17 ms·

$5000 per violation of price-gouging in CA

228 points by quizme2000 7y ago

KarlKemp 7y ago
I think that <stabbing you> is best considered as a form of free speech. A <sharp knife between the third and fourth intercostal space> is a statement of the value of your argument.
- randallsquared 7y ago
  Please stop.
- daenz 7y ago
  Imagine trying to be so edgy and clever with your kneejerk response that you accidentally reveal how unhinged and unsuitable you are for civil society.
zhoujianfu 7y ago
$5,000?! That’s price gouging!
briandear 7y ago
An argument supporting gouging: https://reason.com/2019/01/31/price-gouging-is-supply-and-demand-at-wo/ https://reason.com/2019/01/31/price-gouging-is-supply-and-de...
- microcolonel 7y ago
  The main pragmatic problem with anti-gouging laws (or even just anti-gouging policies within retailers) is that when manufacture and distribution are not supported on the back end to keep up, it leads to shortages (as can be seen at most grocers in the U.S. and Canada right now). My local Wal Mart closed yesterday because they were cleaned out.
- herbstein 7y ago
  Yes, that is an an argument. It's just not terribly convincing if you don't already subscribe to the idea that markets are always right, externalities be damned.
  - baryphonic 7y ago
    What externalities?
    - yladiz 7y ago
      One example is a pandemic.
      - logicchains 7y ago
        The point is that capping the price of e.g. masks means _fewer masks_ are produced, which is worse for stopping the pandemic.
        kharms 7y ago
        Price gouging laws typically apply at the consumer point of sale, I'm not sure they prevent a higher price from factory to store.
        waterhouse 7y ago
        If the law prevents the store from charging a high price to the consumer, then that effectively prevents the factory from charging a high price to the store, because the store would make a loss if it accepted that price.
        kharms 7y ago
        >>What if a seller increased the price of a good or service because the seller’s costs of providing the good or service increased? >If the seller can prove that the increased price is directly attributable to increases in the cost of labor or materials needed to provide the good or service, the seller may not be liable under the statute. It's right there on the linked page. This basically prohibits large markups while allowing for passing of costs.
- sollewitt 7y ago
  That's just poor reasoning on multiple levels: it assumes supply, the argument that it prevents hoarding misses that as prices are driven up the incentive to hold increases, and it overlooks that some populations night need the good immediately so real harm is being done. The gain is personal, the harm is social, this is ethics 101 and solipsistic pseudo-libertarion reasoning doesn't make it right.
  - logicchains 7y ago
    >solipsistic pseudo-liberation reasoning Basic economics is solipsistic pseudo-liberation reasoning now?
    - hodgesrm 7y ago
      The argument that the threat of gouging increases the motivation to hoard is basic economics. For analogous reasons there is FDIC insurance on bank accounts because the alternative is runs on banks that can lead to system collapse. Not every point on the supply/demand curve is a good place to be.
      - logicchains 7y ago
        >The argument that the threat of gouging increases the motivation to hoard is basic economics. But the ability to increase price freely also decreases actual hoarding, because when stores see a massive increase in demand, they'll be incentivised to increase prices, which will deter unnecessary purchases.
        hodgesrm 7y ago
        If your goal is to prevent hoarding and ensure there's enough for everyone, it's simpler just to limit the number of rolls each customer gets. Fewer corner cases.
      - waterhouse 7y ago
        Are people hoarding because they're worried about being gouged on the price, or because they're worried about being unable to buy at all? Are the viral social media posts "OMG look at these high prices", or "OMG look at these empty shelves"? From a hypothetical perspective, which scenario creates a stronger incentive to buy supplies now: "Prices might rise 10x in the next month, but buying will always be possible", or "The supply might run out completely in the next month"?
- logicchains 7y ago
  You'll find a similar argument in any basic econ textbook. Put a cap on prices, then when demand rises for something (which normally leads to an increase in price, all other things being equal), the lack of an accompanying rise in price means there is no incentive to produce more of the good (no incentive for more producers to enter the market), so there isn't a corresponding increase in supply. Might work okay in China, where the government can e.g. command factories to switch to producing masks, but it means American factory owners won't have any incentive to switch over to producing them.
  - hobs 7y ago
    Do you actually think our economy needs 200x as much hand sanitizer production? If the demand runs high enough for long enough, it wont be an emergency, and emergency measures don't apply.
    - logicchains 7y ago
      >Do you actually think our economy needs 200x as much hand sanitizer production? Yes I do. If everybody is now sanitising their hands thoroughly and regularly throughout the day to prevent infection, this could easily be a 200x increase in hand sanitizer usage compared to what it was previously.
  - wbl 7y ago
    The President does have the power to direct factories to make masks during a national emergency.
    - logicchains 7y ago
      That would be much more effective at increasing supply than price caps.
  - XorNot 7y ago
    And like most things, basic econ is not the be all and end all of how the world works otherwise we wouldn't have those all-important second year econ classes. Price gouging is not an efficient market result for anyone - the goods aren't actually, in real terms, worth the temporary price (the costs of manufacturer's switching over production is going to wind up much higher then any profit they can make once they're tooled up) nor does their value represent efficient allocation of resources - the guy with 11,000 bottles of hand sanitizer has no use for them, outside of the extremely limited window of people panicking due to uncertainty. But really, whether anyone believes this can be viewed through a very different lens: multiple times in the past week, US exchanges have ceased trading due to automatic circuit breakers from 7% drops in the market. Surely if the market is all knowing we shouldn't trigger these mechanisms and instead just let the invisible perfect hand let people sell stocks freely. After all, if we don't allow sudden plunges, what incentive will there be for investors to properly allocate their risk in the future? But, no one's making that argument. Nor is anyone questioning why it was suddenly urgent that the government put $USD1.5 trillion of liquidity into the market.
- djhworld 7y ago
  > Higher prices are also a deterrent against hoarding, particularly in the days leading up to a disaster. To be on the safe side, many consumers are inclined to buy more than enough of whatever they think they'll need. The more expensive the propane is, the more is available for everyone else. I think this makes sense. It would definitely stop people like this guy [1] going out and cleaning all the local stores/rural stores and mom and pop outlets of cleaning supplies, then selling the stuff on for a huge profit... [1] https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html?utm_source=pocket&utm_medium=email&utm_campaign=pockethits https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...
  - sneak 7y ago
    If the stores are underpricing, why shouldn’t people who are paying more attention reap those profits instead? Someone’s going to get it. I’d rather it go to those paying attention and willing to put in the work to get it to where it is most needed.
- maxerickson 7y ago
  It'd likely be good business for Costco to keep prices where they have been and limit each customer to a certain amount. (I expect the goodwill would outweigh the costs and any "foregone" profit) Not imposed by the government, not socialism, just good business.
whatshisface 7y ago
Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those laws, exacerbating shortages further.
- nwah1 7y ago
  Yep. A much better way to alleviate shortages would be to suspend sales taxes.
  - bernawil 7y ago
    Most stuff is bought by scalpers and sold on the black market anyway
    - logicchains 7y ago
      It's not a black market if it's a market for legal goods, it's just a market.
      - chillacy 7y ago
        Just not one where sales tax is paid I presume. It’s at least not part of the “formal economy” that will show up on a public profit and loss sheet.
        logicchains 7y ago
        Fun fact: one term for the informal economy is "System D": https://en.wikipedia.org/wiki/System_D https://en.wikipedia.org/wiki/System_D
  - AsyncAwait 7y ago
    Yep, here's that comment. Business benefit over direct customer benefit seems to be the manta these days.
frankharv 7y ago
So much for Americas Free Market principals. Just one more example of socialism creeping into our society.
- wayoutthere 7y ago
  So low wage workers should abandon their jobs to spend their time procuring essentials at reasonable prices? Because right now there's a lot of speculation short-term, but things will go back to normal in a week or so after everyone has enough toilet paper to last until 2050. Free market capitalism frequently generates outcomes that are at odds with a functioning society, and this is just another example.
  - blhack 7y ago
    What makes you think things will go back to normal in a week or so?
    - frankharv 7y ago
      You are correct. Once you slide into Socialism there is no returning. I find it ironic that my post was flagged. Socialists also hate Free Speech to the point of violence.
      - rfrey 7y ago
        You were flagged because your post was inflammatory and content free. Plenty of peiple are expressing the same sort of view, but with actual arguments rather than simple minded sloganeering. And I'm not sure what you mean about free speech... Perhaps you're in favor of the government compelling private citizens to not downvote you?
  - seibelj 7y ago
    Free market capitalism has lead to the greatest standard of living ever experienced in the history of the world, especially for citizens on the lowest rungs of society. It may be at odds with your quibbles of modern society, but when viewed holistically I’m so happy that we have clean water, tons of nutritious food, computers, etc. etc. etc.
Mountain_Skies 7y ago
How often does anyone get charged for this other than a few token made to be an example for the most egregious behavior? Price gouging laws seems to be mostly a threat rather than an actual attempt at regulating pricing. It's similar to how the police will arrest huge numbers of people during a protest and then drop the charges against almost all of them the next day. The backbone of the protest had been broken so it no longer mattered if they swept up a bunch of bystanders with protestors and rioters as they're all let go. I wonder how well any of these gouging laws would stand up in court if the state didn't quickly drop charges when challenged.
- Noumenon72 7y ago
  Yes, this law would make more sense as a norm to shame people from hoarding than as a strictly enforced market restriction.
anikan_vader 7y ago
From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.
- vikramkr 7y ago
  I think governments would rather that people that get it first have access than the peoplwnehat can't afford it. If you're going to have to essentially have some people not get supplies, basing it off of wealth and income is not politically optimal
  - logicchains 7y ago
    If we look at who it's most dangerous too, elderly people, then basing it off wealth would actually be in their favour compared to basing it off who can get to stores quicker to hoard it.
    - geofft 7y ago
      That's an inefficient proxy - there are plenty of poor elderly people (note that elderly people are often retired) and rich young people. If we're going to say anything other than "The people with the most ability to pay should get the goods because they have the most ability to pay, in and of itself," then the free market is the wrong tool to use.
    - vikramkr 7y ago
      There are poor elderly people too. I think the best response in cases of true need like this is some sort of government intervention and rationing based on need as well as some sort of subsidy to make scaling production profitable. Politically the let the market decide ideology is utterly infeasible - not only are most politicians fundamentally good people that care about their constituents and simply aren't the type to stand by while there's a shortage, there's also the political consideration of how your relection chances will be impacted by attack ads detailing that time you stood by as an elderly individual saw a shelf stocked with purell but couldn't afford the gouged price who then went on to pass away due to the virus. Externalities might not be priced, but they can vote.
radu_floricica 7y ago
Prices being elastic is good for people, in a vast majority of cases. It makes sure things get distributed more or less proportional to need, as opposed to just random or worse than random. Case in point: I luckily found some hand gel still for sale online. Probably the very last one around here. So I stocked up - not resale quantities (thought it would have been trivial) but definitely more than I needed - something like 10 pieces. Why? Because the price was low and I'm doubtful I'll get to see any more this year. If the price had been even slightly elastic, I wouldn't have bought 10 pcs for $10 each. I would have probably spent about the same, and gotten 2 or 3. Even better, I would probably still be able to get it from the groceries store, without any shortage - and buy just one as needed. So we have two scenario: if the prices stay the same some people stock up early, and most are left without. If the prices go up proportionally, we end up spending a trivial amount more (let's be honest, spending an extra $7 on hand gel is not a tragedy) but we have no supply problems. First because there is much less stocking up, and then because everybody is incentivised to produce and sell more.
- ghshephard 7y ago
  "I'm doubtful I'll get to see any more this year." - I'll take that action. All of the consumable that people have been panic buying - toilet paper, hand gel, etc... have experienced absolutely zero supply shock, and, indeed, most of the manufacturers are going to be delighted to draw down their inventory and get a boost this quarter. I'll be extraordinarily surprised if shelves aren't completely full of those consumable within 7-10 days. People are strange - the fact that there was a global pandemic coming at us was pretty obvious as of early march, but it was this weekend that everyone decided to panic? It's not as though this were a hurricane that just landed on us by surprise. I fully support the price gouging laws - it discourages these yahoo's from buying up all of the supplies and sticking it in their garage and depriving people over the weekend who might need a container.
  - sneak 7y ago
    > I'll be extraordinarily surprised if shelves aren't completely full of those consumable within 7-10 days. Then why do we need any price-gouging laws? Who is harmed without them, if the supply remains intact?
fortran77 7y ago
I've looked into this (I'm returning to California in two weeks) and you don't have to had to buy something to have standing to sue. If you see someone advertising $1.50 masks for $40 apiece on Amazon, for example, you can sue them in small claims court in CA (if you can find them) and, most likely win, according to my attorney who helped us with a similar case two years ago: There's a similar law in California that allows individuals to sue businesses who offer you a contract that forbids leaving negative feedback on review sites. We had a garage door company offer us a contract that included such a provision. We didn't sign it, went to court, and quickly got a judgement for $2,500, which they paid. (Here's information on that law:) https://racohenlawfirm.com/fines-for-trying-to-stop-bad-online-reviews-californias-new-yelp-law/ https://racohenlawfirm.com/fines-for-trying-to-stop-bad-onli...
caoilte 7y ago
Better to get on with closing nearly every store and introduce rationing. This is stalling.
deleted 7y ago
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mindslight 7y ago
What is everyone experiencing for price gouging / shortages on the west coast? Even though I stocked up myself, I feel like shortages of food and general supplies are going to be temporary. The immediate goal is to avoid having to go back to stores before everybody else figures out the new normal (eg don't fucking stand there coughing in the middle of the store). Hand sanitizer/IPA seems easy to produce in industrial quantities, and it feels like that will sort itself out in a week or two. Respirators/masks seem the only thing that are and will continue to be in short supply. But it feels like government (including health providers) is going to have to get them into everybody's hands eventually. But maybe that's overly optimistic.
justinzollars 7y ago
Price-gouging would correct the toilet paper hoarding problem.
- bob1029 7y ago
  Allowing prices to directly track available inventory seems like an excellent approach. The problem will self-correct very quickly as 4-packs of toilet paper begin to exceed $20. As inventory is replenished, prices could begin to drop again. Yes - this sucks for someone who really wanted toilet paper that day, but at the same time it ensures more conscientious spending where absolutely required. I usually don't check prices when I shop for groceries, but if TP was $20 per roll id probably actively decide to not buy any that day. Having this kind of damping from a price-demand perspective could really help to stabilize the availability of goods in retail environments. I can understand how customers might not like this, but if situations are dire, I think we should consider at least being able to throw some sort of switch to enable this mode of operation during emergencies.
  - kevingadd 7y ago
    "actively decide not to buy any that day" and not wipe your rear end after using the toilet? If you're out of paper towels or soap and the cost is 50x the usual you're just gonna not wash your hands? Think through the consequences here. Not everyone can afford to stockpile stuff like this in advance, some people live paycheck-to-paycheck. I've got a couple weeks of paper products in reserve typically, not 2 months worth - and if the timing is bad I might be down to a week's supply. Thankfully in this case I restocked just before things got bad but if this lasts I'll have to deal with shortages just like everyone else. I'm actually out of hand soap refills...
    - Noumenon72 7y ago
      Are you familiar with marginal analysis from economics? This is how markets work for everything. You are considering the one person with no TP, paper towels, or soap -- that is the person who will not be dissuaded from buying at any price. But there is always one person right on the edge of buying at the current price -- one who has a single roll left and can stretch it, or one who can just poop at work, or one who grew up wiping with corncobs and always thought of TP as a luxury anyway. As the price goes up, those people drop out one by one. It is those marginal consumers, not the one who needs TP the most, who are price sensitive. This ensures that the person with no TP, paper towels, or soap is always able to get the TP that they need now. Even if there's only one roll left. The price may have to rise to $100 a roll to distinguish between them and the next-most-marginal consumer (who also has no TP, paper towels, or soap, but is willing to hold their poop for a day to save $100). That's the most efficient outcome and markets are great at finding it.
sangd 7y ago
We should be applying a much hefty fine for stock investors or other kinds of investors if this $5k price-gouging is reasonable.
deleted 7y ago
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avip 7y ago
Reading this thread is the official confirmation that Americans are out of their mind.
- newbie578 7y ago
  Absolutely, I cannot fathom how people are so anti-government that they cannot see the forest from the tree. These types of situations are textbook explanations for WAR PROFITEERING (except we are in a crisis instead of war).
  - amiga_500 7y ago
    It's because the default mindset is that everyone is horrible and motivated solely by profit.
    - justinmeiners 7y ago
      That's a bit of and extreme characterization of "tend to look out for the well being of your family/people you care about" So who's model accounts for hoarding behaviors like this?
  - rjkennedy98 7y ago
    Yeah, the government is great at stopping price gouging. You know - like in Medicare or DOD contracts.
    - cmrdporcupine 7y ago
      Hoarding doesn't seem to be an issue in the Canadian medicare system here. So I'm not sure this is an attribute of state administrated systems per se, but more something about American culture?
  - gwright 7y ago
    > These types of situations are textbook explanations for WAR PROFITEERING (except we are in a crisis instead of war). Meh. I don't think it is the same thing at all. There is no shortage of raw materials or of labor (as in war time). There is an increased demand (irrational or rational doesn't matter). Best way to decrease demand is to let prices rise. It isn't really any simpler than that. If politeness or customs or laws prevent the price from rising while demand continues to rise then the outcome is 100% expected: shortages where the product isn't available for any price. It is our own mis-placed disdain for surge pricing that is creating the shortages.
rickyc091 7y ago
I'm noticing with Amazon/eBay shut down people have moved to craigslist and alternative resell markets. I see some listings where people are genuinely trying to help (4oz hand sanitizer, two 2oz bottles, alcohol pads, moist wipes) for $20, but these will probably be quickly bought and resold at a premium.
sxyuan 7y ago
I see some commenters saying that preventing price gouging will take away the incentive to produce more of a certain good when the demand increases. This doesn't make sense to me. If, under normal market conditions, producers already make X amount (of , say, toilet paper) due to Y demand at price Z, when the demand spikes to 2Y, if you can produce and sell 2X goods at the same unit cost, you can double your profit without raising the price at all. One might argue that in order to rapidly increase production capacity, the unit cost will rise as well. But that doesn't necessarily mean that you have to allow prices to rise. As long as the extra investment allows you to produce and sell enough units so that the extra profit is greater than your cost, the incentive is still there. And that's ignoring the fact that a price cap doesn't have to fix the price at current levels - it can limit the increase to a reasonable amount.
- aeternum 7y ago
  Most suppliers cannot simply produce 2Y the goods at the same price. Switching lines involves retooling and, risk, and/or overtime, all of which are expensive. If that switch can be done for under the price cap, then the price should remain under the price cap anyway due to competition. If it cannot, then shortages will result.
- SECProto 7y ago
  > If, under normal market conditions, producers already make X amount (of , say, toilet paper) due to Y demand at price Z, when the demand spikes to 2Y, if you can produce and sell 2X goods at the same unit cost, you can double your profit without raising the price at all. This doesn't accurately reflect how the cost would scale. X isn't easily adjustable - it reflects annualized wages, depreciation of production line that is sized for production amount X, etc. Equipment sitting idle is wasted money, so production lines operate close to maximum production already (or at least nowhere near half capacity, that would allow 2X production)
EdgarVerona 7y ago
A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to produce. The price gouging law is not bringing toilet paper to levels where the producer of the product is taking some kind of operating loss or even reduction in profit of any kind. This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit. The free market arguments being made here are baffling, and willfully ignoring the aforementioned truths of this specific set of circumstances that have driven these specific laws. Have we lost all sense of humanity for the sake of our ideology? We would be doing our entire society a severe disservice if our solution to this problem is simply "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper.
- smallnamespace 7y ago
  The price of an item is a very blunt instrument. It doesn't distinguish between producers and scalpers/hoarders. Both of those parties are equally incentivized to produce stock and sell it if the price goes up. From the point of view of a potential buyer, toilet paper straight from the factory, and toilet paper from the guy next door who bought some ahead of time are equally good. > This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit. To a very good approximation, the marginal impact of any hoarders on the scarcity of a product is zero. Hoarders are not trying to drive scarcity themselves, they are trying to buy a product now because they think the price will rise, but they're not trying to make the price rise by buying it. The distinction is important! > The price gouging law is not bringing toilet paper to levels where the producer of the product is taking some kind of operating loss or even reduction in profit of any kind. This completely ignores the fact that the cost to produce a product is not a fixed amount, but rather that higher prices induce producers to make more product sooner. Here's the crux of the issue: when supply is judged to be sufficient, nobody will hoard. When the supply of an item in the short term is in doubt, one of three things happen: 0) The price does not change, but the item goes out of stock. Some proportion of people are unable to procure the item, independently of their need for it. 1) Hoarders step in and cause the price of an item to rise. The higher price means that those who demonstrate a higher desire for an item (by their willingness to pay) end up getting it. The hoarding profits are a charge to the rest of society for a more efficient distribution of the item compared to 0. What bothers people here primarily is that hoarders made money while everyone else is suffering. 2) The government steps in and does the distribution directly, e.g. via rationing. Here, the government decides who needs the item the most.
pgt 7y ago
Taxes working as intended?
hirundo 7y ago
I think that setting a price on something is best considered as a form of speech, even if it isn't exactly the same thing. A price is a statement of the value you believe that a thing has. As a free speech advocate I believe people should be able to express such value judgments freely with few constraints. A price signal is similar to other signals we can make with speech, in that it has the potential to change behavior for good or bad. There have certainly been many bad signals via ordinary opinion that have caused harm. But most of us believe that the net benefits are such that bad speech should rarely be suppressed. I think that the same is true of bad price signals. It isn't that well crafted laws cannot differentiate between good and bad speech or good and bad prices. They can. It's that such laws are the exception rather than the rule. So it's better policy to decentralize such decisions, so that bad ones can't be made for everyone.
- geofft 7y ago
  Setting a price on something is absolutely a form of speech, yes, in the sense that the whole point of free markets is communication / price discovery. It's specifically a form of speech in which richer people can speak things that poorer people can't.
  - gwright 7y ago
    And how do the "poor" benefit from an empty shelf? This argument about poor people not being able to afford TP at 2x, 3x, or even higher prices doesn't make any sense to me. Especially when we are talking about a very short term situation. It isn't like all the TP factories have suddenly vanished. People will adjust, even poor people. Letting the price float is the best way to quickly extinguish the irrational behavior. Preventing the price from increasing is the best way to ensure a longer period of shortage (or complete unavailability).
- jrhurst 7y ago
  Price gouging is the free speech equivalent of yelling fire in a full movie theater. You are harming people for your own enjoyment.
robomartin 7y ago
From the law: “However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, during the state of emergency or local emergency, and the price is no more than 10 percent greater than the total of the cost to the seller plus the markup customarily applied by the seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.” I am glad they included this language, even though it is a bit sloppy. What I am referring to is that yes, costs can increase dramatically during an emergency, however, the “markup customarily applied” could also change in dramatic ways. One of the aspects of the theory of pricing is to include in the equation variables to address support, business continuity, expansion, disruptions and other “nonlinear” factors. In an emergency what might have been simple could become complex. This means it might be impossible for a vendor to maintain an ongoing supply or continue to offer services. And, given the current reality, if the consequence of providing the goods or services could be loosing your entire staff to a quarantine, your ability to maintain a supply might require a very different approach to pricing. Given the severe consequences, this language could cause vendors to avoid exposure for fear of being destroyed by an uninformed claim. Which means supply would contract and prices would explode. That said, the guy buying water at Walmart for $1 to then sell it for $5 should get nailed to the wall with rusty nails.
bjourne 7y ago
It's amazing that it takes a pandemic for people to realize that "free market" isn't the solution to every problem in the world.
- herbstein 7y ago
  Reading this thread would indicate that some people still don't realize it now.
- Noumenon72 7y ago
  It's amazing that even when a pandemic produces a textbook example of a market redistributing supply to where demand is highest, people don't recognize how well markets work.
m3kw9 7y ago
And that eBay btch az couple that is buying up Lyso wipes and reselling them on eBay for 3x
seemslegit 7y ago
Is there any evidence consumers are stocking up to profit rather than just have enough so as to be able to avoid stores for some time ?
- georgemcbay 7y ago
  Yes, there is evidence, because some of the people engaged in this are dumb enough to give interviews to major press: https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html https://www.nytimes.com/2020/03/14/technology/coronavirus-pu... I'm sure in terms of overall numbers the vast majority of people who are panic buying aren't doing it to profit, but it only takes a couple of jackasses like the ones described in the article operating at the scale they did to cause real problems.
  - dragonwriter 7y ago
    The thing is, once people are hoarding for any reason, profit or not, and that leads to signs of potential supply problems, everyone else has a strong incentive to stock up defensively, not for profit or defense against the original disaster, but to prevent being adversely effected by the supply shortages caused by hoarding. Which then creates a positive feedback loop of incentives unless external controls (rationing) are imposed.
epicureanideal 7y ago
This would seem more fair if they said the price couldn’t be raised by more than 50% or 100% during an emergency. So toilet paper that was $10 would become $20. Not a major problem, and yet it gives producers the margins to keep staff working longer hours to produce more goods. But no increase over 10%? That gives producers very little margin to work with. (10% is the rate set in the law. See the link.)
leptoniscool 7y ago
In a free-market, sellers and buyers will find an equilibrium price at which goods can be exchanged for money. When an outsider such as a government artificially sets the price (or forces the price to stay constant), there will be shortages or overproduction.
- rtkwe 7y ago
  Stores and manufacturers aren't actually charging increased prices in the majority of cases here. It's people buying out those stores and selling. If manufacturers don't see the increased prices the Econ 101 logic breaks down.
  - gwright 7y ago
    They should be charging increased prices. They should have charged increased prices the moment demand went up (like Uber surge pricing). That would have snuffed out the speculators right quick. One reason they don't do this is because of the attitudes illustrated in the comments here. People irrationally believe that surge pricing in this case is wrong and the negative response by their customers outweighs the benefits of surge pricing. I believe that attitude about surge pricing is wrong and it is one reason why we end up with shortages. It is a terribly self-defeating attitude that exacerbates the situation.
    - salawat 7y ago
      They should absolutely not have raised prices. The issue isn't manufacturers, and only retailers in that they failed to implement a purchase limit per customer given news of a pandemic. You want the maximum number of people with enough supply to get by. Not to have large swathes of the population to go without because someone decided to usurp the logistics network in search of price gouging opportunities.
      - gwright 7y ago
        Purchase limit per customer? So a single person and a family of four and a family of six are subject to the same limit? Much easier to raise the price then ask people to prove their need for a product. And how are you going to prevent people from just having mom, dad, and each child purchase the items separately?
deleted 7y ago
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voodooranger 7y ago
I highly recommend listening to Duke professor Mike Munger discuss price gouging on this episode of Econ Talk: https://www.econtalk.org/munger-on-price-gouging/ https://www.econtalk.org/munger-on-price-gouging/ It’s very entertaining and enlightening.
jbverschoor 7y ago
So what will this do to Uber surge pricing?
jeffdavis 7y ago
For basic goods like toilet paper, production hasn't fallen, and consumption hasn't risen. Distribution is still adequate for the amount of production and distribution, so it's not directly the problem, either. The problem is buffering. Normally, buffering happens within the supply chain -- the back rooms of stores, loaded in trucks, warehouses, distribution centers, and the factories themselves. Now, we are telling everyone "buffer at home so you don't need to go out so much". But the problem is, buffering is much less efficient at the end of the chain, so you need to buffer a lot more. That's causing a short-term strain on production and distribution. Blaming selfishness or gouging probably doesn't do much to help this problem. My guess is that the biggest problem is the discrepancy between how much stuff would be needed to buffer within the supply chain versus how much stuff is needed to buffer at the end of the supply chain (i.e. at home). Worse, because it's a temporary buffering problem and there's no real increase in consumption, there's little incentive for production to increase now to alleviate it. Any increased production/distribution now just means less demand later when people start to work through their caches at home (and stop buying for a while). So the only way to alleviate this is to allow the prices (that manufacturers charge) to rise, which will give manufacturers a cushion against the inevitable slump in the future. That's not very popular and not worth the brand damage, so it won't happen. The good news is that I don't think this will last more than another few weeks. Gougers will stop buying at some point because they don't want to get stuck with a huge supply of toilet paper and no channels to sell it. And the home caches will fill up. EDIT: this analysis has nothing to do with things like facemasks, where consumption has dramatically risen.
pascalxus 7y ago
The crazy thing here is that they go after these gougers so aggressively for just selling a 20$ bottle of soap. And yet, predatory hospitals in the US can do x1000 times worse and not even get a slap on the hand. Hospitals are the #1 cause of bankrupcy in the US.
- kevingadd 7y ago
  Good reason to 1) be pleased that we haven't let price-gougers achieve regulatory capture yet 2) be frustrated that the predatory hospital/insurance ghouls have not been displaced by Medicare For All or an equivalent like they have in most other civilized nations
- techslave 7y ago
  they aren’t gouging. gouging is a reaction to a disaster or event of some sort. hospitals always charge the absurd prices.
  - loeg 7y ago
    So if Arnold Arbitrage changes his name to Henry Hospital and always charges a high markup, that's A-Ok with you? This point of view seems inconsistent.
- dsfyu404ed 7y ago
  Big predators almost always prefer many soft targets to one big meal that can put up a fight. The hospital has a legal team. Some jerk who's re-selling hand sanitizer at 5000% markup does not. They both deserve to be gone after but it should be obvious why the state prefers the latter.
yyy888sss 7y ago
The current hoarding issues are being addressed in Australia by all supermarkets, they are rationing key goods ( 1 pack toilet paper, pasta, handwipes etc per day) but keeping prices low. You can deal with rapid demand increases for essential goods this way.
magnusss 7y ago
Come on, guys. Hoarding a commodity in order to corner a market and thereby profiteer is immoral, (often) illegal, and a distortion of the free market. It’s bad behavior. Please stop.
- grecy 7y ago
  I agree that it's immoral, but I do have to wonder if there's much difference between what these people are doing vs Nike making a pair of shoes for $2 then selling them for $400, or hospitals in America marking stuff up 500 or 1000%. By definition capitalism is about making a profit. Sell things for as much as you can, and win. I find it fascinating how where there isn't a "crisis" then maximizing profit is just what we're all supposed to be doing, and we accept it but somehow in a "crisis" it's suddenly evil and horrible. Suddenly capitalism itself starts to feel mighty immoral, doesn't it?
  - magnusss 7y ago
    Or selling software with 0 marginal cost for $40k? :-) As with all moral issues, it is difficult to come up with an objective distinction between wrong and right. I tend to rely on Kant’s categorical imperative: Would society be harmed if everyone behaved in this way? In our situation where hoarders are attempting to profit from a crisis, I believe the answer is clear: It’s immoral.
    - grecy 7y ago
      > I tend to rely on Kant’s categorical imperative: Would society be harmed if everyone behaved in this way? Hospitals in the USA marking stuff up 500 or 1000% ARE harming society already. If all shoe companies charged $400 for a $2 shoe, I believe society would be harmed, yes. If every company hired people as part time only so they didn't have to pay benefits, again, society would be harmed. The list goes on. Capitalism is already harming society badly.
      - magnusss 7y ago
        > Hospitals in the USA marking stuff up 500 or 1000% ARE harming society already. Agreed, that needs to be fixed. > If all shoe companies charged $400 for a $2 shoe, I believe society would be harmed, yes. A competitor would step in, charge less, and win the business. It would only be immoral if competition was quashed or impossible, such as in a hoarding situation. > If every company hired people as part time only so they didn't have to pay benefits, again, society would be harmed. I don’t see why this is true. The only benefit of moral significance is medical, and there’s no law of the universe that states that must be paid by an employer.
stevespang 7y ago
Funny how price gouging NEVER applies to doctors and lawyers - - - seemingly only to tree co's after hurricanes, contractors, and the like. But when your freedom or your health is at risk, then the medical community and the lawyers can screw you over all they want - - - at no real risk to them.
jmugan 7y ago
I wish we could apply price-gouging laws to medical care. But I guess it just seems like normal practice at this point.
2dvisio 7y ago
Suddenly in UK groceries became very expensive. Same exact shopping two weeks ago £50, today £80 :/
randyrand 7y ago
If I buy all the toilet paper in a store and resell it for 5% more is that considered price gouging? What if I sell it to another middle man who also distributes and sells for 5% more?
pascalxus 7y ago
So, on the one hand, people react with aghast to find out that a bottle of Purrel soap costs 20$, when it actually should cost 2$ to produce. But, here in CA, on the other hand, when a House (something far more crucial to people's lives), costs 800,000$ instead of 200,000$, that's okay (at least with the vast majority of voters). I should mention the reason for 1 and the other are completely different. The soap, is merely due to the seller, wehreas the housing shortage is a political choice voters agreed to.

228 points by quizme2000 7y ago

I think that <stabbing you> is best considered as a form of free speech. A <sharp knife between the third and fourth intercostal space> is a statement of the value of your argument.

randallsquared 7y ago
Please stop.
daenz 7y ago
Imagine trying to be so edgy and clever with your kneejerk response that you accidentally reveal how unhinged and unsuitable you are for civil society.

zhoujianfu 7y ago

$5,000?! That’s price gouging!

briandear 7y ago

An argument supporting gouging: https://reason.com/2019/01/31/price-gouging-is-supply-and-demand-at-wo/ https://reason.com/2019/01/31/price-gouging-is-supply-and-de...

microcolonel 7y ago
The main pragmatic problem with anti-gouging laws (or even just anti-gouging policies within retailers) is that when manufacture and distribution are not supported on the back end to keep up, it leads to shortages (as can be seen at most grocers in the U.S. and Canada right now). My local Wal Mart closed yesterday because they were cleaned out.
herbstein 7y ago
Yes, that is an an argument. It's just not terribly convincing if you don't already subscribe to the idea that markets are always right, externalities be damned.
- baryphonic 7y ago
  What externalities?
  - yladiz 7y ago
    One example is a pandemic.
    - logicchains 7y ago
      The point is that capping the price of e.g. masks means _fewer masks_ are produced, which is worse for stopping the pandemic.
      - kharms 7y ago
        Price gouging laws typically apply at the consumer point of sale, I'm not sure they prevent a higher price from factory to store.
        waterhouse 7y ago
        If the law prevents the store from charging a high price to the consumer, then that effectively prevents the factory from charging a high price to the store, because the store would make a loss if it accepted that price.
        kharms 7y ago
        >>What if a seller increased the price of a good or service because the seller’s costs of providing the good or service increased? >If the seller can prove that the increased price is directly attributable to increases in the cost of labor or materials needed to provide the good or service, the seller may not be liable under the statute. It's right there on the linked page. This basically prohibits large markups while allowing for passing of costs.
sollewitt 7y ago
That's just poor reasoning on multiple levels: it assumes supply, the argument that it prevents hoarding misses that as prices are driven up the incentive to hold increases, and it overlooks that some populations night need the good immediately so real harm is being done. The gain is personal, the harm is social, this is ethics 101 and solipsistic pseudo-libertarion reasoning doesn't make it right.
- logicchains 7y ago
  >solipsistic pseudo-liberation reasoning Basic economics is solipsistic pseudo-liberation reasoning now?
  - hodgesrm 7y ago
    The argument that the threat of gouging increases the motivation to hoard is basic economics. For analogous reasons there is FDIC insurance on bank accounts because the alternative is runs on banks that can lead to system collapse. Not every point on the supply/demand curve is a good place to be.
    - logicchains 7y ago
      >The argument that the threat of gouging increases the motivation to hoard is basic economics. But the ability to increase price freely also decreases actual hoarding, because when stores see a massive increase in demand, they'll be incentivised to increase prices, which will deter unnecessary purchases.
      - hodgesrm 7y ago
        If your goal is to prevent hoarding and ensure there's enough for everyone, it's simpler just to limit the number of rolls each customer gets. Fewer corner cases.
    - waterhouse 7y ago
      Are people hoarding because they're worried about being gouged on the price, or because they're worried about being unable to buy at all? Are the viral social media posts "OMG look at these high prices", or "OMG look at these empty shelves"? From a hypothetical perspective, which scenario creates a stronger incentive to buy supplies now: "Prices might rise 10x in the next month, but buying will always be possible", or "The supply might run out completely in the next month"?
logicchains 7y ago
You'll find a similar argument in any basic econ textbook. Put a cap on prices, then when demand rises for something (which normally leads to an increase in price, all other things being equal), the lack of an accompanying rise in price means there is no incentive to produce more of the good (no incentive for more producers to enter the market), so there isn't a corresponding increase in supply. Might work okay in China, where the government can e.g. command factories to switch to producing masks, but it means American factory owners won't have any incentive to switch over to producing them.
- hobs 7y ago
  Do you actually think our economy needs 200x as much hand sanitizer production? If the demand runs high enough for long enough, it wont be an emergency, and emergency measures don't apply.
  - logicchains 7y ago
    >Do you actually think our economy needs 200x as much hand sanitizer production? Yes I do. If everybody is now sanitising their hands thoroughly and regularly throughout the day to prevent infection, this could easily be a 200x increase in hand sanitizer usage compared to what it was previously.
- wbl 7y ago
  The President does have the power to direct factories to make masks during a national emergency.
  - logicchains 7y ago
    That would be much more effective at increasing supply than price caps.
- XorNot 7y ago
  And like most things, basic econ is not the be all and end all of how the world works otherwise we wouldn't have those all-important second year econ classes. Price gouging is not an efficient market result for anyone - the goods aren't actually, in real terms, worth the temporary price (the costs of manufacturer's switching over production is going to wind up much higher then any profit they can make once they're tooled up) nor does their value represent efficient allocation of resources - the guy with 11,000 bottles of hand sanitizer has no use for them, outside of the extremely limited window of people panicking due to uncertainty. But really, whether anyone believes this can be viewed through a very different lens: multiple times in the past week, US exchanges have ceased trading due to automatic circuit breakers from 7% drops in the market. Surely if the market is all knowing we shouldn't trigger these mechanisms and instead just let the invisible perfect hand let people sell stocks freely. After all, if we don't allow sudden plunges, what incentive will there be for investors to properly allocate their risk in the future? But, no one's making that argument. Nor is anyone questioning why it was suddenly urgent that the government put $USD1.5 trillion of liquidity into the market.
djhworld 7y ago
> Higher prices are also a deterrent against hoarding, particularly in the days leading up to a disaster. To be on the safe side, many consumers are inclined to buy more than enough of whatever they think they'll need. The more expensive the propane is, the more is available for everyone else. I think this makes sense. It would definitely stop people like this guy [1] going out and cleaning all the local stores/rural stores and mom and pop outlets of cleaning supplies, then selling the stuff on for a huge profit... [1] https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html?utm_source=pocket&utm_medium=email&utm_campaign=pockethits https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...
- sneak 7y ago
  If the stores are underpricing, why shouldn’t people who are paying more attention reap those profits instead? Someone’s going to get it. I’d rather it go to those paying attention and willing to put in the work to get it to where it is most needed.
maxerickson 7y ago
It'd likely be good business for Costco to keep prices where they have been and limit each customer to a certain amount. (I expect the goodwill would outweigh the costs and any "foregone" profit) Not imposed by the government, not socialism, just good business.

whatshisface 7y ago

Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those laws, exacerbating shortages further.

nwah1 7y ago
Yep. A much better way to alleviate shortages would be to suspend sales taxes.
- bernawil 7y ago
  Most stuff is bought by scalpers and sold on the black market anyway
  - logicchains 7y ago
    It's not a black market if it's a market for legal goods, it's just a market.
    - chillacy 7y ago
      Just not one where sales tax is paid I presume. It’s at least not part of the “formal economy” that will show up on a public profit and loss sheet.
      - logicchains 7y ago
        Fun fact: one term for the informal economy is "System D": https://en.wikipedia.org/wiki/System_D https://en.wikipedia.org/wiki/System_D
- AsyncAwait 7y ago
  Yep, here's that comment. Business benefit over direct customer benefit seems to be the manta these days.

frankharv 7y ago

So much for Americas Free Market principals. Just one more example of socialism creeping into our society.

wayoutthere 7y ago
So low wage workers should abandon their jobs to spend their time procuring essentials at reasonable prices? Because right now there's a lot of speculation short-term, but things will go back to normal in a week or so after everyone has enough toilet paper to last until 2050. Free market capitalism frequently generates outcomes that are at odds with a functioning society, and this is just another example.
- blhack 7y ago
  What makes you think things will go back to normal in a week or so?
  - frankharv 7y ago
    You are correct. Once you slide into Socialism there is no returning. I find it ironic that my post was flagged. Socialists also hate Free Speech to the point of violence.
    - rfrey 7y ago
      You were flagged because your post was inflammatory and content free. Plenty of peiple are expressing the same sort of view, but with actual arguments rather than simple minded sloganeering. And I'm not sure what you mean about free speech... Perhaps you're in favor of the government compelling private citizens to not downvote you?
- seibelj 7y ago
  Free market capitalism has lead to the greatest standard of living ever experienced in the history of the world, especially for citizens on the lowest rungs of society. It may be at odds with your quibbles of modern society, but when viewed holistically I’m so happy that we have clean water, tons of nutritious food, computers, etc. etc. etc.

Mountain_Skies 7y ago

How often does anyone get charged for this other than a few token made to be an example for the most egregious behavior? Price gouging laws seems to be mostly a threat rather than an actual attempt at regulating pricing. It's similar to how the police will arrest huge numbers of people during a protest and then drop the charges against almost all of them the next day. The backbone of the protest had been broken so it no longer mattered if they swept up a bunch of bystanders with protestors and rioters as they're all let go. I wonder how well any of these gouging laws would stand up in court if the state didn't quickly drop charges when challenged.

Noumenon72 7y ago
Yes, this law would make more sense as a norm to shame people from hoarding than as a strictly enforced market restriction.

anikan_vader 7y ago

From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.

vikramkr 7y ago
I think governments would rather that people that get it first have access than the peoplwnehat can't afford it. If you're going to have to essentially have some people not get supplies, basing it off of wealth and income is not politically optimal
- logicchains 7y ago
  If we look at who it's most dangerous too, elderly people, then basing it off wealth would actually be in their favour compared to basing it off who can get to stores quicker to hoard it.
  - geofft 7y ago
    That's an inefficient proxy - there are plenty of poor elderly people (note that elderly people are often retired) and rich young people. If we're going to say anything other than "The people with the most ability to pay should get the goods because they have the most ability to pay, in and of itself," then the free market is the wrong tool to use.
  - vikramkr 7y ago
    There are poor elderly people too. I think the best response in cases of true need like this is some sort of government intervention and rationing based on need as well as some sort of subsidy to make scaling production profitable. Politically the let the market decide ideology is utterly infeasible - not only are most politicians fundamentally good people that care about their constituents and simply aren't the type to stand by while there's a shortage, there's also the political consideration of how your relection chances will be impacted by attack ads detailing that time you stood by as an elderly individual saw a shelf stocked with purell but couldn't afford the gouged price who then went on to pass away due to the virus. Externalities might not be priced, but they can vote.

radu_floricica 7y ago

Prices being elastic is good for people, in a vast majority of cases. It makes sure things get distributed more or less proportional to need, as opposed to just random or worse than random. Case in point: I luckily found some hand gel still for sale online. Probably the very last one around here. So I stocked up - not resale quantities (thought it would have been trivial) but definitely more than I needed - something like 10 pieces. Why? Because the price was low and I'm doubtful I'll get to see any more this year. If the price had been even slightly elastic, I wouldn't have bought 10 pcs for $10 each. I would have probably spent about the same, and gotten 2 or 3. Even better, I would probably still be able to get it from the groceries store, without any shortage - and buy just one as needed. So we have two scenario: if the prices stay the same some people stock up early, and most are left without. If the prices go up proportionally, we end up spending a trivial amount more (let's be honest, spending an extra $7 on hand gel is not a tragedy) but we have no supply problems. First because there is much less stocking up, and then because everybody is incentivised to produce and sell more.

ghshephard 7y ago
"I'm doubtful I'll get to see any more this year." - I'll take that action. All of the consumable that people have been panic buying - toilet paper, hand gel, etc... have experienced absolutely zero supply shock, and, indeed, most of the manufacturers are going to be delighted to draw down their inventory and get a boost this quarter. I'll be extraordinarily surprised if shelves aren't completely full of those consumable within 7-10 days. People are strange - the fact that there was a global pandemic coming at us was pretty obvious as of early march, but it was this weekend that everyone decided to panic? It's not as though this were a hurricane that just landed on us by surprise. I fully support the price gouging laws - it discourages these yahoo's from buying up all of the supplies and sticking it in their garage and depriving people over the weekend who might need a container.
- sneak 7y ago
  > I'll be extraordinarily surprised if shelves aren't completely full of those consumable within 7-10 days. Then why do we need any price-gouging laws? Who is harmed without them, if the supply remains intact?

fortran77 7y ago

I've looked into this (I'm returning to California in two weeks) and you don't have to had to buy something to have standing to sue. If you see someone advertising $1.50 masks for $40 apiece on Amazon, for example, you can sue them in small claims court in CA (if you can find them) and, most likely win, according to my attorney who helped us with a similar case two years ago: There's a similar law in California that allows individuals to sue businesses who offer you a contract that forbids leaving negative feedback on review sites. We had a garage door company offer us a contract that included such a provision. We didn't sign it, went to court, and quickly got a judgement for $2,500, which they paid. (Here's information on that law:) https://racohenlawfirm.com/fines-for-trying-to-stop-bad-online-reviews-californias-new-yelp-law/ https://racohenlawfirm.com/fines-for-trying-to-stop-bad-onli...

caoilte 7y ago

Better to get on with closing nearly every store and introduce rationing. This is stalling.

deleted 7y ago

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mindslight 7y ago

What is everyone experiencing for price gouging / shortages on the west coast? Even though I stocked up myself, I feel like shortages of food and general supplies are going to be temporary. The immediate goal is to avoid having to go back to stores before everybody else figures out the new normal (eg don't fucking stand there coughing in the middle of the store). Hand sanitizer/IPA seems easy to produce in industrial quantities, and it feels like that will sort itself out in a week or two. Respirators/masks seem the only thing that are and will continue to be in short supply. But it feels like government (including health providers) is going to have to get them into everybody's hands eventually. But maybe that's overly optimistic.

justinzollars 7y ago

Price-gouging would correct the toilet paper hoarding problem.

bob1029 7y ago
Allowing prices to directly track available inventory seems like an excellent approach. The problem will self-correct very quickly as 4-packs of toilet paper begin to exceed $20. As inventory is replenished, prices could begin to drop again. Yes - this sucks for someone who really wanted toilet paper that day, but at the same time it ensures more conscientious spending where absolutely required. I usually don't check prices when I shop for groceries, but if TP was $20 per roll id probably actively decide to not buy any that day. Having this kind of damping from a price-demand perspective could really help to stabilize the availability of goods in retail environments. I can understand how customers might not like this, but if situations are dire, I think we should consider at least being able to throw some sort of switch to enable this mode of operation during emergencies.
- kevingadd 7y ago
  "actively decide not to buy any that day" and not wipe your rear end after using the toilet? If you're out of paper towels or soap and the cost is 50x the usual you're just gonna not wash your hands? Think through the consequences here. Not everyone can afford to stockpile stuff like this in advance, some people live paycheck-to-paycheck. I've got a couple weeks of paper products in reserve typically, not 2 months worth - and if the timing is bad I might be down to a week's supply. Thankfully in this case I restocked just before things got bad but if this lasts I'll have to deal with shortages just like everyone else. I'm actually out of hand soap refills...
  - Noumenon72 7y ago
    Are you familiar with marginal analysis from economics? This is how markets work for everything. You are considering the one person with no TP, paper towels, or soap -- that is the person who will not be dissuaded from buying at any price. But there is always one person right on the edge of buying at the current price -- one who has a single roll left and can stretch it, or one who can just poop at work, or one who grew up wiping with corncobs and always thought of TP as a luxury anyway. As the price goes up, those people drop out one by one. It is those marginal consumers, not the one who needs TP the most, who are price sensitive. This ensures that the person with no TP, paper towels, or soap is always able to get the TP that they need now. Even if there's only one roll left. The price may have to rise to $100 a roll to distinguish between them and the next-most-marginal consumer (who also has no TP, paper towels, or soap, but is willing to hold their poop for a day to save $100). That's the most efficient outcome and markets are great at finding it.

sangd 7y ago

We should be applying a much hefty fine for stock investors or other kinds of investors if this $5k price-gouging is reasonable.

deleted 7y ago

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avip 7y ago

Reading this thread is the official confirmation that Americans are out of their mind.

newbie578 7y ago
Absolutely, I cannot fathom how people are so anti-government that they cannot see the forest from the tree. These types of situations are textbook explanations for WAR PROFITEERING (except we are in a crisis instead of war).
- amiga_500 7y ago
  It's because the default mindset is that everyone is horrible and motivated solely by profit.
  - justinmeiners 7y ago
    That's a bit of and extreme characterization of "tend to look out for the well being of your family/people you care about" So who's model accounts for hoarding behaviors like this?
- rjkennedy98 7y ago
  Yeah, the government is great at stopping price gouging. You know - like in Medicare or DOD contracts.
  - cmrdporcupine 7y ago
    Hoarding doesn't seem to be an issue in the Canadian medicare system here. So I'm not sure this is an attribute of state administrated systems per se, but more something about American culture?
- gwright 7y ago
  > These types of situations are textbook explanations for WAR PROFITEERING (except we are in a crisis instead of war). Meh. I don't think it is the same thing at all. There is no shortage of raw materials or of labor (as in war time). There is an increased demand (irrational or rational doesn't matter). Best way to decrease demand is to let prices rise. It isn't really any simpler than that. If politeness or customs or laws prevent the price from rising while demand continues to rise then the outcome is 100% expected: shortages where the product isn't available for any price. It is our own mis-placed disdain for surge pricing that is creating the shortages.

rickyc091 7y ago

I'm noticing with Amazon/eBay shut down people have moved to craigslist and alternative resell markets. I see some listings where people are genuinely trying to help (4oz hand sanitizer, two 2oz bottles, alcohol pads, moist wipes) for $20, but these will probably be quickly bought and resold at a premium.

sxyuan 7y ago

I see some commenters saying that preventing price gouging will take away the incentive to produce more of a certain good when the demand increases. This doesn't make sense to me. If, under normal market conditions, producers already make X amount (of , say, toilet paper) due to Y demand at price Z, when the demand spikes to 2Y, if you can produce and sell 2X goods at the same unit cost, you can double your profit without raising the price at all. One might argue that in order to rapidly increase production capacity, the unit cost will rise as well. But that doesn't necessarily mean that you have to allow prices to rise. As long as the extra investment allows you to produce and sell enough units so that the extra profit is greater than your cost, the incentive is still there. And that's ignoring the fact that a price cap doesn't have to fix the price at current levels - it can limit the increase to a reasonable amount.

aeternum 7y ago
Most suppliers cannot simply produce 2Y the goods at the same price. Switching lines involves retooling and, risk, and/or overtime, all of which are expensive. If that switch can be done for under the price cap, then the price should remain under the price cap anyway due to competition. If it cannot, then shortages will result.
SECProto 7y ago
> If, under normal market conditions, producers already make X amount (of , say, toilet paper) due to Y demand at price Z, when the demand spikes to 2Y, if you can produce and sell 2X goods at the same unit cost, you can double your profit without raising the price at all. This doesn't accurately reflect how the cost would scale. X isn't easily adjustable - it reflects annualized wages, depreciation of production line that is sized for production amount X, etc. Equipment sitting idle is wasted money, so production lines operate close to maximum production already (or at least nowhere near half capacity, that would allow 2X production)

EdgarVerona 7y ago

A lot of people in this thread are willfully ignoring some basic facts here. These products are being made in sufficient quantity for everyone. There is not a significant decrease in production. There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. This is not a case of toilet paper suddenly costing more to produce. The price gouging law is not bringing toilet paper to levels where the producer of the product is taking some kind of operating loss or even reduction in profit of any kind. This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit. The free market arguments being made here are baffling, and willfully ignoring the aforementioned truths of this specific set of circumstances that have driven these specific laws. Have we lost all sense of humanity for the sake of our ideology? We would be doing our entire society a severe disservice if our solution to this problem is simply "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper.

smallnamespace 7y ago
The price of an item is a very blunt instrument. It doesn't distinguish between producers and scalpers/hoarders. Both of those parties are equally incentivized to produce stock and sell it if the price goes up. From the point of view of a potential buyer, toilet paper straight from the factory, and toilet paper from the guy next door who bought some ahead of time are equally good. > This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit. To a very good approximation, the marginal impact of any hoarders on the scarcity of a product is zero. Hoarders are not trying to drive scarcity themselves, they are trying to buy a product now because they think the price will rise, but they're not trying to make the price rise by buying it. The distinction is important! > The price gouging law is not bringing toilet paper to levels where the producer of the product is taking some kind of operating loss or even reduction in profit of any kind. This completely ignores the fact that the cost to produce a product is not a fixed amount, but rather that higher prices induce producers to make more product sooner. Here's the crux of the issue: when supply is judged to be sufficient, nobody will hoard. When the supply of an item in the short term is in doubt, one of three things happen: 0) The price does not change, but the item goes out of stock. Some proportion of people are unable to procure the item, independently of their need for it. 1) Hoarders step in and cause the price of an item to rise. The higher price means that those who demonstrate a higher desire for an item (by their willingness to pay) end up getting it. The hoarding profits are a charge to the rest of society for a more efficient distribution of the item compared to 0. What bothers people here primarily is that hoarders made money while everyone else is suffering. 2) The government steps in and does the distribution directly, e.g. via rationing. Here, the government decides who needs the item the most.

pgt 7y ago

Taxes working as intended?

hirundo 7y ago

I think that setting a price on something is best considered as a form of speech, even if it isn't exactly the same thing. A price is a statement of the value you believe that a thing has. As a free speech advocate I believe people should be able to express such value judgments freely with few constraints. A price signal is similar to other signals we can make with speech, in that it has the potential to change behavior for good or bad. There have certainly been many bad signals via ordinary opinion that have caused harm. But most of us believe that the net benefits are such that bad speech should rarely be suppressed. I think that the same is true of bad price signals. It isn't that well crafted laws cannot differentiate between good and bad speech or good and bad prices. They can. It's that such laws are the exception rather than the rule. So it's better policy to decentralize such decisions, so that bad ones can't be made for everyone.

geofft 7y ago
Setting a price on something is absolutely a form of speech, yes, in the sense that the whole point of free markets is communication / price discovery. It's specifically a form of speech in which richer people can speak things that poorer people can't.
- gwright 7y ago
  And how do the "poor" benefit from an empty shelf? This argument about poor people not being able to afford TP at 2x, 3x, or even higher prices doesn't make any sense to me. Especially when we are talking about a very short term situation. It isn't like all the TP factories have suddenly vanished. People will adjust, even poor people. Letting the price float is the best way to quickly extinguish the irrational behavior. Preventing the price from increasing is the best way to ensure a longer period of shortage (or complete unavailability).
jrhurst 7y ago
Price gouging is the free speech equivalent of yelling fire in a full movie theater. You are harming people for your own enjoyment.

robomartin 7y ago

From the law: “However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, during the state of emergency or local emergency, and the price is no more than 10 percent greater than the total of the cost to the seller plus the markup customarily applied by the seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.” I am glad they included this language, even though it is a bit sloppy. What I am referring to is that yes, costs can increase dramatically during an emergency, however, the “markup customarily applied” could also change in dramatic ways. One of the aspects of the theory of pricing is to include in the equation variables to address support, business continuity, expansion, disruptions and other “nonlinear” factors. In an emergency what might have been simple could become complex. This means it might be impossible for a vendor to maintain an ongoing supply or continue to offer services. And, given the current reality, if the consequence of providing the goods or services could be loosing your entire staff to a quarantine, your ability to maintain a supply might require a very different approach to pricing. Given the severe consequences, this language could cause vendors to avoid exposure for fear of being destroyed by an uninformed claim. Which means supply would contract and prices would explode. That said, the guy buying water at Walmart for $1 to then sell it for $5 should get nailed to the wall with rusty nails.

bjourne 7y ago

It's amazing that it takes a pandemic for people to realize that "free market" isn't the solution to every problem in the world.

herbstein 7y ago
Reading this thread would indicate that some people still don't realize it now.
Noumenon72 7y ago
It's amazing that even when a pandemic produces a textbook example of a market redistributing supply to where demand is highest, people don't recognize how well markets work.

m3kw9 7y ago

And that eBay btch az couple that is buying up Lyso wipes and reselling them on eBay for 3x

seemslegit 7y ago

Is there any evidence consumers are stocking up to profit rather than just have enough so as to be able to avoid stores for some time ?

georgemcbay 7y ago
Yes, there is evidence, because some of the people engaged in this are dumb enough to give interviews to major press: https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html https://www.nytimes.com/2020/03/14/technology/coronavirus-pu... I'm sure in terms of overall numbers the vast majority of people who are panic buying aren't doing it to profit, but it only takes a couple of jackasses like the ones described in the article operating at the scale they did to cause real problems.
- dragonwriter 7y ago
  The thing is, once people are hoarding for any reason, profit or not, and that leads to signs of potential supply problems, everyone else has a strong incentive to stock up defensively, not for profit or defense against the original disaster, but to prevent being adversely effected by the supply shortages caused by hoarding. Which then creates a positive feedback loop of incentives unless external controls (rationing) are imposed.

epicureanideal 7y ago

This would seem more fair if they said the price couldn’t be raised by more than 50% or 100% during an emergency. So toilet paper that was $10 would become $20. Not a major problem, and yet it gives producers the margins to keep staff working longer hours to produce more goods. But no increase over 10%? That gives producers very little margin to work with. (10% is the rate set in the law. See the link.)

leptoniscool 7y ago

In a free-market, sellers and buyers will find an equilibrium price at which goods can be exchanged for money. When an outsider such as a government artificially sets the price (or forces the price to stay constant), there will be shortages or overproduction.

rtkwe 7y ago
Stores and manufacturers aren't actually charging increased prices in the majority of cases here. It's people buying out those stores and selling. If manufacturers don't see the increased prices the Econ 101 logic breaks down.
- gwright 7y ago
  They should be charging increased prices. They should have charged increased prices the moment demand went up (like Uber surge pricing). That would have snuffed out the speculators right quick. One reason they don't do this is because of the attitudes illustrated in the comments here. People irrationally believe that surge pricing in this case is wrong and the negative response by their customers outweighs the benefits of surge pricing. I believe that attitude about surge pricing is wrong and it is one reason why we end up with shortages. It is a terribly self-defeating attitude that exacerbates the situation.
  - salawat 7y ago
    They should absolutely not have raised prices. The issue isn't manufacturers, and only retailers in that they failed to implement a purchase limit per customer given news of a pandemic. You want the maximum number of people with enough supply to get by. Not to have large swathes of the population to go without because someone decided to usurp the logistics network in search of price gouging opportunities.
    - gwright 7y ago
      Purchase limit per customer? So a single person and a family of four and a family of six are subject to the same limit? Much easier to raise the price then ask people to prove their need for a product. And how are you going to prevent people from just having mom, dad, and each child purchase the items separately?

deleted 7y ago

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voodooranger 7y ago

I highly recommend listening to Duke professor Mike Munger discuss price gouging on this episode of Econ Talk: https://www.econtalk.org/munger-on-price-gouging/ https://www.econtalk.org/munger-on-price-gouging/ It’s very entertaining and enlightening.

jbverschoor 7y ago

So what will this do to Uber surge pricing?

jeffdavis 7y ago

For basic goods like toilet paper, production hasn't fallen, and consumption hasn't risen. Distribution is still adequate for the amount of production and distribution, so it's not directly the problem, either. The problem is buffering. Normally, buffering happens within the supply chain -- the back rooms of stores, loaded in trucks, warehouses, distribution centers, and the factories themselves. Now, we are telling everyone "buffer at home so you don't need to go out so much". But the problem is, buffering is much less efficient at the end of the chain, so you need to buffer a lot more. That's causing a short-term strain on production and distribution. Blaming selfishness or gouging probably doesn't do much to help this problem. My guess is that the biggest problem is the discrepancy between how much stuff would be needed to buffer within the supply chain versus how much stuff is needed to buffer at the end of the supply chain (i.e. at home). Worse, because it's a temporary buffering problem and there's no real increase in consumption, there's little incentive for production to increase now to alleviate it. Any increased production/distribution now just means less demand later when people start to work through their caches at home (and stop buying for a while). So the only way to alleviate this is to allow the prices (that manufacturers charge) to rise, which will give manufacturers a cushion against the inevitable slump in the future. That's not very popular and not worth the brand damage, so it won't happen. The good news is that I don't think this will last more than another few weeks. Gougers will stop buying at some point because they don't want to get stuck with a huge supply of toilet paper and no channels to sell it. And the home caches will fill up. EDIT: this analysis has nothing to do with things like facemasks, where consumption has dramatically risen.

pascalxus 7y ago

The crazy thing here is that they go after these gougers so aggressively for just selling a 20$ bottle of soap. And yet, predatory hospitals in the US can do x1000 times worse and not even get a slap on the hand. Hospitals are the #1 cause of bankrupcy in the US.

kevingadd 7y ago
Good reason to 1) be pleased that we haven't let price-gougers achieve regulatory capture yet 2) be frustrated that the predatory hospital/insurance ghouls have not been displaced by Medicare For All or an equivalent like they have in most other civilized nations
techslave 7y ago
they aren’t gouging. gouging is a reaction to a disaster or event of some sort. hospitals always charge the absurd prices.
- loeg 7y ago
  So if Arnold Arbitrage changes his name to Henry Hospital and always charges a high markup, that's A-Ok with you? This point of view seems inconsistent.
dsfyu404ed 7y ago
Big predators almost always prefer many soft targets to one big meal that can put up a fight. The hospital has a legal team. Some jerk who's re-selling hand sanitizer at 5000% markup does not. They both deserve to be gone after but it should be obvious why the state prefers the latter.

yyy888sss 7y ago

The current hoarding issues are being addressed in Australia by all supermarkets, they are rationing key goods ( 1 pack toilet paper, pasta, handwipes etc per day) but keeping prices low. You can deal with rapid demand increases for essential goods this way.

magnusss 7y ago

Come on, guys. Hoarding a commodity in order to corner a market and thereby profiteer is immoral, (often) illegal, and a distortion of the free market. It’s bad behavior. Please stop.

grecy 7y ago
I agree that it's immoral, but I do have to wonder if there's much difference between what these people are doing vs Nike making a pair of shoes for $2 then selling them for $400, or hospitals in America marking stuff up 500 or 1000%. By definition capitalism is about making a profit. Sell things for as much as you can, and win. I find it fascinating how where there isn't a "crisis" then maximizing profit is just what we're all supposed to be doing, and we accept it but somehow in a "crisis" it's suddenly evil and horrible. Suddenly capitalism itself starts to feel mighty immoral, doesn't it?
- magnusss 7y ago
  Or selling software with 0 marginal cost for $40k? :-) As with all moral issues, it is difficult to come up with an objective distinction between wrong and right. I tend to rely on Kant’s categorical imperative: Would society be harmed if everyone behaved in this way? In our situation where hoarders are attempting to profit from a crisis, I believe the answer is clear: It’s immoral.
  - grecy 7y ago
    > I tend to rely on Kant’s categorical imperative: Would society be harmed if everyone behaved in this way? Hospitals in the USA marking stuff up 500 or 1000% ARE harming society already. If all shoe companies charged $400 for a $2 shoe, I believe society would be harmed, yes. If every company hired people as part time only so they didn't have to pay benefits, again, society would be harmed. The list goes on. Capitalism is already harming society badly.
    - magnusss 7y ago
      > Hospitals in the USA marking stuff up 500 or 1000% ARE harming society already. Agreed, that needs to be fixed. > If all shoe companies charged $400 for a $2 shoe, I believe society would be harmed, yes. A competitor would step in, charge less, and win the business. It would only be immoral if competition was quashed or impossible, such as in a hoarding situation. > If every company hired people as part time only so they didn't have to pay benefits, again, society would be harmed. I don’t see why this is true. The only benefit of moral significance is medical, and there’s no law of the universe that states that must be paid by an employer.

stevespang 7y ago

Funny how price gouging NEVER applies to doctors and lawyers - - - seemingly only to tree co's after hurricanes, contractors, and the like. But when your freedom or your health is at risk, then the medical community and the lawyers can screw you over all they want - - - at no real risk to them.

jmugan 7y ago

I wish we could apply price-gouging laws to medical care. But I guess it just seems like normal practice at this point.

2dvisio 7y ago

Suddenly in UK groceries became very expensive. Same exact shopping two weeks ago £50, today £80 :/

randyrand 7y ago

If I buy all the toilet paper in a store and resell it for 5% more is that considered price gouging? What if I sell it to another middle man who also distributes and sells for 5% more?

pascalxus 7y ago

So, on the one hand, people react with aghast to find out that a bottle of Purrel soap costs 20$, when it actually should cost 2$ to produce. But, here in CA, on the other hand, when a House (something far more crucial to people's lives), costs 800,000$ instead of 200,000$, that's okay (at least with the vast majority of voters). I should mention the reason for 1 and the other are completely different. The soap, is merely due to the seller, wehreas the housing shortage is a political choice voters agreed to.