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By letting prices rise, it may be worthwhile for factories that manufacture a similar product, or have manufactured masks in the past to retool back to mask pro

By letting prices rise, it may be worthwhile for factories that manufacture a similar product, or have manufactured masks in the past to retool back to mask production. While it may be too late for this immediate epidemic, it also incentivizes middlemen to warehouse goods like masks which will help for the next epidemic.

AlexandrB 7y ago
This may or may not be good economics, but it's terrible health policy. If the goal was stopping the spread of COVID19 and masks were an effective preventative measure you would want them to be as cheap as possible to encourage use. This is a scenario where the magic hand of the market will get people killed.
- gruez 7y ago
  Sounds like a public education problem (ie. people thinking that masks are the silver bullet).
- smnrchrds 7y ago
  The magic hand of the market will get poor people killed. That's what the magic hand does. If wealthy British are willing and able to pay more for Irish agricultural products that Irish peasants, the invisible hand does not intervene to prevent the famine/genocide. It just ensures Irish agricultural products fetch the highest profit in the open market. A large percentage of the population of Ireland dying as the result is none of the concern of the hand as long as profits are made in the process.
  - DuskStar 7y ago
    Ah yes, the famine caused by having to grow cash crops to pay rent to a foreign empire, leading to overdependence on a single food crop that provided several times the calories/acre/year of anything else. Definitely the magic hand's fault.
    - hef19898 7y ago
      Yep, because the magic hand didn't do anything when the one wonder crop didn't grow anymore. It quite literally just let people die. The great irish famine is a fact.
    - claudeganon 7y ago
      Consider for a second that you’re comparing an imaginary supposition (the magic hand) by a philosopher of the British Empire with the historical reality of that empire, and evaluate the circumstances again.
    - smnrchrds 7y ago
      I am no expert on the subject, so please bear with me if I am missing something. But it looks like back then, people really believed the invisible hand will take care of things, and it didn't, and I would be surprised if it does in our case. From Wikipedia: The new Whig administration, influenced by the doctrine of laissez-faire,[11] believed that the market would provide the food needed, and they refused to intervene against food exports to England, then halted the previous government's food and relief works, leaving many hundreds of thousands of people without any work, money, or food. Charles Trevelyan, who was in charge of the administration of government relief, limited the Government's food aid programme because of a firm belief in laissez-faire.[98]
      - aeternum 7y ago
        The Whigs used the laissez-faire argument when they did not really have laissez-faire. Britain had high tariffs on corn and other grains that could have allowed Ireland and Britain to import food other than potatoes. Navigation laws also required only British ships to bring goods to British ports, which further reduced any import of food. One year later, the British government did intervene by building workhouses to help house the poor tenant farmers. However this made the situation worse because instead of the British government funding the houses, they taxed the Irish landowners triggering mass evictions of the poor tenant farmers.
- AnthonyMouse 7y ago
  > This may or may not be good economics, but it's terrible health policy. If the goal was stopping the spread of COVID19 and masks were an effective preventative measure you would want them to be as cheap as possible to encourage use. "Health policy" has no exemption from economics. The way you get enough masks during high demand is by someone stockpiling them. If you want them to be cheap, someone has to stockpile even more of them. That could be the government, but only if they thought to do it ahead of time. If they didn't, now you've got a market problem that pricing is the best way to address -- prohibiting price from rising due to demand only causes misallocation, because people who have more masks than they need have a reduced incentive to sell them to the people who need them. The first guy in the store buys fifty when he only needed one because he wanted to be sure to have enough, but then the store runs out before everyone has one and there are fifty unused masks in the one guy's basement. Charging more is how you get him to not buy more than he needed.
  - licebmi__at__ 7y ago
    >The first guy in the store buys fifty when he only needed one because he wanted to be sure to have enough, but then the store runs out before everyone has one and there are fifty unused masks in the one guy's basement. Maybe he won't give anything up because price might keep going up and whenever he needs the masks they will be so costly he cannot afford them. Or maybe the price rise will give some party an incentive to stockpile masks because making money is a clear incentive instead of a more nebulous "avoid a health crisis".
    - TeMPOraL 7y ago
      Yup. Compare with other assets: people don't sell when prices go up. Last thing we need now is turning PPE into an investment vehicle.
      - AnthonyMouse 7y ago
        People only don't sell things when the prices go up if they expect them to go up even more. That doesn't apply to temporary shortages at all. Either the demand will fall off over time or manufacturing will catch up to the demand, either of which causes the prices to decrease over time. Anybody who wants to profit from a shortage has to do it while there is still a shortage.

AlexandrB 7y ago

This may or may not be good economics, but it's terrible health policy. If the goal was stopping the spread of COVID19 and masks were an effective preventative measure you would want them to be as cheap as possible to encourage use. This is a scenario where the magic hand of the market will get people killed.

gruez 7y ago
Sounds like a public education problem (ie. people thinking that masks are the silver bullet).
smnrchrds 7y ago
The magic hand of the market will get poor people killed. That's what the magic hand does. If wealthy British are willing and able to pay more for Irish agricultural products that Irish peasants, the invisible hand does not intervene to prevent the famine/genocide. It just ensures Irish agricultural products fetch the highest profit in the open market. A large percentage of the population of Ireland dying as the result is none of the concern of the hand as long as profits are made in the process.
- DuskStar 7y ago
  Ah yes, the famine caused by having to grow cash crops to pay rent to a foreign empire, leading to overdependence on a single food crop that provided several times the calories/acre/year of anything else. Definitely the magic hand's fault.
  - hef19898 7y ago
    Yep, because the magic hand didn't do anything when the one wonder crop didn't grow anymore. It quite literally just let people die. The great irish famine is a fact.
  - claudeganon 7y ago
    Consider for a second that you’re comparing an imaginary supposition (the magic hand) by a philosopher of the British Empire with the historical reality of that empire, and evaluate the circumstances again.
  - smnrchrds 7y ago
    I am no expert on the subject, so please bear with me if I am missing something. But it looks like back then, people really believed the invisible hand will take care of things, and it didn't, and I would be surprised if it does in our case. From Wikipedia: The new Whig administration, influenced by the doctrine of laissez-faire,[11] believed that the market would provide the food needed, and they refused to intervene against food exports to England, then halted the previous government's food and relief works, leaving many hundreds of thousands of people without any work, money, or food. Charles Trevelyan, who was in charge of the administration of government relief, limited the Government's food aid programme because of a firm belief in laissez-faire.[98]
    - aeternum 7y ago
      The Whigs used the laissez-faire argument when they did not really have laissez-faire. Britain had high tariffs on corn and other grains that could have allowed Ireland and Britain to import food other than potatoes. Navigation laws also required only British ships to bring goods to British ports, which further reduced any import of food. One year later, the British government did intervene by building workhouses to help house the poor tenant farmers. However this made the situation worse because instead of the British government funding the houses, they taxed the Irish landowners triggering mass evictions of the poor tenant farmers.
AnthonyMouse 7y ago
> This may or may not be good economics, but it's terrible health policy. If the goal was stopping the spread of COVID19 and masks were an effective preventative measure you would want them to be as cheap as possible to encourage use. "Health policy" has no exemption from economics. The way you get enough masks during high demand is by someone stockpiling them. If you want them to be cheap, someone has to stockpile even more of them. That could be the government, but only if they thought to do it ahead of time. If they didn't, now you've got a market problem that pricing is the best way to address -- prohibiting price from rising due to demand only causes misallocation, because people who have more masks than they need have a reduced incentive to sell them to the people who need them. The first guy in the store buys fifty when he only needed one because he wanted to be sure to have enough, but then the store runs out before everyone has one and there are fifty unused masks in the one guy's basement. Charging more is how you get him to not buy more than he needed.
- licebmi__at__ 7y ago
  >The first guy in the store buys fifty when he only needed one because he wanted to be sure to have enough, but then the store runs out before everyone has one and there are fifty unused masks in the one guy's basement. Maybe he won't give anything up because price might keep going up and whenever he needs the masks they will be so costly he cannot afford them. Or maybe the price rise will give some party an incentive to stockpile masks because making money is a clear incentive instead of a more nebulous "avoid a health crisis".
  - TeMPOraL 7y ago
    Yup. Compare with other assets: people don't sell when prices go up. Last thing we need now is turning PPE into an investment vehicle.
    - AnthonyMouse 7y ago
      People only don't sell things when the prices go up if they expect them to go up even more. That doesn't apply to temporary shortages at all. Either the demand will fall off over time or manufacturing will catch up to the demand, either of which causes the prices to decrease over time. Anybody who wants to profit from a shortage has to do it while there is still a shortage.