I'd just say that yes, they're effective if properly used, and refocus the propaganda efforts on guilt-tripping society into donating all the hoarded PPEs to hospitals and clinics.
> It's true for surgical masks, whose purpose is to prevent the wearer from spreading the infection around; you can apply social distancing in lieu of these masks, which is not possible for medical staff.
This isn't an argument that they're ineffective for stopping transmission. It's an argument that there are alternatives. And many people aren't/weren't able to fully social distance either, which is why masks were (and are) still useful. Recommending against N95 use while encouraging the use of cloth barriers was an easy, obvious step to take that our structurally incompetent public health agencies failed to do (among many, many other failings).
> It's also true for respirators, which require specialized training to be worn correctly, which is something the medical staff has, and regular citizens don't.
A California study showed that 65%[0] of healthcare workers apply respirators incorrectly; the population baseline is 72%. Your argument proves too much, unless you think that respirators are useless for doctors and all the complaints about PPE shortages were pointless whining.
The point here is that the evidence we had in February and early March was more than enough to make a sane decision on masks, reducing spread and individual risk while not exacerbating hospital shortages (in and of itself a symptom of institutional incompetence). It's beyond me why people are bending over backwards to avoid admitting the institutional stupidity the early days of the pandemic were wracked with.
> Your argument proves too much, unless you think that respirators are useless for doctors and all the complaints about PPE shortages were pointless whining.
I don't think it does. Even the stats you quoted show that respirators will be more effective, on average, for doctors, than they will be for general population. At the same time, protecting a medical worker will give you "more bang for your buck" than protecting a random citizen. You should also count in the probability of actual exposure to the virus, which for general population is low, and for the hospitals (both the workers and the hospitalized) is absurdly high. All of this points towards strongly prioritizing PPE supply for medical facilities.
> The point here is that the evidence we had in February and early March was more than enough to make a sane decision on masks, reducing spread and individual risk while not exacerbating hospital shortages
The evidence I saw directly late February/early March was that hospitals around the world were complaining that they have days' worth of PPE supplies and started to cancel elective procedures to conserve them, while the PPE market pretty much entirely dried up (beyond the price gougers offering their hoards on-line). Why hospitals didn't have stockpiles is another matter (and IMO has a lot to do with optimizing costs, and - in countries with public healthcare - cries for leaner governments, cutting out fat, making things more market-driven). But my point is, there was never enough PPE on the market for everyone; there was barely enough for medical workers and industrial use, both of which had predictable demand around which the whole supply chain stabilized. So some kind of action that prevents general population from buying up all PPE on the market was warranted - though I don't like the one taken, which was lying to people about the effectiveness.
If you protect general population then you reduce also exposure of the doctors.
Preventing general population buying up all PPE does not necessary require lying about its effectiveness.
This lie has second level effects because now many people think that wearing mask is not effective and it is difficult to implement mask wearing practice.
I know that it has been impossible at least in one country to get people to wear masks because of this.
> The initial research for masks indicated that they weren't helpful, due to Coronaviruses showing up on the outside of the masks after asking an infected person to cough. It wasn't until a few weeks later when they noticed that the petri dishes that the patients had coughed into had substantially more virus reproduction without masks than with the masks. The people doing the research weren't lying, it was a very logical sequence of events. Sometimes initial research implies an incorrect conclusion, that's why it's called "initial research" and not "conclusive research", which is why they "changed their minds" afterward. This is well documented and is not controversial [0]
From your link:
> This experiment did not include N95 masks and does not reflect the actual transmission of infection from patients with COVID-19 wearing different types of masks. We do not know whether masks shorten the travel distance of droplets during coughing. Further study is needed to recommend whether face masks decrease transmission of virus from asymptomatic individuals or those with suspected COVID-19 who are not coughing.
Masks aren't some cutting-edge, space-age drug that may cause cancer. They're a piece of material placed across the nose and mouth, and have been in use for literally thousands of years. We have strong priors on their value in preventing the spread of respiratory diseases in general, and in the absence of proof of their ineffectiveness at doing so for Sars-CoV2, recommending their use was obviously the prudent course of action.
None of the available information, including the study you link, made it a good idea to recommend strongly and repeatedly against wearing masks, up to and including the Surgeon General exhorting "Seriously, people - STOP BUYING MASKS".
The midwit religious adherence to scientism on parts of the left has been one of the biggest cultural failures of the pandemic, a mirror image to parts of the right's knee-jerk distrust of experts. The scientific method is the greatest knowledge-generation engine that's ever existed, but it doesn't mean forfeiting our inability to reason about anything until there's a micro-targeted peer-reviewed trial. Reasoning under uncertainty is difficult, but our public health authorities have proven themselves to be incapable of fairly basic critical thinking. The idea that this is a "logical sequence of events" is beyond laughable.
It doesn't have to be Jeff Bezos. At the start of the pandemic in the US there were plenty of stories of bad actors leveraging their credit to buy up high demands items (toilet paper, hand sanitizer, etc) all around their local area and selling it at a premium online.
So the goalpost has been moved from ultra wealthy to anyone with a $2k limit credit card. There is actually an easy way to make it hard for anyone with a $2k credit card to buy up all the supplies: just allow supermarkets to raise the prices.
The goalpost was placed wrongly, likely by accident. It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis, of whom there's much more than the ultra-rich, and who have much stronger incentives to buy up the supply.
> allow supermarkets to raise the prices.
That would just price out anyone without $2k credit.
> It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis
If the store itself is allowed to raise prices then there is no opportunity for profiteering because they'd have to pay the store the market price to begin with. The arbitrage opportunity only exists as a result of the price controls.
> That would just price out anyone without $2k credit.
It would price them out of buying out the whole store, not price them out of buying a few for their own use.
It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them.
The way I see it, distributing universally needed goods in a crisis is about flattening the distribution of wealth one has vs. amount of goods one can get. Usually competition provides a downward pressure, but I think this fails in times of sudden demand shifts. As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. Eventually, a peak is reached, all those pent-up stock starts getting unloaded on the market, prices go down - but this evolution takes time, and throughout all this, a lot of people cannot afford to buy the good.
So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies, and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
> It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them.
The price controls actually make the price higher, because then the normal channels run out of supply and if you need it you have to turn to the black market. The black market prices are higher both because the people who didn't need it very much but lucked into official supply weren't deterred by pricing (wasting supply) and because the black market operators can collect a risk premium for breaking the rules.
> As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices.
If they expect the price to be higher tomorrow then all they have to do is demand that price today. You can still get it from them.
And that's what you want, because if the shortage is going to get worse rather than better over time then you want the higher prices immediately to induce rationing and avoid an even worse shortage in the near future.
> So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies
The assumption is that this actually happens.
If the price of a mask triples from $1.50 to $4.50, even someone making minimum wage can afford a mask, or even ten masks, if they really need them. If they don't really need them then they may be deterred by the price, but that's the whole point.
> and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
Which the high prices do by themselves. Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit.
> Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit.
That assumes the price is stable or near the peak. But if the price curve is rising, that's no different than a stock that's going up, is it?
You're still buying low and selling high. If the price goes up $10/week for 30 masks, you're making money by hoarding them.
If everyone knows the price next week will be $10 instead of today's $3, why would the today's price be $3? Why would supermarket sell it for $3, if they expect the price next week to be $10? Why not set it to $10 outright?
Opportunist speculators who buy up all of supermarket's stock aren't going to be in it for a long term: it's super high risk. They want to buy it cheaper than it should be, and sell for it for what the price should actually be. Holding onto product for long is very risky.
Because speculators create their own temporary price increase. $3 apiece may be a stable price in store, and the store sees no reason to increase it. And then a bunch of speculators show up, buy all the masks in the region, betting the local market will bear a price of $10 apiece. If the demand is inelastic enough - as it is with emergency goods - the market may very well bear that price, or even $20 apiece as people suddenly notice there are no masks in stores and enter panic mode. So the end result, in the best case where nobody got priced out, is that everyone now paid $20 for their mask where they could've paid $3. That money goes to a bunch of speculators who provided no value, no service, just seized the opportunity to extract rent out of the market.
Ultra wealthy aside, what about the slightly wealthy?
In CA the bottom 1/4 of households make $35,000 a year. Without price controls, will they ever be able to afford PPE in an emergency when they have to compete with the 15% of people making $150,000 a year?
Are you sure? PPE might be a bad example, but back in March rumours have been circulating in my home country about ultra-wealthy "private persons" buying ventilator equipment to be put in their homes.
I don't know if those rumors were true, but they very well might have been - those ultra-wealthy used to fly to EU for treatments, but when the borders closed and they were faced with the reality of the medical care system they've built for "commoners"... "Better to buy a ventilator, just for me and for my family. Just in case, you know."
Shortages happen when demand exceeds production capacity, or if prices are artificially capped to make increased production unprofitable.
Usually the more of a product is bought, the more get produced. If the world will need more ventilators over the coming months, the best thing is for everyone to buy as many as they can right away.
There aren't that many "ultra-wealthy" people who are going to hoard ventilators. Even if they did buy them as an impulse, it would be an unusual scenario for them to sit unused in storage while the local hospital has patients going without them. Even the ultra-wealthy will value their friendly relations with the local ICU doctors more than that box gathering dust in the corner and donations will happen.
So they bought ventilators. Did hospitals run out of ventilators? No. Did they even get to use the ventilators they bought? No. What's the problem then?
Actually, yes, there was a lack of ventilators in hospitals in my home country at some point. Luckily, not for long, as it's one of the countries which produces them. I can imagine that some of the neighbouring countries had it worse.
Not only does it actually pass the sniff test, but allowing price gouging creates a market incentive for people to hoard supplies until they think prices are at their highest, then try to sell their stock for maximum price: https://www.timesfreepress.com/news/local/story/2020/mar/14/...
Hoarding artificially drives up the prices and keeps emergency supplies out of the hands of those who need it most.
When you disallow price gouging, you remove one of the worst incentives for hoarding of critical supplies. You still get some people who think anti-price-gouging laws don't apply to them, or who have never heard of such laws, but that doesn't mean allowing price gouging would improve the situation by any means. On the contrary, more people would hoard for longer, because they see the available supply constricting even faster (due to more people hoarding), driving prices even higher, making their own hoard of supplies seem even more likely to be their ticket to wealth, and if it's perfectly legal, nothing is going to rain on their early retirement.
In the above case of someone hoarding 17,700 bottles of hand sanitizer, they ended up donating the entire stock to avoid being fined for price gouging, which seems like an example of the system working correctly to disincentivize hoarding during an emergency: https://www.nytimes.com/2020/04/22/us/hand-sanitizer-matt-co...
That man bought a good in a place where there was high supply and low demand. He wanted to sell it in a place that had low supply and high demand. There were people who were desperate for hand sanitizer in coastal urban areas. They were willing to pay this man for it. Had he been left alone, at the end of the day everyone would have been better off. The people who sold him the hand sanitizer are better off (otherwise why are they selling hand sanitizer?). The people who most wanted hand sanitizer would have gotten it, and this man would have been compensated for his foresight and scrappiness. All voluntary transactions with no coercion.
Instead the local government sent men with guns to his home and "encouraged" him to "donate" his hand sanitizer. Then it sat in a church until it was eventually distributed to local firemen, policemen, and medics... in a county that (at the time) had a total of 1 confirmed case of coronavirus. Now he's poorer and potentially facing jail time. And thousands of people in places like New York and New Jersey went without hand sanitizer and were more likely to spread the disease. I'm guessing at least a few people died because of this.
My go-to story of price-gouging laws causing more problems is Michael Munger's They Clapped: Can Price-Gouging Laws Prohibit Scarcity?[1], which details the effect these laws had after Hurricane Fran struck Raleigh, NC. It's yet another instance of a well-intentioned law that makes people worse-off.
I completely disagree. Your comments on the example I referenced don’t match reality or what was in the article at all. Read the first paragraph of the first article:
> On March 1, the day after the first coronavirus death in the United States, brothers Matt and Noah Colvin set out in a silver SUV to pick up some hand sanitizer. Driving around Chattanooga, Tennessee, they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves.
These people did not buy hand sanitizer in an area with high supply with an intention of getting it to people in need. They recognized that the value of hand sanitizer was about to go up, so they acted faster than everyone else to scoop up as much stock as they could, with the intention of charging people much more than they paid for it.
This had nothing to do with supply chain inefficiency, where supply is sometimes available in the wrong geographic location. They acted before the pandemic was a major national issue, in anticipation that it would become such a thing, in order that they would stand to profit from it without actually bringing any additional value to anyone.
That's the great thing about commerce: It makes selfish greedy people beneficial to society. It doesn't matter what this guy's intent was. The end result would have been to move a scarce resource from the shelves of some stores in Tennessee to where it was desperately needed. Instead, the resource sat in a church in Tennessee while thousands of people in New York and New Jersey were getting infected.
Here's a hypothetical: Imagine that instead of those stores having hand sanitizer for him to buy, they'd taken it off their shelves and sold it online at market prices (much higher than the price a few weeks before). The end effect would be the same, except without him as a middle-man. Would you prefer that the police go to those stores and "encourage" them to "donate" the supplies? In this hypothetical there's no middle-man, making it purely a distribution issue. So if you still have qualms about this hypothetical, then it's the price mechanism that bothers you and not the middle-men.
People love to hate on middle-men and claim they're not creating any value. But large companies are often too sclerotic to do things like arbitrage a couple products in their inventory for a short time. If not for the middle-men, many more people would have to endure shortages. That's the value they create.
> It makes selfish greedy people beneficial to society. It doesn't matter what this guy's intent was. The end result would have been to move a scarce resource from the shelves of some stores in Tennessee to where it was desperately needed.
You didn’t respond to anything I wrote. Why should I continue this discussion? It wasn’t a supply chain inefficiency issue. Period.
Nationwide chains are perfectly capable of recalling stock from stores that aren’t selling much of something, and moving it to stores that are running low on those supplies.
Local chains are capable of selling those products online, but there’s no need for them to massively mark up the prices to be incentivized to do so. Unless the product is intended to be a loss leader, they already have a profit margin factored in.
Hoarders create an artificial shortage, often in hopes of jacking up the price.
I think the misunderstanding here is that, like most people, you don't like when sellers make huge profits off scarce goods. After all, the seller has more than enough of the good for himself. Why is he also making absurd amounts of money off those who lack it? It feels wrong.
But prices aren't arbitrary. If the price of a good rises, it's because people bought all the ones being sold for lower prices. If people are buying hand sanitizer at $20 per bottle, it's because they can't find any for $19 or $18, let alone for $2 per bottle. The only reason this guy could sell hand sanitizer at such a price was because nobody else was selling it for cheaper.
Now the typical response to this point is that the prices wouldn't be high if we stopped middle-men from buying up all the supply. There's one solution that eliminates middle-men: Stores could raise prices. Then arbitrage wouldn't be possible. Sadly, stores tend not to raise prices because they're worried about violating price-gouging laws. It seems their fears are warranted.
But even in this situation, middle-men don't cause shortages. There aren't massive amounts of hand sanitizer sitting in peoples' garages. These middle-men want to sell their stock and they want to sell it quickly. They know manufacturing will ramp up. They know people will discover or build substitutes. If they wait a couple months to sell, they'll end up losing money. (Especially once you count shipping, storage, and hazardous materials costs. Hand sanitizer is flammable and requires special shipping & insurance.) These middle-men don't destroy any hand sanitizer. They don't hoard it in storage for months. It's the same amount of hand sanitizer, but it goes to desperate people in New York and New Jersey instead of people in a county in Tennessee with only one confirmed infection (at the time).
The main reason for these price spikes and shortages wasn't hoarders or middle-men. It's because demand for hand sanitizer skyrocketed. Every public venue, every workplace, every household wanted it. There simply wasn't enough to go around. This was especially true in New York and New Jersey which were experiencing the brunt of the disease. It was less true in Tennessee where many stores had shelves full of un-utilized supplies. With price caps, people in Tennessee would have bought more bottles of hand sanitizer "just to be sure" and it would likely have been un-utilized or underutilized in their homes. Meanwhile, people in the epicenter of the infection would go without.
Had this man been allowed to sell his goods, and had he sold them at a lower price, he would have run out sooner and they wouldn't have been utilized as efficiently. The lucky people who first found out about it would have bought more "just in case" since, well, supply is scarce. And when someone else showed up an hour later, so desperate that they'd be willing to pay $20/bottle, they'd be out of luck.
Whether or not this guy makes a huge profit is insignificant compared to whether or not supplies get to the people who are most desperate for them. That's what price mechanisms encourage. It's certainly not perfect, but it's a damn sight better than price caps.
> You didn’t respond to anything I wrote. Why should I continue this discussion? It wasn’t a supply chain inefficiency issue. Period.
Yet the only way he could have profited is if there was a shortage somewhere, a.k.a a supply chain inefficiency. Either the supply chain is imbalanced and he gets an opportunity to make money or it’s not. You can’t have it both ways.
> Nationwide chains are perfectly capable of recalling stock from stores that aren’t selling much of something, and moving it to stores that are running low on those supplies.
Not efficiently. Recalling inventory from stores is a very slow process that doesn’t fit their normal model. Also, the inventories don’t come from a grand central warehouse so moving stock from a Walmart in California to a Walmart in New York isn’t really something that the infrastructure can support.
> but there’s no need for them to massively mark up the prices to be incentivized to do so. Unless the product is intended to be a loss leader, they already have a profit margin factored in.
That’s incompetence on the local chains, not that they don’t like more profit. Managers have no incentives to monitor prices and redistribute to higher priced markets so the local chains sell at bad prices.
> Hoarders create an artificial shortage, in hopes of jacking up the price.
No, hoarders do not create shortages. They try to profit during shortages. It’s a critical distinction. Hoarders did not account for the toilet paper shortage, the massive change from commercial to private TP consumption did that.
I recommend reading up on how markets get cornered to gain an understanding of what is required to artificially create a shortage. You’ll quickly realize that it takes an obscene amount of purchasing to meaningfully move a market.
Otherwise we’d have monthly occurrences of people cornering bottled water markets without there being an impending storm.
TLDR; shortages exist because everyone is buying more. People just don’t like price gouging because they are emotional and don’t like paying more when there is a shortage despite this being the mechanism that drives markets around the globe every day (energy, grain, beef, pork, currency, etc).
> Either the supply chain is imbalanced and he gets an opportunity to make money or it’s not. You can’t have it both ways.
But they can, because supply chains can actually run in both directions. GP explicitly mentioned the concept of recalling the stock. And while the supply flowing in reverse isn't moving as efficiently as it normally is, it's still likely much more efficient than a guy fedexing packages to random people across the country.
> That man bought a good in a place where there was high supply and low demand. He wanted to sell it in a place that had low supply and high demand.
That could've been achieved just with a population density map. No reason to use jacked-up prices as a means of determining demand.
More importantly, that could've been done by the supply chain itself, as the stores in high supply/low demand area would be able to return the unneeded sanitizer back to the suppliers, and it would then be redirected to high demand/low supply areas. There's no need for an extra intermediary to make an absurd profit off it.
The supply chain makes no distinction between people who buy hand sanitizer for $2 in Tennessee, and people who buy hand sanitizer for $2 in New Jersey, but are desperate enough to pay $20 for it.
The supply chain has no incentive to redirect resources in the absence of a proper price signal.
It’s much more likely that anti-hoarding laws are passed in order to prosecute people who are planning to price gouge but haven’t been caught in the act.
Would you care to explain why lots of people would hoard when it’s both unprofitable and unnecessary to do so?
Once you have a supply of toilet paper, most people are not going to buy a ten year supply of toilet paper just because it isn’t exorbitantly priced.
People who think they can make a profit absolutely will buy a ten year supply of toilet paper.
> Once you have a supply of toilet paper, most people are
Let me stop you there. The TP shortage was because of normal people buying enough toilet paper to stay at home full time. That’s it.
About half of the TP production goes to giant commercial rolls that go in businesses. The other half for home brands. The commercial factories need to be retooled for smaller rolls and new supply chains need to be setup for commercial to fill the home demand.
With absolutely no hoarding, the home demand would increase at least a 1/4. Then throw in people just buying multiple packs to make it 2 weeks without shopping and you’ve already wiped out the supply.
> People who think they can make a profit absolutely will
Good. I would rather have the option to pay twice the normal price than to wipe my ass with a rock because my government rationed supply ran out.
Finally, anti price gouging behavior encourages poor planning by the population at large. Maybe paying $50 for a flat of water bottles will teach you to fucking think ahead and spend $150 on a critical supplies kit.
> You're basically claiming that supply&demand doesn't work.
Yes, most economists would agree that there are cases when supply and demand do not allocate resources most efficiently. The economics 101 idea your repeating requires that all actors be rational. We know that isn't the case, both in simple cases like this one and in more complex cases, like those that led to the financial crisis.
As soon as you introduce irrational actors, it isn't unreasonable for governments to step in and prevent irrational actors from harming the otherwise reasonable processes.
Price gouging, in fact, encourages this kind of irrational behavior. A rational actor would have realized that we weren't going to run out of toilet paper, and that stocking up on hundreds of rolls wasn't helpful. A rational actor would have continued buying toilet paper at their normal rate, maybe purchasing an extra roll or two.
The people who bought pallets of toilet paper were not acting rationally. And to prevent the issues irrational actors cause, regulations like per-customer limits lead to better allocation of resources.
Society as a whole is better off when everyone has access to toilet paper (or PPE or hand sanitizer). Reducing access only to those who are willing to pay 100x the normal price is not rational. It is a failure of the market.
> The economics 101 idea your repeating requires that all actors be rational.
It does not require people to be rational. I don't know who you took Econ 101 from, but you should ask for your money back.
What it does do is provide incentives for rational behavior.
> Reducing access only to those who are willing to pay 100x the normal price is not rational. It is a failure of the market.
It does not reduce access at all. A sanitizer hoard only has value if it can be sold to people who use it. The hoarder would also know that supply will increase, and he'll have to sell it fast in order to realize a profit. Furthermore, the higher prices encourage only the best use of the sanitizers are made, and encourage more supply.
> What it does do is provide incentives for rational behavior.
Yes, and when/if enough actors do act irrationally, the efficient allocation of resources breaks down.
> A sanitizer hoard only has value if it can be sold to people who use it. The hoarder would also know that supply will increase, and he'll have to sell it fast in order to realize a profit.
Only if individuals are acting rationally. If I am panicking due to a pandemic that I believe hand sanitizer will protect me from, I will be willing to purchase a lot for personal consumption. If enough people do this, it prevents others who have need from getting their own hand sanitizer.
That is not "where they are needed the most". A middle class family who can afford to stay home does not need hand sanitizer more than a frontline worker or a hospital, in fact it's likely better for that family if the frontline worker gets the sanitizer instead. But acting in a panic, and acting irrationally, one can purchase enough hand sanitizer that the price rises enough to prevent those with greater need from accessing it.
> Furthermore, the higher prices encourage only the best use of the sanitizers are made
Except they don't, as we just demonstrated. Hospitals and frontline workers are rationally the best places for a limited supply of hand sanitizer. Increasing the prices does not result in those people getting the hand sanitizer, but instead it results in wealthy individuals getting it.
Hospitals don't have the funding to compete on price with panicked upper class people who believe that hand sanitizer will save their lives. Purchasing quotas are a much better solution, since there is value in as many people as possible having some hand sanitizer for personal use. And if you institute quotas, you don't need to increase price to limit demand, so the only reason to increase price would be to profiteer.
> The hoarder would also know that supply will increase
... eventually. A smart hoarder will just keep their hoard until extra manufacturing is about to start, and dump their hoard then. Because of that, the sanitizer is the least available precisely at the time it's needed the most.
To use an absurdly simplified example, imagine if access to sanitizer reduces effective reproduction number (Re) of the virus, in a way proportional to the amount of people that have this access. Every day the virus spreads, the probability of an individual getting infected grows, so the need to have the sanitizer grows as well.
When that sanitizer is most needed is at the very, very beginning - where it could halt a pandemic in its tracks. But the "maximum need" as perceived by the hoarders will occur only at the point the pandemic is about to burn itself out anyway. Which is precisely when it'll do the least good. A savvy hoarder will sell then, and make a hefty profit. A less savvy hoarder will mistime that point, sell late, and make a smaller profit.
To me, this is the best argument against price gauging.
That said, I think it still doesn't matter because
1) You can substitute hand sanitizer with soap. In a way, hand sanitizer is a luxury item.
2) There is no monopoly on hand sanitizer. There are always less-savvy hoarders who sell their products so manufacturing the pandemic by hoarding doesn't work
3) Preventing the early spread of the virus requires state-level coordination to be successful or else the virus spreads anyway. So for the low reproduction number scenario, let's assume massive state intervention. In that case, containment is very likely and there is no future excessive demand for hand sanitizer, thus even savvy hoarders will sell their stock early on.
I can't imagine a speculator who couldn't easily store couple hundred liters of hand sanitizer in their home if they knew they could make a killing off it. People generally have more space in their homes than they need for survival, so there's slack to make a temporary sacrifice.
Regardless, my point is that sanitizer stored by the speculator waiting for the best price is sanitizer not available for those who would otherwise buy it from the store.
Something seems odd about this. Hypothetical Bezos buys everything if it’s at a high price but avoids buying everything if it’s a lower price? Why wouldn’t he just despatch hordes of people to buy up everything for cheap instead.
Also clearly the price controls did not solve the “who needs them the most” or no one would be complaining about “hoarding”.
>If everybody is panicking, then the goods go to the panicking people who have the most disposable income. This has absolutely nothing at all to do with where the goods are most needed.
This statement is disconnected from reality.
The concept you're thinking of is that the supplies will go to the people who will pay the most for them.
Who will pay the most for them is unrelated to who needs them the most. It has more to do with who has disposable income.
If everybody is panicking, then the goods go to the panicking people who have the most disposable income. This has absolutely nothing at all to do with where the goods are most needed.
E.g. the ultra wealthy can easily outbid hospitals for PPE. You are free to argue that the ultra wealthy need PPE more than hospitals, but it's going to be a hard sell.