>...Most emergencies are sufficiently short-term that they don't meaningfully reduce incentives for new producers to enter a market, because there's no time to adapt.
That is simply wrong. Before all these price gouging laws, in natural disasters there used to be marginal producers (people with a pickup truck etc.) who would load up on some supplies like ice etc. and bring them to the area that was hit to make a quick profit. When the electricity is out and someone wants $12 a bag for ice it would anger you if you just want to keep your drinks cold, but you would think it is a bargain if that way you can keep your insulin chilled:
In the long run, high profits during a shortage also mean that suppliers in general will be incentivized to keep a larger stockpile of things that have a good shelf-life since they know they will be able to make good money the next time there is a shortage (more than the storage costs). (Or will incentivize spending money to be more flexible in production in case demand increases for a short time.) If you are going to literally make it illegal to try this, then you better have a government be willing to spend its tax dollars on creating a stockpile rather than spending money on more immediate things that are more likely to get votes. (We've now seen that all the talk of the national stockpile the federal government supposedly had was greatly exaggerated.)
It's a bargain for someone who can normally afford to be paying more to store their insulin, sure, but for someone who's barely affording it normally, there's no difference between having it and not.
It's a pretty racist approach really, since those people who aren't going to be able to afford the bump are likely to be black.
The same forces that push the government to not work on its stock pile affects companies just as much. You could be selling those things NOW for the current price rather than spending money to store them to maybe sell them at a higher price and maybe have to throw them out. When the emergency happens very infrequently like this one, private companies' stockpiles wont do any better than the government's did. The government has better means to think long term though since they don't need to continuously make larger short term profits
>It's a bargain for someone who can normally afford to be paying more to store their insulin, sure, but for someone who's barely affording it normally, there's no difference between having it and not.
I guess you are claiming that someone who is buying insulin on a regular basis and has a refrigerator to store it, could come up with a couple of dollars to save their life, but not $12. (Oh and I guess you are implying that things like friends, family, neighbors, charities, churches, pawn shops, etc. etc. don't exist so they had no possibility to get $12.) In the article, there isn't any evidence that is why the police were called.
>It's a pretty racist approach really, since those people who aren't going to be able to afford the bump are likely to be black.
I imagine the economists who oppose price gouging laws would be very upset at your attempt to defame them. If you have an actual argument to make, make it.
>The same forces that push the government to not work on its stock pile affects companies just as much. ...
Companies try to maximize profit. For decades they have been removing inefficiency and making everything more lean - just in time delivery of their raw materials, only producing that they need, etc. So now when a supply shock happens during a pandemic, shortages happen and people die. High prices in a disaster are an incentive to make various investments which wouldn't pay off in normal times, but might have a large pay off later. A company in the US that makes protective gear almost went bankrupt after the SARS outbreak, because they had increased headcount and bought new equipment - he told both the Obama and Trump administrations that he wasn't going to be able to do that again. Both administrations ignored him.
>…The government has better means to think long term though since they don't need to continuously make larger short term profits
As I said before, if you want to make higher prices illegal, you better have a government be willing to spend its tax dollars on creating a stockpile (and excess productive capacity) rather than spending money on more immediate things that are more likely to get them votes. You can claim "government has better means to think long term" - but that obviously isn't what happened here - and considering the potential pandemics we've had in the last 20 years, you can't claim they didn't have enough warning.
I understand that people's sense of fairness is strong enough that some would rather have people die rather than someone make what they consider excess profit. So I understand when they simply ignore it when they read that economists (the ones who actually study the issue) are generally opposed to these kinds of laws. I think the majority of people who support price gouging laws though are not so dogmatic - they want large supplies of essential items available - they just don't understand the way to achieve that is to allow the price to go higher in times of emergency.
That is simply wrong. Before all these price gouging laws, in natural disasters there used to be marginal producers (people with a pickup truck etc.) who would load up on some supplies like ice etc. and bring them to the area that was hit to make a quick profit. When the electricity is out and someone wants $12 a bag for ice it would anger you if you just want to keep your drinks cold, but you would think it is a bargain if that way you can keep your insulin chilled:
https://www.econlib.org/library/Columns/y2007/Mungergouging....
In the long run, high profits during a shortage also mean that suppliers in general will be incentivized to keep a larger stockpile of things that have a good shelf-life since they know they will be able to make good money the next time there is a shortage (more than the storage costs). (Or will incentivize spending money to be more flexible in production in case demand increases for a short time.) If you are going to literally make it illegal to try this, then you better have a government be willing to spend its tax dollars on creating a stockpile rather than spending money on more immediate things that are more likely to get votes. (We've now seen that all the talk of the national stockpile the federal government supposedly had was greatly exaggerated.)
For these reasons, a majority of economists are opposed to 'price gouging' laws. For example see http://www.igmchicago.org/surveys/price-gouging/