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Pricing doesn’t fix the scarcity problem in a shortage or short term emergency. Rationing is the best way to address it.

bhickey 7y ago
Except it does. There was a shortage of generators after Katrina. A guy filled a U-Haul with generators and trucked them into the disaster area to resell at a markup. He was arrested for his trouble. Everyone in the situation was made worse off. Rising prices bring in supply. Rationing encourages over consumption and black market trade -- if there's a price ceiling you better believe I'm going to max out my gasoline ration whether I need it or not.
- lonelappde 7y ago
  Rich people's lives aren't worth more than than poor people's lives
  - bhickey 7y ago
    I never said they were. I said that high prices attract supply. This supply then drives down prices. This doesn't work for drug pricing due to monopolies. It does work for hauling water into a city on an 18-wheeler.
    - loopz 7y ago
      Scarcity, crisis, war. Good for filling someone's pockets. Follow The Money.
- pas 7y ago
  Raising prices is good if that leads to increase in supply which then pushes prices down. It's bad if it leads to no added quantity and inequality (unfairness) in allocation/distribution.
- falcolas 7y ago
  The same thing would have happened with high prices for generators. It might not have been this particular guy, but someone would have done the same thing, regardless of the price of the generators. The price only gates off who can do such a thing. > Rising prices bring in supply. Supply chains are not so flexible that they can react appropriately to such sudden spikes in demand, no matter the price set. See the recent debacle around video cards and crypto currencies. The insanely high prices set by first party suppliers couldn't stop them from being constantly sold out. It also didn't result in increased production of video cards, since the companies (correctly) predicted that the demand would not last. Prices were never driven down below their pre-crypto levels. In the end, the only effect is that an average person was unable to obtain a video card at an affordable price for a year or so.
zozbot234 7y ago
High prices do precisely that - ration goods in order to fix the shortage and ensure that the scarce supply finds its highest and best use.
- phatfish 7y ago
  The "highest and best use" being those with enough money to afford it? This is just the neo-liberal mantra of "the markets are always right". That's fine when it's just rich people playing with their spare change. But when markets impact the whole of society it becomes a moral problem, currently we are letting city traders and investors make moral decisions for entire nations.
- falcolas 7y ago
  How will the rich, in a disaster area, put it to better use than the poor? Does re-selling the water at an even higher price to the poor once they've bought out the supermarkets really contribute to the rebuilding of an area hit by a disaster? On the other end of the scale, if your survival depends on getting water but you don't have readily available money, do you deserve to die because your "use" of the water is not the "best"?
- slumdev 7y ago
  No, they don't. Income and wealth inequality prevent this from ever being a reality. HBU analyses work on real estate and businesses. Doing one on a staple good with inelastic demand is complete insanity.

bhickey 7y ago

Except it does. There was a shortage of generators after Katrina. A guy filled a U-Haul with generators and trucked them into the disaster area to resell at a markup. He was arrested for his trouble. Everyone in the situation was made worse off. Rising prices bring in supply. Rationing encourages over consumption and black market trade -- if there's a price ceiling you better believe I'm going to max out my gasoline ration whether I need it or not.

lonelappde 7y ago
Rich people's lives aren't worth more than than poor people's lives
- bhickey 7y ago
  I never said they were. I said that high prices attract supply. This supply then drives down prices. This doesn't work for drug pricing due to monopolies. It does work for hauling water into a city on an 18-wheeler.
  - loopz 7y ago
    Scarcity, crisis, war. Good for filling someone's pockets. Follow The Money.
pas 7y ago
Raising prices is good if that leads to increase in supply which then pushes prices down. It's bad if it leads to no added quantity and inequality (unfairness) in allocation/distribution.
falcolas 7y ago
The same thing would have happened with high prices for generators. It might not have been this particular guy, but someone would have done the same thing, regardless of the price of the generators. The price only gates off who can do such a thing. > Rising prices bring in supply. Supply chains are not so flexible that they can react appropriately to such sudden spikes in demand, no matter the price set. See the recent debacle around video cards and crypto currencies. The insanely high prices set by first party suppliers couldn't stop them from being constantly sold out. It also didn't result in increased production of video cards, since the companies (correctly) predicted that the demand would not last. Prices were never driven down below their pre-crypto levels. In the end, the only effect is that an average person was unable to obtain a video card at an affordable price for a year or so.

zozbot234 7y ago

High prices do precisely that - ration goods in order to fix the shortage and ensure that the scarce supply finds its highest and best use.

phatfish 7y ago
The "highest and best use" being those with enough money to afford it? This is just the neo-liberal mantra of "the markets are always right". That's fine when it's just rich people playing with their spare change. But when markets impact the whole of society it becomes a moral problem, currently we are letting city traders and investors make moral decisions for entire nations.
falcolas 7y ago
How will the rich, in a disaster area, put it to better use than the poor? Does re-selling the water at an even higher price to the poor once they've bought out the supermarkets really contribute to the rebuilding of an area hit by a disaster? On the other end of the scale, if your survival depends on getting water but you don't have readily available money, do you deserve to die because your "use" of the water is not the "best"?
slumdev 7y ago
No, they don't. Income and wealth inequality prevent this from ever being a reality. HBU analyses work on real estate and businesses. Doing one on a staple good with inelastic demand is complete insanity.