Yi brought up a point in the coronavirus thread about price gouging, and how crackdowns on price gouging can lead to shelves unnecessarily emptying out. Let's start a rational discussion about the pros and cons of banning price gouging during a situation like this, and whether banning the practice helps or hurts in the aggregate.
What does Languish think? Are these bans necessary for the proper functioning of society, or do they just lead to the further breakdown of supply chains during a crisis?
Define price gouging.
Quote from: The Brain on March 14, 2020, 12:54:18 PM
Define price gouging.
There is a probably a tedious legal and economic definition, but let's just say that you know it when you see it. Selling soap for $1.50 instead of $0.99 is not it, selling it for $5 is.
Count me on the "it's not price gouging, its the free market at work" side of things.
and Yi argues that capitalism isn't about screwing someone over.
Quote from: Barrister on March 14, 2020, 01:02:07 PM
Count me on the "it's not price gouging, its the free market at work" side of things.
I think most people will concede that free market as a general concept leads to better social outcomes in steady state (though they may debate about how often market failures happen and what to do about them). However, is it still reasonable to assume that this holds in a situation where panic can feed upon itself, and where people either individually or collectively can become highly irrational? Honest question, I don't know the answer, or whether this has been studied professionally.
Quote from: Grey Fox on March 14, 2020, 01:02:55 PM
and Yi argues that capitalism isn't about screwing someone over.
You have not made a convincing case that a single person buying up thousands of bottles of hand sanitizer at $0.99/each during a crisis is a good thing. How is that not screwing people over?
Quote from: Habbaku on March 14, 2020, 01:08:11 PM
Quote from: Grey Fox on March 14, 2020, 01:02:55 PM
and Yi argues that capitalism isn't about screwing someone over.
You have not made a convincing case that a single person buying up thousands of bottles of hand sanitizer at $0.99/each during a crisis is a good thing. How is that not screwing people over?
I think many people do not realize that cornering the market is actually an anti-free-market activity. Free market doesn't mean that anything goes, is still requires the government to enforce certain laws to prevent anti-competitive practices.
Quote from: Habbaku on March 14, 2020, 01:08:11 PM
Quote from: Grey Fox on March 14, 2020, 01:02:55 PM
and Yi argues that capitalism isn't about screwing someone over.
You have not made a convincing case that a single person buying up thousands of bottles of hand sanitizer at $0.99/each during a crisis is a good thing. How is that not screwing people over?
Oh, it is too. It's all Capitalism.
Quote from: Barrister on March 14, 2020, 01:02:07 PM
Count me on the "it's not price gouging, its the free market at work" side of things.
In a state of emergency the free market is hardly free.
I can't choose to go to the cheaper supermarket at the other side of town.
The free market is like fire.
Necessary to keep you warm.
But it needs to be properly controlled and harnessed
Quote from: Tyr on March 14, 2020, 02:51:18 PM
But it needs to be properly controlled and harassed
:unsure:
Quote from: Tyr on March 14, 2020, 02:51:18 PM
The free market is like fire.
Necessary to keep you warm.
But it needs to be properly controlled and harassed
Fire is rather simplistic.
"The free market is like a fission reactor..."
Quote from: Barrister on March 14, 2020, 01:02:07 PM
Count me on the "it's not price gouging, its the free market at work" side of things.
The "free market" is a theoretical concept that does not exist in the real world. It is the economic equivalent of "perfect vacuum" or "free will;" useful for studying theory, but not the basis for an appeal in the practical reality.
In the theoretical "free market," price gouging simply results in competitor entry into the market to take advantage of the higher prices. If that doesn't happen nearly instantaneously, then the market isn't "free."
Quote from: Habbaku on March 14, 2020, 01:08:11 PM
Quote from: Grey Fox on March 14, 2020, 01:02:55 PM
and Yi argues that capitalism isn't about screwing someone over.
You have not made a convincing case that a single person buying up thousands of bottles of hand sanitizer at $0.99/each during a crisis is a good thing. How is that not screwing people over?
If we didn't have this fear of "price gouging", the supermarket itself would have raised the price on hand sanitizer during a crisis, removing any profit for the second-hand seller.
Better solution: the store could limit 1 or 2 per customer. Not a perfect answer but it effectively makes hoarding much harder and more time consuming.
What social utility is there in douches like this guy: https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html (https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html)
As a first crack at the issue, I would say any price increase that increases supply should be allowed, whereas any price increase that limits supply should not.
For example, take my personal Spam experience. It was essentially sold out on Friday. Maybe if the truck driver or the stocker had been paid a corona bonus the shelf would have been full. That cost should be passed on to me. Same with workers at the Spam plant.
On the other hand if I. M. Profiteer had bought up the whole shelf and was selling cans at triple the normal price out of his car trunk, that should not be allowed.
All these rules, man. What's wrong with just living by ear?
Quote from: Grey Fox on March 14, 2020, 01:02:55 PM
and Yi argues that capitalism isn't about screwing someone over.
I'm pretty sure I've never used that set of words in that exact order.
I do think that most cases of people arguing that capitalism is screwing them over are in fact cases of people wishing they were paid more, or had to pay less for a product or service.
I do certainly think it's possible for capitalism to screw people over. Case in point, the Well Fargo fake accounts.
Quote from: Admiral Yi on March 14, 2020, 05:42:18 PM
I do certainly think it's possible for capitalism to screw people over. Case in point, the Well Fargo fake accounts.
I don't think I would include out and out fraud as a fault of capitalism.
Quote from: Barrister on March 14, 2020, 05:57:53 PM
Quote from: Admiral Yi on March 14, 2020, 05:42:18 PM
I do certainly think it's possible for capitalism to screw people over. Case in point, the Well Fargo fake accounts.
I don't think I would include out and out fraud as a fault of capitalism.
Surely that depends on the incentives and likelihood of consequences?
Quote from: Admiral Yi on March 14, 2020, 05:42:18 PM
Quote from: Grey Fox on March 14, 2020, 01:02:55 PM
and Yi argues that capitalism isn't about screwing someone over.
I'm pretty sure I've never used that set of words in that exact order.
How about:
Yi and screwing capitalism argues that isn't over someone?
Quote from: Oexmelin on March 14, 2020, 06:02:18 PM
How about:
Yi and screwing capitalism argues that isn't over someone?
I can't speak for anyone else. Screwing capitalism will have to speak for himself.
Quote from: Sheilbh on March 14, 2020, 06:01:14 PM
Quote from: Barrister on March 14, 2020, 05:57:53 PM
Quote from: Admiral Yi on March 14, 2020, 05:42:18 PM
I do certainly think it's possible for capitalism to screw people over. Case in point, the Well Fargo fake accounts.
I don't think I would include out and out fraud as a fault of capitalism.
Surely that depends on the incentives and likelihood of consequences?
Surely that is as true in a command economy as in a market one?
Quote from: Barrister on March 14, 2020, 05:57:53 PM
I don't think I would include out and out fraud as a fault of capitalism.
I would include it as a fault of human nature. Which can and does operate in a for-profit context.
Quote from: Admiral Yi on March 14, 2020, 06:09:35 PM
Quote from: Oexmelin on March 14, 2020, 06:02:18 PM
How about:
Yi and screwing capitalism argues that isn't over someone?
I can't speak for anyone else. Screwing capitalism will have to speak for himself.
So you agree that "Yi and argues that isn't over someone?" I can respect that.
Quote from: Barrister on March 14, 2020, 01:02:07 PM
Count me on the "it's not price gouging, its the free market at work" side of things.
Normally say yes. But not in times of national emergencies.
Quote from: Josephus on March 16, 2020, 12:20:43 PM
Quote from: Barrister on March 14, 2020, 01:02:07 PM
Count me on the "it's not price gouging, its the free market at work" side of things.
Normally say yes. But not in times of national emergencies.
Why not? We see what happens when the price doesn't increase. Demand spikes and there are then instant shortages. Which just encourages people to hoarde and buy as much as they can.
Right now you can't buy masks, lots of places are out of toilet paper, etc. If stores had just increased their price you'd be able to walk into a store and buy them if you needed them badly enough.
Quote from: Barrister on March 16, 2020, 01:44:32 PM
Quote from: Josephus on March 16, 2020, 12:20:43 PM
Quote from: Barrister on March 14, 2020, 01:02:07 PM
Count me on the "it's not price gouging, its the free market at work" side of things.
Normally say yes. But not in times of national emergencies.
Why not? We see what happens when the price doesn't increase. Demand spikes and there are then instant shortages. Which just encourages people to hoarde and buy as much as they can.
Right now you can't buy masks, lots of places are out of toilet paper, etc. If stores had just increased their price you'd be able to walk into a store and buy them if you needed them badly enough.
It would be so much better. We could buy all the things we need, and for reserve, while the poor people would leave empty handed. We just would need to remember to also visit the gun store, so we would have all the guns when the revolution arrives.
I think rationing is a better system in an emergency with suddenly scarce resources.
Quote from: Barrister on March 16, 2020, 01:44:32 PM
Quote from: Josephus on March 16, 2020, 12:20:43 PM
Quote from: Barrister on March 14, 2020, 01:02:07 PM
Count me on the "it's not price gouging, its the free market at work" side of things.
Normally say yes. But not in times of national emergencies.
Why not? We see what happens when the price doesn't increase. Demand spikes and there are then instant shortages. Which just encourages people to hoarde and buy as much as they can.
Right now you can't buy masks, lots of places are out of toilet paper, etc. If stores had just increased their price you'd be able to walk into a store and buy them if you needed them badly enough.
The flaw in this argument is that not everywhere has anti-gouging legislation, or it is not enforced everywhere, yet shortages still happen. In the US, only 13 states have anti-gouging legislation, apparently. Yet hoarding is seen all over.
The reason, I suspect, is that there simply hasn't been time for 'the market' to step in and (say) ship toilet paper from where there is plenty, to where there is none, at a high price - any faster at least than actual supply channels (as there isn't, in fact, a real shortage).
Markets are infinitely fast only in theory ... in reality, there are gaps and lags, so even places where prices are unrestrained will see shortages and hoarding. Legislation to restrain 'irrational price exuberance' may actually be beneficial in lessening hoarding, as the population will be reassured that normalicy will endure. Seeing "Toilet paper: $50" signs would make hoarders of everyone.
Quote from: alfred russel on March 16, 2020, 02:34:53 PM
I think rationing is a better system in an emergency with suddenly scarce resources.
Rationing takes time to set up though.
Quote from: Barrister on March 16, 2020, 02:51:52 PM
Rationing takes time to set up though.
Ad hoc, informal rationing like "limit 2 per customer" is very easy to set up.
Also very easy to game, unfortunately.
Quote from: Admiral Yi on March 16, 2020, 02:57:57 PM
Quote from: Barrister on March 16, 2020, 02:51:52 PM
Rationing takes time to set up though.
Ad hoc, informal rationing like "limit 2 per customer" is very easy to set up.
Also very easy to game, unfortunately.
Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps
Quote from: Tyr on March 16, 2020, 02:59:52 PM
Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps
Public shaming - also for people breaking the social distancing rules.
Quote from: Tyr on March 16, 2020, 02:59:52 PM
Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps
I drop my two rolls of TP in the car, pick up two more and go through a different check out lane, one where the cashier doesn't recognize me.
Quote from: Admiral Yi on March 16, 2020, 03:04:04 PM
Quote from: Tyr on March 16, 2020, 02:59:52 PM
Ish. You can still buy more than 2 by going store to store or coming back later, but it does massively reduce the efficiency of your buying.
Few rules are perfect and completely stop undesirable outcomes but every little helps
I drop my two rolls of TP in the car, pick up two more and go through a different check out lane, one where the cashier doesn't recognize me.
Which will take you half an hour to get 4 rolls vs. Half an hour to get 60 without the limits.
It takes you 30 minutes to buy two rolls of TP? No wonder she had to close those mines. :P
Another dodge would be to borrow four kids from your neighbor and buy 2 rolls for each of them.
Quote from: Admiral Yi on March 16, 2020, 03:23:32 PM
It takes you 30 minutes to buy two rolls of TP? No wonder she had to close those mines. :P
Another dodge would be to borrow four kids from your neighbor and buy 2 rolls for each of them.
I was assuming queues in the supermarket and having to walk to the car and back.
There are ways to cheat it easily of course. But it is besides the point. Speed bumps help reduce shortages and help encourage proper behaviour
I assume this discussion is because of cases like this one?
QuoteHe has 17.700 bottles of hand sanitizer and nowhere to sell them
Amazon cracked down on coronavirus price gouging. Now, while the rest of the world searches, some sellers are holding stockpiles of sanitizer and masks
(https://static01.nyt.com/images/2020/03/13/business/00gouge1/merlin_170438451_dd144ae2-8cd3-4d76-9196-7c12518b53a4-superJumbo.jpg?quality=90&auto=webp)
On March 1, the day after the first coronavirus death in the United States was announced, brothers Matt and Noah Colvin set out in a silver S.U.V. to pick up some hand sanitizer. Driving around Chattanooga, Tenn., they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves.
Over the next three days, Noah Colvin took a 1,300-mile road trip across Tennessee and into Kentucky, filling a U-Haul truck with thousands of bottles of hand sanitizer and thousands of packs of antibacterial wipes, mostly from "little hole-in-the-wall dollar stores in the backwoods," his brother said. "The major metro areas were cleaned out."
Matt Colvin stayed home near Chattanooga, preparing for pallets of even more wipes and sanitizer he had ordered, and starting to list them on Amazon. Mr. Colvin said he had posted 300 bottles of hand sanitizer and immediately sold them all for between $8 and $70 each, multiples higher than what he had bought them for. To him, "it was crazy money." To many others, it was profiteering from a pandemic.
The next day, Amazon pulled his items and thousands of other listings for sanitizer, wipes and face masks. The company suspended some of the sellers behind the listings and warned many others that if they kept running up prices, they'd lose their accounts. EBay soon followed with even stricter measures, prohibiting any U.S. sales of masks or sanitizer.
Now, while millions of people across the country search in vain for hand sanitizer to protect themselves from the spread of the coronavirus, Mr. Colvin is sitting on 17,700 bottles of the stuff with little idea where to sell them.
Apparently he ended up donating them.
https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html (https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html)
If those guys are valiant entrepreneurs riding high on capitalism, I guess that war profiteers are too, right?
Quote from: Admiral Yi on March 16, 2020, 03:23:32 PM
It takes you 30 minutes to buy two rolls of TP? No wonder she had to close those mines. :P
Another dodge would be to borrow four kids from your neighbor and buy 2 rolls for each of them.
Tyr has the gist of it. Most people who panic buy are not about thinking creatively in order to game the system, as you are doing here. They impulse buy because they can, and because they are afraid of inequality. Saying 2 per customers, and enforcing it already sends a message that everyone is on equal footing.
(Incidentally, this is also why one all those "economic interactions" game-studies are often teaching people to maximize their advantage, rather than neutrally observe how people behave).
Quote from: Oexmelin on March 16, 2020, 04:57:56 PM
Tyr has the gist of it. Most people who panic buy are not about thinking creatively in order to game the system, as you are doing here. They impulse buy because they can, and because they are afraid of inequality. Saying 2 per customers, and enforcing it already sends a message that everyone is on equal footing.
(Incidentally, this is also why one all those "economic interactions" game-studies are often teaching people to maximize their advantage, rather than neutrally observe how people behave).
I didn't say anything about the number of people that would try to game the system. I said it would be relatively easy to do.
But that's not the point. We aren't trying to stop people being smart and having their wife go through the checkout separately. Frankly we can live with a few people buying double the quota.
I'm sure they will feel very proud of themselves for doing this. They beat the system. Hurray them.
But the overwhelming majority of people won't do this. Even those people who are sad enough to want to spend their time scoring cool rebel points by disobeying the rules have finite time.
Quote from: Tyr on March 16, 2020, 05:12:12 PM
But that's not the point. We aren't trying to stop people being smart and having their wife go through the checkout separately. Frankly we can live with a few people buying double the quota.
I'm sure they will feel very proud of themselves for doing this. They beat the system. Hurray them.
But the overwhelming majority of people won't do this. Even those people who are sad enough to want to spend their time scoring cool rebel points by disobeying the rules have finite time.
If that's not the point why did you choose to dispute it when I first raised it? You could have verily easily said "that's true, but on the other hand..." Then we would all be singing kumbayah now.
It's not too late.
(https://media.giphy.com/media/pNsBooBjruKnm/giphy.gif)
HK's shortages of toilet paper and hygiene products lasted for about three weeks. After three weeks, supermarkets were flooded with toilet paper. I can find almost any product I need now, except maybe facemasks. I can still find them, just not too easily and not without substantial increases in price.
Quote from: Monoriu on March 16, 2020, 07:53:48 PM
HK's shortages of toilet paper and hygiene products lasted for about three weeks. After three weeks, supermarkets were flooded with toilet paper. I can find almost any product I need now, except maybe facemasks. I can still find them, just not too easily and not without substantial increases in price.
Your not from 'Murica are you. Don't doubt the resolve of our obtuseness.
Quote from: Monoriu on March 16, 2020, 07:53:48 PM
HK's shortages of toilet paper and hygiene products lasted for about three weeks. After three weeks, supermarkets were flooded with toilet paper. I can find almost any product I need now, except maybe facemasks. I can still find them, just not too easily and not without substantial increases in price.
Of course people in HK have limited space in their apartments; Americans could stash 1000s of toilet-rolls in their larger houses should they wish to be that stupid :yeah:
:showoff:
Here is a case study: my dad tells me that in his Russian-ish neighborhood, masks are sold and available, in a store selling nuts of all places. He was able to buy some. I drove over there and confirmed that this is true, and I bought a 20-pack pack for myself and my sister, as well as a box of gloves. I could quickly see why they were available without flying off the shelves: a pack of 20 masks sold for $22. I don't know how fair a price that was, but next to them were small bottles of sanitizer for $16.99, so I'm guessing the masks in normal times go for less.
So, are these nut peddlers scumbags? Or are they people making sure that my elderly dad with a heart condition can go buy groceries with some partial level of protection, surrounded by people who also can wear that partial level of protection? I've got no problem with them, no one else had anything on offer, I just hope these masks didn't come from some Russian mafia raid on a plane meant for Europe. :unsure: :ph34r: