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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

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.
- geofft 7y ago
  > 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. No, what bothers me is the assumption that "higher desire" means "more willingness [and ability] to pay," and that "more efficient" means "assigned to the people with higher desire." For reasons of life and death (which I, personally, find more important than the principle of a free market), I think a "more efficient" tool should be one that distributes to people with higher need, and need is generally not correlated with ability to pay. It may even be inversely correlated: I as a tech worker can just stay home for weeks, and I haven't needed a drop of hand sanitizer. Someone who drives buses or makes hamburgers can't do that and must be out in the world for their job, and their jobs pay them a lot less than my job does. So, government rationing would be an "efficient" solution in my definition, yes, but there's a milder option here: use the government's influence to artificially prevent the price of the product from rising. Then there's no incentive for people to buy large quantities with the purpose of reselling it, and it's more likely that everyone will buy the small amount that they need.
  - rahimnathwani 7y ago
    "use the government's influence to artificially prevent the price of the product from rising" How would that work? If Dollar Tree were fully stocked with hand sanitizer, I would go there right now and buy 10 bottles. But so would 99 other people. So we 100 would get all the 1000 bottles, and everyone else would be SOL.
    - geofft 7y ago
      Why would you buy 10 bottles? What are you going to do with them? Are you afraid they're going to run out? Why? (Put another way, why aren't you buying 10 bottles of drain cleaner right now?) One of my local pharmacies had hand sanitizer in stock for $3 and no obvious limit on purchases. I bought one, because I needed one, and I expected that (because my locality had announced anti-price-gouging laws) I could go back and buy another one if I needed it. But it kind of lasts for a long while.
Scoundreller 7y ago
> There is not a significant decrease in production. And if there are, it's too soon to feel the impacts. And who knows how long it takes for TP to switch from commercial/industrial sales to residential sales. People are spending far more time at home instead of work/school/malls/restaurants/vacations. But if Chinese pollution studies are to be believed, we could be feeling a lot of shortages over the coming months. I'm not worried TP, but I am about pharma APIs.
logicchains 7y ago
>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. If people want that much toilet paper, the only solution that's going to satisfy them is producing all the toilet paper they want. Society is just an aggregate of people, and if enough of them want for whatever reason a shit-tonne of toilet paper, it would be doing them a disservice to stop the market from giving them what they want.
- EdgarVerona 7y ago
  Really? Regardless of the consequences? What becomes of that toilet paper when this fear has subsided? What becomes of the companies that had to scale production, create new factories, hire new workers etc... when the existing glut of supply is not only so much that those new facilities are hurting them, but also that it has decreased the demand for their product even with normal production capabilities?
  - logicchains 7y ago
    >What becomes of that toilet paper when this fear has subsided? It doesn't expire? People just use it up, and don't buy more until they've used all their store. >What becomes of the companies that had to scale production, create new factories, hire new workers etc... when the existing glut of supply is not only so much that those new facilities are hurting them, but also that it has decreased the demand for their product even with normal production capabilities? They only would have made the decision to scale production if they estimated the profit from filling this short-term demand would make up for the cost of having to eventually scale back the temporary investment. It's not exactly hard to predict that the demand won't last forever. Ultimately the amount of toilet paper bought/consumed isn't going to change significantly, just the purchase dates will cluster together.
    - EdgarVerona 7y ago
      > They only would have made the decision to scale production if they estimated the profit from filling this short-term demand would make up for the cost of having to eventually scale back the temporary investment. It's not exactly hard to predict that the demand won't last forever. So what you're saying is, they wouldn't have scaled production, so your entire proposition about why the price increase would be an effective means to alleviate the problem was false.
whatshisface 7y ago
>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." If the people want to hoard toilet paper, who are we to deny them?
- CaptArmchair 7y ago
  "No, you can't have more pie. You have had enough already." Literally any exasperated parent who has to deal with little children having a tantrum because they can't get what they want. Yes, that sounds harsh, but it's exactly how this works. Your statement is simply saying that society - you, me and everyone - should obediently and without criticizing enable those who can't cater to their own emotional needs; those who don't know how to deal with their own drive towards self-gratification; those who haven't learned to not indulge in their own irrational fears. People don't need toilet paper, they need to talk and understand that hoarding is a dysfunctional way of approaching their own fears about the future. And that hoarding - ultimately - is a self fulfilling prophecy as it puts unnecessary pressure on supply chains and creates even more unrest and fear. That's why your comment is not constructive nor even remotely funny.
  - logicchains 7y ago
    >Literally any exasperated parent who has to deal with little children having a tantrum because they can't get what they want. >Yes, that sounds harsh, but it's exactly how this works. Your statement is simply saying that society - you, me and everyone - should obediently and without criticizing enable those who can't cater to their own emotional needs; those who don't know how to deal with their own drive towards self-gratification; those who haven't learned to not indulge in their own irrational fears. So other people should do what you want, not what they want, because you know better than them? How would you feel if people compared you to "little children having a tantrum" just because your values differed from theirs? >That's why your comment is not constructive nor even remotely funny. Having so little respect for other human beings that you compare them to little children is not constructive foundation upon which to base policy making.
daenz 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. You neglected to mention that demand is increased. If it wasn't, then people would be hoarding lysol wipes and reselling them year round. But they're not, because it only makes sense when demand has increased. The lack of correct pricing by the stores is incentivizing hoarders, because, given the increased demand, they can make a profit on the difference people will buy it at vs the difference that they can acquire it. The stores should be pricing in this increased demand. If this is indeed a case of people "creating small niches of artificial scarcity so that they can profit", then I would like to hear your explanation as to why they aren't doing it with toilet paper all the time. Why can I ever buy tp in the stores? Shouldn't a hoarder have taken it all and is charging double somewhere online?
- EdgarVerona 7y ago
  You neglected to mention that when people see fake headlines about toilet paper scarcity, there's a nontrivial percentage of people who see that as an opportunity for said arbitrage. There's two kinds of hoarding happening here: fear-alleviating and profit-seeking, which allows the profit seeking form of acquisition to be possible. Several weeks ago, it wouldn't have been feasible for someone to scoop up the entire market. Profit-seeking acquisition is however both a self fulfilling prophecy for the fake headlines about insufficient production, and a means by which the people seeking these products to alleviate fear have their fears justified. So is your solution "good on them, they're taking advantage of people's fears to help make the rumors true?" Just what price do you think toilet paper should be right now in stores?
  - daenz 7y ago
    >So is your solution "good on them, they're taking advantage of people's fears to help make the rumors true?" My solution is we should do all that we can to decrease the latency that prices respond to supply and demand. It will help everyone. >Just what price do you think toilet paper should be right now in stores? That's not up to me to decide, because I don't presume to speak for the individual wants and needs for all participating suppliers and consumers, which is how a price is determined.
robomartin 7y ago
I agree with the points you are making. I will add that hoarding does increase the cost of producing goods. If the toilet paper manufacturer needs to produce at 10x normal capacity because people are filling their car with the stuff, they will need to increase staff, work more shifts and maybe even buy/rent/build more production equipment. Does this double, triple or quadruple costs? Likely not. Yet costs do increase, unless the manufacturer does not increase production capacity to match demand. In which case supply dwindles to zero, with predictable consequences. The point is: No factory or service provider operates with 10x production capacity they can turn on at a moments notice, that would bankrupt any business instantly. Perhaps the law we need is one to control hoarding behavior or the rate of change. With that you avoid shocking businesses with unreasonable step changes in demand.
- syshum 7y ago
  >Perhaps the law we need is one to control hoarding behavior or the rate of change. Aside from an authoritarian system of governance where all purchases are tracked, and one must only purchase their "allotted" amount of goods, how exactly would one control hoarding? i hope you are not proposing such a dystopian future.
  - XorNot 7y ago
    By the exact mechanism in the article above, penalizing price-gouging?
    - syshum 7y ago
      That does not prevent hoarding The idea that people are hoarding right now simply because they want to resell the goods to others is moronic on many levels People are hoarding right now because they believe they may be months with out a supply of the good, so they are buying in multiples of normal levels fully expecting they will use it themselves, not reselling
      - XorNot 7y ago
rahimnathwani 7y ago
"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." People hoarding aren't trying to create artificial scarcity. They are buying because they anticipate scarcity, and want to either (i) be prepared, or (ii) profit from resale. Hoarding has caused shortages which, in turn, justify the original hoarding. This is a sad situation, but capping prices isn't a solution. If anything, I would expect higher prices would discourage hoarding, resulting in a more even allocation of TP/whatever between people.
- daveFNbuck 7y ago
  Higher prices may encourage hoarding, as people might see the higher prices as a sign of scarcity and want to buy as much as possible before prices increase further or stores run out.
  - logicchains 7y ago
    But they also decrease hoarding in that the higher the price, the fewer items people can afford to buy and hoard.
    - sova 7y ago
      Hoarding is a temporally displaced behavior that begins before crisis happens. Artificial scarcity is created in pockets spurned on by time itself. Artificial Scarcity is capable of riding Real Demand as long as Real Demand exists.
- _bxg1 7y ago
  > People hoarding aren't trying to create artificial scarcity https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html https://www.nytimes.com/2020/03/14/technology/coronavirus-pu... > On March 1, the day after the first coronavirus death in the United States was announced, brothers Matt and Noah Colvin set out in a silver S.U.V. to pick up some hand sanitizer. Driving around Chattanooga, Tenn., they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves. Over the next three days, Noah Colvin took a 1,300-mile road trip across Tennessee and into Kentucky, filling a U-Haul truck with thousands of bottles of hand sanitizer and thousands of packs of antibacterial wipes, mostly from “little hole-in-the-wall dollar stores in the backwoods,” his brother said. “The major metro areas were cleaned out.”
yjftsjthsd-h 7y ago
> The fuck are we going to do with that much toilet paper. It's not like it goes bad (on a meaningful timescale); it'll get used eventually.
- EdgarVerona 7y ago
  But if we created it at the dramatically and artificially increased demand that it has right now, it would be disastrous for that industry once this panic subsides. Imagine the increase in infrastructure these companies would have to build to keep up with this fake supply. The workers, the real estate, the building of supply chains and machinery. Now imagine what happens to that industry when suddenly the market's demand tanks back to a reasonable level, and there's suddenly not only far more capacity for production that is now unprofitable, there's a huge backlog of supply already in the hands of consumers. This situation is just as bad for the manufacturer as it is for the consumer.
  - logicchains 7y ago
    The manufacturers aren't stupid. If they're capable of running a profitable manufacturing company they're capable of realising the demand won't last forever, and not investing an amount that would cost them too much when the demand dies back down.
    - EdgarVerona 7y ago
      I was about to respond to you with the same response I made below - but it turns out we're basically having the same conversation twice. I'll refer to our other conversation below instead of repeating myself.
zozbot234 7y ago
> "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper. Stock it somewhere, and release it gradually over the following months, perhaps at a loss. Some hoarders will actually stock it as a reserve for the next emergency and brief price spike, which is socially beneficial behavior. Think of it as a kind of insurance. This would be more of a problem if we were talking about perishable products, but we're not. Toilet paper and personal protective equipment (masks) are not perishable. Canned food and lysol are only mildly perishable.
- EdgarVerona 7y ago
  The problem is also with the industry itself, particularly if it's perishable. If this continues much longer, there's going to be a point (and perhaps it's already there? We don't get numbers about capacity - though I'd love to see it if there are numbers available!) where these companies reach peak capacity, and would have to incur significant investments in order to scale: investments that would become a detriment once the market comes back to normal, particularly if everyone has a glut of stored supply by the time this has ended.
  - yyy888sss 7y ago
    Manufacturer aren't stupid, they are aren't going to over invest. In Australia the the toilet paper companies just added shifts to manufacture 24/7.
JumpCrisscross 7y ago
> This is not a case of toilet paper suddenly costing more to produce Production and logistics have gotten more expensive. That has happened economy-wide, and will only get worse as the pandemic exponentiates. They’ve also become less reliable, which is why we have hoarding. The purpose of price spikes is to incentivise production, to create slack in the system. (It also reduces the quantity demanded. Toilet paper at a 100% premium doesn’t do much to someone purchasing a normal amount. But it is material at hoarding volumes.) One could say “we don’t want more price discrimination.” But that is a choice to prefer shortages over price increases. (Which is fair.) If I have a warehouse of toilet paper, I am incentivised to ship it to Texas or New York over California. (Counterpoint: low income consumers there are going to face pressure to use alternatives.) Bottom line: these are not costless policies. (That doesn’t make them bad per se.)
- bob33212 7y ago
  The delivery guy I talked said his route was easier on Friday because of all the Work from home. What increases in logistics costs are you referring to?
  - lonelappde 7y ago
    His company is getting paid less for his route so they might need to cut/merge routes and slow deliver time. In places more severely affected, delivery/handling workers may be unavailable to work.
- kevingadd 7y ago
  Toilet paper is produced locally (since it's very expensive to ship from overseas), so the logistics and production costs for TP aren't likely to have changed much as a result of COVID-19. We don't require employers to provide paid sick leave so the hourly wage people doing production and logistics for the TP also aren't costing the employer more than before, and they're probably showing up sick like usual so they won't be dealing with staffing issues. At present TP demand is simply higher than normal (from panic) and manufacturers are having to scale up. This is all avoidable. https://www.forbes.com/sites/amyfeldman/2020/03/12/how-kochs-georgia-pacific-one-of-countrys-biggest-toilet-paper-makers-is-responding-to-coronavirus-panic-buying/#789acb4d797b https://www.forbes.com/sites/amyfeldman/2020/03/12/how-kochs...
6gvONxR4sf7o 7y ago
Amen. Price isn't even the issue here, just a symptom. Hoarding is the issue. Limit people to not buying 100 rolls of toilet paper, and suddenly the price everyone's willing to pay levels out. Price isn't the problem. Uneven distribution is.
- koheripbal 7y ago
  The best solution is to increase production to the point where all those hoarders are left with tons of worthless inventory.
  - gruez 7y ago
    then they just return their inventory for a full refund.
    - yyy888sss 7y ago
      Australian supermarkets are refusing refunds on all of these hoarded goods.
      - scruple 7y ago
        I'd love to see that stateside, too. I have to go out for some regular old run of the mill groceries tomorrow morning, I'm going to ask about refund/return policies at the two grocers that we frequent.
      - coredog64 7y ago
        IMO, ensuring sufficient stock and refusing refunds will be a more thorough punishment than some half-enforced CA law on price gouging.
      - gruez 7y ago
        I wonder whether that's legal or not. Presumably they bought the goods before this thing blew up and the terms of sale at the time of purchase allowed for returns. Are stores allowed to retroactively change their return ploicy? Do they have a "we can deny returns for any reason" clause in their return policy? Is that legal?
nate_meurer 7y ago
> This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit. A good example of this is in a related thread: https://news.ycombinator.com/item?id=22576225 https://news.ycombinator.com/item?id=22576225 The article describes how a couple of guys drove from store to store all across their state, buying up all of the antiseptic supplies in stock, and then trying to resell them online for as much money as they could possibly get.
- g_langenderfer 7y ago
  If I'm an 80 year old with a heart transplant, I'm happy they're doing this!
- deleted 7y ago
  [deleted]
- EdgarVerona 7y ago
  Jesus. Yeah, it's sick. There's another story along the same lines, to the tune of $70k in disaster profiteering: https://abc14news.com/2020/03/14/canadian-couple-make-more-than-70000-selling-disinfectant-wipes-at-inflated-prices/ https://abc14news.com/2020/03/14/canadian-couple-make-more-t...
  - RareSoft 7y ago
    Is this not just the world we live in? Personally I agree with you but then I also consider how there are a handful of billionaires with more wealth than a huge portion of the global population and big pharma/ insurance companies charge so much that people are dying because they can't afford medication like Insulin. If that's the way the world is then why should anyone be expected to behave any differently? It's not right to vilify these people while we give a free pass to everyone else doing equally unethical things.
    - nate_meurer 7y ago
      > It's not right to vilify these people while we give a free pass to everyone else doing equally unethical things. Who is this "we" you speak of? Let me see if I understand your argument: because there is someone out there who will "give a free pass" to big pharma, the rest of us should politely shut up about disaster profiteers? We should all just say "oh well, pharma co's do it, so no biggie". Is that about right?
yyy888sss 7y ago
This whole problem was solved in Australia by all supermarkets rationing fast selling goods (1 pack toilet paper, handwipes, pasta etc per day) but keeping prices low.
- smnrchrds 7y ago
  I agree with the approach but not the instances. 1 pack of toilet paper lasts a good while so that's OK. 1 pack of pasta per day means you have to go back to store every day and expose yourself and others to danger.
  - yyy888sss 7y ago
    Well they can only deliver so much pasta per day (the pasta factories are presumably already going full tilt) so the other option would be to massively raise the price... apparently not a popular option. You don't have to go back every day because there are 100s of other non perishable foods people aren't panic buying.
  - lonelappde 7y ago
    In a catastrophe, carbs are a terrible staple. High volume for low satiety. Fiber, fat, and protein are far more efficient.
    - JMTQp8lwXL 7y ago
      They're shelf stable, which is useful quality if power goes out and you can't keep your refrigerator or freezer cold.
      - geoffpado 7y ago
        Or everyone in your household is ill and can’t go shopping, which is more likely in this particular catastrophe.
g_langenderfer 7y ago
> and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. So are you suggesting: - I create a toilet paper cartel with all my buddies - we hit surrounding area grocery stores with surgical TP buying - Hoard til prices rise - dump on muppet consumers - profit?? this is ridiculous
- salawat 7y ago
  Yes, that is exactly what some people are doing, and what has quite a few posters justifiably angry. It may sound ridiculous to you, but That doesn't mean there isn't another person out there willing to do it.
  - EdgarVerona 7y ago
    As a case study: https://abc14news.com/2020/03/14/canadian-couple-make-more-than-70000-selling-disinfectant-wipes-at-inflated-prices/ https://abc14news.com/2020/03/14/canadian-couple-make-more-t...
- kevingadd 7y ago
  Check ebay and equivalents, kijiji just had to go on record that they were banning sales of toilet paper, sanitizer, etc.
- indymike 7y ago
  It is also not likely to work beyond a few days unless you have the means to continuously buy all the toilet paper.
rdiddly 7y ago
I hear you on keeping our humanity, and that is presumably the basis of the anti-price-gouging measures in the first place, and those are, at absolute worst, probably not going to do any harm. Still in an uncanny way, I think a "free market" (asterisk, disclaimer, footnotes 1 through n) actually would handle a situation like this fairly effectively. After all, TP that costs more is less likely to be hoarded, and less likely to be an attractive "buy low / sell high" arbitrage (because it's not "low"). Part of the effect of a higher price is less buying (demand). I mean it makes a certain amount of sense. And I have one anecdatum: I was going to buy TP myself -- not because I hear "pandemic" and my thoughts immediately turn to my anus, but simply because it was getting to be time to reorder the ol' 48-roll brick. But because of this situation, my usual seller was out of stock, and everyone else was in fact, price gouging. So I'm just going to wait. I'll wipe my ass with my hand before I pay those prices. That's the thing, we're not talking penicillin here - you could permanently do without TP. I'll spare you the specific details of how. But one of the things you would need is bleach, which come to think of it, is probably also covered under this anti-price-gouging order, so hey, thumbs-up emoji!
atomi 7y ago
> Have we lost all sense of humanity for the sake of our ideology? There has been a lot of strict adherence to ideology in spite of critical thinking and logic going around lately.
34679 7y ago
In times of increased demand, it becomes necessary to increase production. I assume you are aware of the concept of overtime pay? In California in particular, 150% pay is guaranteed for hours over 40 in a week and hours over 8 in a workday, increasing to 200% pay for hours over 12 in a shift and more than 8 hours on their 7th consecutive day of work.[1] What options do they have? Hiring new employees requires training, and that takes time. Meeting demand quickly requires a significant increase in payroll per unit produced, so why shouldn't they be able to charge more? What incentive do they have to increase their costs for a diminished return? [1]https://www.tsheets.com/resources/overtime-laws-california https://www.tsheets.com/resources/overtime-laws-california
deleted 7y ago
[deleted]
dillondoyle 7y ago
are you sure? reporting say 3M can only ramp up another 35MM per month. Im not sure what the baseline production /month is - but estimates for how many masks needed just for healthcare workers are 300MM. And I would guess takes a month or two ramp up production, machines are probably already running 24/7 need to build more. So it seems from reporting that n95 masks are NOT being made in sufficient quantity for healthcare workers - let alone everyone. http://www.startribune.com/3m-can-t-confirm-pence-comments-about-making-more-masks/568354132/ http://www.startribune.com/3m-can-t-confirm-pence-comments-a... https://www.cnbc.com/2020/02/28/us-mulls-using-sweeping-powers-to-ramp-up-production-of-coronavirus-protective-gear.html https://www.cnbc.com/2020/02/28/us-mulls-using-sweeping-powe...

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.

geofft 7y ago
> 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. No, what bothers me is the assumption that "higher desire" means "more willingness [and ability] to pay," and that "more efficient" means "assigned to the people with higher desire." For reasons of life and death (which I, personally, find more important than the principle of a free market), I think a "more efficient" tool should be one that distributes to people with higher need, and need is generally not correlated with ability to pay. It may even be inversely correlated: I as a tech worker can just stay home for weeks, and I haven't needed a drop of hand sanitizer. Someone who drives buses or makes hamburgers can't do that and must be out in the world for their job, and their jobs pay them a lot less than my job does. So, government rationing would be an "efficient" solution in my definition, yes, but there's a milder option here: use the government's influence to artificially prevent the price of the product from rising. Then there's no incentive for people to buy large quantities with the purpose of reselling it, and it's more likely that everyone will buy the small amount that they need.
- rahimnathwani 7y ago
  "use the government's influence to artificially prevent the price of the product from rising" How would that work? If Dollar Tree were fully stocked with hand sanitizer, I would go there right now and buy 10 bottles. But so would 99 other people. So we 100 would get all the 1000 bottles, and everyone else would be SOL.
  - geofft 7y ago
    Why would you buy 10 bottles? What are you going to do with them? Are you afraid they're going to run out? Why? (Put another way, why aren't you buying 10 bottles of drain cleaner right now?) One of my local pharmacies had hand sanitizer in stock for $3 and no obvious limit on purchases. I bought one, because I needed one, and I expected that (because my locality had announced anti-price-gouging laws) I could go back and buy another one if I needed it. But it kind of lasts for a long while.

Scoundreller 7y ago

> There is not a significant decrease in production. And if there are, it's too soon to feel the impacts. And who knows how long it takes for TP to switch from commercial/industrial sales to residential sales. People are spending far more time at home instead of work/school/malls/restaurants/vacations. But if Chinese pollution studies are to be believed, we could be feeling a lot of shortages over the coming months. I'm not worried TP, but I am about pharma APIs.

logicchains 7y ago

>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. If people want that much toilet paper, the only solution that's going to satisfy them is producing all the toilet paper they want. Society is just an aggregate of people, and if enough of them want for whatever reason a shit-tonne of toilet paper, it would be doing them a disservice to stop the market from giving them what they want.

EdgarVerona 7y ago
Really? Regardless of the consequences? What becomes of that toilet paper when this fear has subsided? What becomes of the companies that had to scale production, create new factories, hire new workers etc... when the existing glut of supply is not only so much that those new facilities are hurting them, but also that it has decreased the demand for their product even with normal production capabilities?
- logicchains 7y ago
  >What becomes of that toilet paper when this fear has subsided? It doesn't expire? People just use it up, and don't buy more until they've used all their store. >What becomes of the companies that had to scale production, create new factories, hire new workers etc... when the existing glut of supply is not only so much that those new facilities are hurting them, but also that it has decreased the demand for their product even with normal production capabilities? They only would have made the decision to scale production if they estimated the profit from filling this short-term demand would make up for the cost of having to eventually scale back the temporary investment. It's not exactly hard to predict that the demand won't last forever. Ultimately the amount of toilet paper bought/consumed isn't going to change significantly, just the purchase dates will cluster together.
  - EdgarVerona 7y ago
    > They only would have made the decision to scale production if they estimated the profit from filling this short-term demand would make up for the cost of having to eventually scale back the temporary investment. It's not exactly hard to predict that the demand won't last forever. So what you're saying is, they wouldn't have scaled production, so your entire proposition about why the price increase would be an effective means to alleviate the problem was false.

whatshisface 7y ago

>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." If the people want to hoard toilet paper, who are we to deny them?

CaptArmchair 7y ago
"No, you can't have more pie. You have had enough already." Literally any exasperated parent who has to deal with little children having a tantrum because they can't get what they want. Yes, that sounds harsh, but it's exactly how this works. Your statement is simply saying that society - you, me and everyone - should obediently and without criticizing enable those who can't cater to their own emotional needs; those who don't know how to deal with their own drive towards self-gratification; those who haven't learned to not indulge in their own irrational fears. People don't need toilet paper, they need to talk and understand that hoarding is a dysfunctional way of approaching their own fears about the future. And that hoarding - ultimately - is a self fulfilling prophecy as it puts unnecessary pressure on supply chains and creates even more unrest and fear. That's why your comment is not constructive nor even remotely funny.
- logicchains 7y ago
  >Literally any exasperated parent who has to deal with little children having a tantrum because they can't get what they want. >Yes, that sounds harsh, but it's exactly how this works. Your statement is simply saying that society - you, me and everyone - should obediently and without criticizing enable those who can't cater to their own emotional needs; those who don't know how to deal with their own drive towards self-gratification; those who haven't learned to not indulge in their own irrational fears. So other people should do what you want, not what they want, because you know better than them? How would you feel if people compared you to "little children having a tantrum" just because your values differed from theirs? >That's why your comment is not constructive nor even remotely funny. Having so little respect for other human beings that you compare them to little children is not constructive foundation upon which to base policy making.

daenz 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. You neglected to mention that demand is increased. If it wasn't, then people would be hoarding lysol wipes and reselling them year round. But they're not, because it only makes sense when demand has increased. The lack of correct pricing by the stores is incentivizing hoarders, because, given the increased demand, they can make a profit on the difference people will buy it at vs the difference that they can acquire it. The stores should be pricing in this increased demand. If this is indeed a case of people "creating small niches of artificial scarcity so that they can profit", then I would like to hear your explanation as to why they aren't doing it with toilet paper all the time. Why can I ever buy tp in the stores? Shouldn't a hoarder have taken it all and is charging double somewhere online?

EdgarVerona 7y ago
You neglected to mention that when people see fake headlines about toilet paper scarcity, there's a nontrivial percentage of people who see that as an opportunity for said arbitrage. There's two kinds of hoarding happening here: fear-alleviating and profit-seeking, which allows the profit seeking form of acquisition to be possible. Several weeks ago, it wouldn't have been feasible for someone to scoop up the entire market. Profit-seeking acquisition is however both a self fulfilling prophecy for the fake headlines about insufficient production, and a means by which the people seeking these products to alleviate fear have their fears justified. So is your solution "good on them, they're taking advantage of people's fears to help make the rumors true?" Just what price do you think toilet paper should be right now in stores?
- daenz 7y ago
  >So is your solution "good on them, they're taking advantage of people's fears to help make the rumors true?" My solution is we should do all that we can to decrease the latency that prices respond to supply and demand. It will help everyone. >Just what price do you think toilet paper should be right now in stores? That's not up to me to decide, because I don't presume to speak for the individual wants and needs for all participating suppliers and consumers, which is how a price is determined.

robomartin 7y ago

I agree with the points you are making. I will add that hoarding does increase the cost of producing goods. If the toilet paper manufacturer needs to produce at 10x normal capacity because people are filling their car with the stuff, they will need to increase staff, work more shifts and maybe even buy/rent/build more production equipment. Does this double, triple or quadruple costs? Likely not. Yet costs do increase, unless the manufacturer does not increase production capacity to match demand. In which case supply dwindles to zero, with predictable consequences. The point is: No factory or service provider operates with 10x production capacity they can turn on at a moments notice, that would bankrupt any business instantly. Perhaps the law we need is one to control hoarding behavior or the rate of change. With that you avoid shocking businesses with unreasonable step changes in demand.

syshum 7y ago
>Perhaps the law we need is one to control hoarding behavior or the rate of change. Aside from an authoritarian system of governance where all purchases are tracked, and one must only purchase their "allotted" amount of goods, how exactly would one control hoarding? i hope you are not proposing such a dystopian future.
- XorNot 7y ago
  By the exact mechanism in the article above, penalizing price-gouging?
  - syshum 7y ago
    That does not prevent hoarding The idea that people are hoarding right now simply because they want to resell the goods to others is moronic on many levels People are hoarding right now because they believe they may be months with out a supply of the good, so they are buying in multiples of normal levels fully expecting they will use it themselves, not reselling
    - XorNot 7y ago

rahimnathwani 7y ago

"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." People hoarding aren't trying to create artificial scarcity. They are buying because they anticipate scarcity, and want to either (i) be prepared, or (ii) profit from resale. Hoarding has caused shortages which, in turn, justify the original hoarding. This is a sad situation, but capping prices isn't a solution. If anything, I would expect higher prices would discourage hoarding, resulting in a more even allocation of TP/whatever between people.

daveFNbuck 7y ago
Higher prices may encourage hoarding, as people might see the higher prices as a sign of scarcity and want to buy as much as possible before prices increase further or stores run out.
- logicchains 7y ago
  But they also decrease hoarding in that the higher the price, the fewer items people can afford to buy and hoard.
  - sova 7y ago
    Hoarding is a temporally displaced behavior that begins before crisis happens. Artificial scarcity is created in pockets spurned on by time itself. Artificial Scarcity is capable of riding Real Demand as long as Real Demand exists.
_bxg1 7y ago
> People hoarding aren't trying to create artificial scarcity https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html https://www.nytimes.com/2020/03/14/technology/coronavirus-pu... > On March 1, the day after the first coronavirus death in the United States was announced, brothers Matt and Noah Colvin set out in a silver S.U.V. to pick up some hand sanitizer. Driving around Chattanooga, Tenn., they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves. Over the next three days, Noah Colvin took a 1,300-mile road trip across Tennessee and into Kentucky, filling a U-Haul truck with thousands of bottles of hand sanitizer and thousands of packs of antibacterial wipes, mostly from “little hole-in-the-wall dollar stores in the backwoods,” his brother said. “The major metro areas were cleaned out.”

yjftsjthsd-h 7y ago

> The fuck are we going to do with that much toilet paper. It's not like it goes bad (on a meaningful timescale); it'll get used eventually.

EdgarVerona 7y ago
But if we created it at the dramatically and artificially increased demand that it has right now, it would be disastrous for that industry once this panic subsides. Imagine the increase in infrastructure these companies would have to build to keep up with this fake supply. The workers, the real estate, the building of supply chains and machinery. Now imagine what happens to that industry when suddenly the market's demand tanks back to a reasonable level, and there's suddenly not only far more capacity for production that is now unprofitable, there's a huge backlog of supply already in the hands of consumers. This situation is just as bad for the manufacturer as it is for the consumer.
- logicchains 7y ago
  The manufacturers aren't stupid. If they're capable of running a profitable manufacturing company they're capable of realising the demand won't last forever, and not investing an amount that would cost them too much when the demand dies back down.
  - EdgarVerona 7y ago
    I was about to respond to you with the same response I made below - but it turns out we're basically having the same conversation twice. I'll refer to our other conversation below instead of repeating myself.

zozbot234 7y ago

> "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper. Stock it somewhere, and release it gradually over the following months, perhaps at a loss. Some hoarders will actually stock it as a reserve for the next emergency and brief price spike, which is socially beneficial behavior. Think of it as a kind of insurance. This would be more of a problem if we were talking about perishable products, but we're not. Toilet paper and personal protective equipment (masks) are not perishable. Canned food and lysol are only mildly perishable.

EdgarVerona 7y ago
The problem is also with the industry itself, particularly if it's perishable. If this continues much longer, there's going to be a point (and perhaps it's already there? We don't get numbers about capacity - though I'd love to see it if there are numbers available!) where these companies reach peak capacity, and would have to incur significant investments in order to scale: investments that would become a detriment once the market comes back to normal, particularly if everyone has a glut of stored supply by the time this has ended.
- yyy888sss 7y ago
  Manufacturer aren't stupid, they are aren't going to over invest. In Australia the the toilet paper companies just added shifts to manufacture 24/7.

JumpCrisscross 7y ago

> This is not a case of toilet paper suddenly costing more to produce Production and logistics have gotten more expensive. That has happened economy-wide, and will only get worse as the pandemic exponentiates. They’ve also become less reliable, which is why we have hoarding. The purpose of price spikes is to incentivise production, to create slack in the system. (It also reduces the quantity demanded. Toilet paper at a 100% premium doesn’t do much to someone purchasing a normal amount. But it is material at hoarding volumes.) One could say “we don’t want more price discrimination.” But that is a choice to prefer shortages over price increases. (Which is fair.) If I have a warehouse of toilet paper, I am incentivised to ship it to Texas or New York over California. (Counterpoint: low income consumers there are going to face pressure to use alternatives.) Bottom line: these are not costless policies. (That doesn’t make them bad per se.)

bob33212 7y ago
The delivery guy I talked said his route was easier on Friday because of all the Work from home. What increases in logistics costs are you referring to?
- lonelappde 7y ago
  His company is getting paid less for his route so they might need to cut/merge routes and slow deliver time. In places more severely affected, delivery/handling workers may be unavailable to work.
kevingadd 7y ago
Toilet paper is produced locally (since it's very expensive to ship from overseas), so the logistics and production costs for TP aren't likely to have changed much as a result of COVID-19. We don't require employers to provide paid sick leave so the hourly wage people doing production and logistics for the TP also aren't costing the employer more than before, and they're probably showing up sick like usual so they won't be dealing with staffing issues. At present TP demand is simply higher than normal (from panic) and manufacturers are having to scale up. This is all avoidable. https://www.forbes.com/sites/amyfeldman/2020/03/12/how-kochs-georgia-pacific-one-of-countrys-biggest-toilet-paper-makers-is-responding-to-coronavirus-panic-buying/#789acb4d797b https://www.forbes.com/sites/amyfeldman/2020/03/12/how-kochs...

6gvONxR4sf7o 7y ago

Amen. Price isn't even the issue here, just a symptom. Hoarding is the issue. Limit people to not buying 100 rolls of toilet paper, and suddenly the price everyone's willing to pay levels out. Price isn't the problem. Uneven distribution is.

koheripbal 7y ago
The best solution is to increase production to the point where all those hoarders are left with tons of worthless inventory.
- gruez 7y ago
  then they just return their inventory for a full refund.
  - yyy888sss 7y ago
    Australian supermarkets are refusing refunds on all of these hoarded goods.
    - scruple 7y ago
      I'd love to see that stateside, too. I have to go out for some regular old run of the mill groceries tomorrow morning, I'm going to ask about refund/return policies at the two grocers that we frequent.
    - coredog64 7y ago
      IMO, ensuring sufficient stock and refusing refunds will be a more thorough punishment than some half-enforced CA law on price gouging.
    - gruez 7y ago
      I wonder whether that's legal or not. Presumably they bought the goods before this thing blew up and the terms of sale at the time of purchase allowed for returns. Are stores allowed to retroactively change their return ploicy? Do they have a "we can deny returns for any reason" clause in their return policy? Is that legal?

nate_meurer 7y ago

> This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit. A good example of this is in a related thread: https://news.ycombinator.com/item?id=22576225 https://news.ycombinator.com/item?id=22576225 The article describes how a couple of guys drove from store to store all across their state, buying up all of the antiseptic supplies in stock, and then trying to resell them online for as much money as they could possibly get.

g_langenderfer 7y ago
If I'm an 80 year old with a heart transplant, I'm happy they're doing this!
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EdgarVerona 7y ago
Jesus. Yeah, it's sick. There's another story along the same lines, to the tune of $70k in disaster profiteering: https://abc14news.com/2020/03/14/canadian-couple-make-more-than-70000-selling-disinfectant-wipes-at-inflated-prices/ https://abc14news.com/2020/03/14/canadian-couple-make-more-t...
- RareSoft 7y ago
  Is this not just the world we live in? Personally I agree with you but then I also consider how there are a handful of billionaires with more wealth than a huge portion of the global population and big pharma/ insurance companies charge so much that people are dying because they can't afford medication like Insulin. If that's the way the world is then why should anyone be expected to behave any differently? It's not right to vilify these people while we give a free pass to everyone else doing equally unethical things.
  - nate_meurer 7y ago
    > It's not right to vilify these people while we give a free pass to everyone else doing equally unethical things. Who is this "we" you speak of? Let me see if I understand your argument: because there is someone out there who will "give a free pass" to big pharma, the rest of us should politely shut up about disaster profiteers? We should all just say "oh well, pharma co's do it, so no biggie". Is that about right?

yyy888sss 7y ago

This whole problem was solved in Australia by all supermarkets rationing fast selling goods (1 pack toilet paper, handwipes, pasta etc per day) but keeping prices low.

smnrchrds 7y ago
I agree with the approach but not the instances. 1 pack of toilet paper lasts a good while so that's OK. 1 pack of pasta per day means you have to go back to store every day and expose yourself and others to danger.
- yyy888sss 7y ago
  Well they can only deliver so much pasta per day (the pasta factories are presumably already going full tilt) so the other option would be to massively raise the price... apparently not a popular option. You don't have to go back every day because there are 100s of other non perishable foods people aren't panic buying.
- lonelappde 7y ago
  In a catastrophe, carbs are a terrible staple. High volume for low satiety. Fiber, fat, and protein are far more efficient.
  - JMTQp8lwXL 7y ago
    They're shelf stable, which is useful quality if power goes out and you can't keep your refrigerator or freezer cold.
    - geoffpado 7y ago
      Or everyone in your household is ill and can’t go shopping, which is more likely in this particular catastrophe.

g_langenderfer 7y ago

> and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product. So are you suggesting: - I create a toilet paper cartel with all my buddies - we hit surrounding area grocery stores with surgical TP buying - Hoard til prices rise - dump on muppet consumers - profit?? this is ridiculous

salawat 7y ago
Yes, that is exactly what some people are doing, and what has quite a few posters justifiably angry. It may sound ridiculous to you, but That doesn't mean there isn't another person out there willing to do it.
- EdgarVerona 7y ago
  As a case study: https://abc14news.com/2020/03/14/canadian-couple-make-more-than-70000-selling-disinfectant-wipes-at-inflated-prices/ https://abc14news.com/2020/03/14/canadian-couple-make-more-t...
kevingadd 7y ago
Check ebay and equivalents, kijiji just had to go on record that they were banning sales of toilet paper, sanitizer, etc.
indymike 7y ago
It is also not likely to work beyond a few days unless you have the means to continuously buy all the toilet paper.

rdiddly 7y ago

I hear you on keeping our humanity, and that is presumably the basis of the anti-price-gouging measures in the first place, and those are, at absolute worst, probably not going to do any harm. Still in an uncanny way, I think a "free market" (asterisk, disclaimer, footnotes 1 through n) actually would handle a situation like this fairly effectively. After all, TP that costs more is less likely to be hoarded, and less likely to be an attractive "buy low / sell high" arbitrage (because it's not "low"). Part of the effect of a higher price is less buying (demand). I mean it makes a certain amount of sense. And I have one anecdatum: I was going to buy TP myself -- not because I hear "pandemic" and my thoughts immediately turn to my anus, but simply because it was getting to be time to reorder the ol' 48-roll brick. But because of this situation, my usual seller was out of stock, and everyone else was in fact, price gouging. So I'm just going to wait. I'll wipe my ass with my hand before I pay those prices. That's the thing, we're not talking penicillin here - you could permanently do without TP. I'll spare you the specific details of how. But one of the things you would need is bleach, which come to think of it, is probably also covered under this anti-price-gouging order, so hey, thumbs-up emoji!

atomi 7y ago

> Have we lost all sense of humanity for the sake of our ideology? There has been a lot of strict adherence to ideology in spite of critical thinking and logic going around lately.

34679 7y ago

In times of increased demand, it becomes necessary to increase production. I assume you are aware of the concept of overtime pay? In California in particular, 150% pay is guaranteed for hours over 40 in a week and hours over 8 in a workday, increasing to 200% pay for hours over 12 in a shift and more than 8 hours on their 7th consecutive day of work.[1] What options do they have? Hiring new employees requires training, and that takes time. Meeting demand quickly requires a significant increase in payroll per unit produced, so why shouldn't they be able to charge more? What incentive do they have to increase their costs for a diminished return? [1]https://www.tsheets.com/resources/overtime-laws-california https://www.tsheets.com/resources/overtime-laws-california

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dillondoyle 7y ago

are you sure? reporting say 3M can only ramp up another 35MM per month. Im not sure what the baseline production /month is - but estimates for how many masks needed just for healthcare workers are 300MM. And I would guess takes a month or two ramp up production, machines are probably already running 24/7 need to build more. So it seems from reporting that n95 masks are NOT being made in sufficient quantity for healthcare workers - let alone everyone. http://www.startribune.com/3m-can-t-confirm-pence-comments-about-making-more-masks/568354132/ http://www.startribune.com/3m-can-t-confirm-pence-comments-a... https://www.cnbc.com/2020/02/28/us-mulls-using-sweeping-powers-to-ramp-up-production-of-coronavirus-protective-gear.html https://www.cnbc.com/2020/02/28/us-mulls-using-sweeping-powe...