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It won't change. People will always act in their own interest. They're not going to pay 5x the price for masks (2c from China, 10c from this guy) if they don'

It won't change. People will always act in their own interest. They're not going to pay 5x the price for masks (2c from China, 10c from this guy) if they don't have to. Who knows when this will happen again? They might pay those higher prices for 10 years (which is apparently how long it's been since last time he had to ramp up production) before it makes any difference. They likely also won't stock up on masks for financial reasons, too. It costs money to have storage space for them.

toss1 7y ago
... and THIS is exactly why we need a functioning government and why government is NOT like a business In business, the main concern is optimizing product and cost. Extra inventory and capacity is considered wasteful, not adding shareholder value this quarter or this year. the govt's job is to build the infrastructure (physical, legal, technological, etc.) and ensure preparedness. Calculate the greatest plausible need, and ensure that the resources are there to meet it. That is why we pay for firehouse & firemen to, we hope, hardly ever work, pay for soldiers to, we hope, mostly shoot at targets, etc. This is why we should not be outsourcing entire supply chains, even if it is most profitable. Some second sourcing, sure, but critical manufacturing capability and intellectual property capability offshoring is just foolish.
- akvadrako 7y ago
  This is actually an example of how the government should be run like a business. Paying 10x the amount for masks to ensure they are available when needed would have saved money in the long run.
  - toss1 7y ago
    In theory, yes. But I have almost never seen a business ACTUALLY do that, and have watched decades of management consultants actively advising AGAINST that type of management. Aside from the general issue of offshoring the production capacity and know-how (as if it were somehow fungible & low value), the JIT (Just In Time) inventory movement has also taken over the entire industry. So, instead of maintaining stockpiles of input materials with associated costs of storage space and idle capital, they spend costs to manage networks to try to ensure that it arrives "Just In Time". Great while it works, and if done properly, it can be robust to handle single supplier disasters. But, the more rare broad events like this kill everything. The MBAs might even argue that paying 10x to ensure availability isn't even economical, as the events requiring you to pay 100x don't add up to the total 10x cost. But the real issue is that no business is managed to handle the tail risk (the rare, low-likelihood events with disastrous consequenses). Any business that does manage for tail risk -especially at the level that a govt should manage for tail risk- will be outperformed by any biz that manages for normal circumstances. They will likely fail. Consider trying to setup a for-profit local fire department. You are paying $$millions for equipment and must pay skilled workers to sit around and polish the equipment almost every day. The customers and other regulators are actively working to ensure that you are never needed. When a fire does happen, and you show up and demand payment or ccard (assuming the homeowner is even present and not inside the fire), most of the time they can't pay, so you have no sale. Your fire department would go bankrupt quickly. The only solution would be for everyone in the coverage area to pay into a fund supporting your company, and get service whenever they need it. You'd need to make sure that EVERYONE paid in and there were no freeloaders. Congratulations - you've just invented government, not a business.
    - akvadrako 7y ago
      > But the real issue is that no business is managed to handle the tail risk (the rare, low-likelihood events with disastrous consequenses). There is an entire industry devoted to this. It's what made Warren Buffet rich.
      - toss1 7y ago
        Yes, that's called insurance, and it is about ordinary risks not tail risks, and about only the financial component, not the real-world component. Having fire insurance is NOT the same as installing detection and response systems and having a prepared and active fire department. Getting an insurance payout for your dead children is not the same as having the fireman with his ladder and gear go into the building and rescue them. Insurance manages only PART of the financial component of risk. Read an insurance policy and you will find dozens of pages AVOIDING the real tail risks - the rare events with massive potential losses. If you really want to insure against tail risk, you need to go, not to the overall insurance industry but a small subset of specialty insurers, such as Lloyd's of London (which actually isn't even actually an insurance company). Even with those specialty insurance-type products, no amount of insurance can protect you from the practical consequences of not being prepared for tail risk. As in the firemen example above, you might be able to get a massive payout for your inability to buy masks this week, but no payout will guarantee that you can actually get the items you need if they don't exist. In contrast, a properly prepared govt would spend the funds to have them on hand, just as we have on hand an inventory of fire trucks, water pipes and hydrants, etc. So, no, insurance not an example where a business runs like a govt. should The goals of a business vs a competent govt are fundamentally different. Business is run for current profit, govt is all about building infrastructure, both physical & institutional and preparing for (not insuring against) massive tail risk.
benjohnson 7y ago
>>It costs money to have storage space for them. $40 per employee. My five-man IT company have enough PPE to keep going for 120 days. It cost us $200 a year to maintain it - or $40 per employee. We have N95, face-shields, and Tyvek bunny suits. We even have N100 half-face respirators for a really serious pathogen. EDIT: It does cost for storage. At $25 per sq-ft for real estate, it add $50 to the cost. So a total of $50 per employee. (We have prudently given a lot to the local hospital as we've been working primarily from home. We've also been 3D printing face-shields.)
- greedo 7y ago
  Not judging, but why does a five-man IT company require PPE? I've been involved with DR/BCP for 20 years and this has never come across my radar.
  - dylz 7y ago
    California OSHA has made it a legal requirement for companies to have N95 masks for employees in the past.
    - greedo 7y ago
      Thanks! I haven't worked in CA for over 2 decades, and in the Midwest this requirement would be viewed with a jaundiced eye.
      - dylz 7y ago
        A lot of people were asking WTF about Facebook, Apple, etc having tons of masks - CA pretty much had temporary mandatory "you must have enough for all of your workers" declarations during wildfires.
  - benjohnson 7y ago
    Great question! Day to day it's quite useful - I don't want to send my guys into a sketchy attic that may have glass fibers, rat turds, black mold, and asbestos to check on a network cable and I don't want them to lose and eyeball when using a power drill. We also spend a fair amount of money on ladder safety - looking at the OSHA data, that a great way to maim yourself.

toss1 7y ago

... and THIS is exactly why we need a functioning government and why government is NOT like a business In business, the main concern is optimizing product and cost. Extra inventory and capacity is considered wasteful, not adding shareholder value this quarter or this year. the govt's job is to build the infrastructure (physical, legal, technological, etc.) and ensure preparedness. Calculate the greatest plausible need, and ensure that the resources are there to meet it. That is why we pay for firehouse & firemen to, we hope, hardly ever work, pay for soldiers to, we hope, mostly shoot at targets, etc. This is why we should not be outsourcing entire supply chains, even if it is most profitable. Some second sourcing, sure, but critical manufacturing capability and intellectual property capability offshoring is just foolish.

akvadrako 7y ago
This is actually an example of how the government should be run like a business. Paying 10x the amount for masks to ensure they are available when needed would have saved money in the long run.
- toss1 7y ago
  In theory, yes. But I have almost never seen a business ACTUALLY do that, and have watched decades of management consultants actively advising AGAINST that type of management. Aside from the general issue of offshoring the production capacity and know-how (as if it were somehow fungible & low value), the JIT (Just In Time) inventory movement has also taken over the entire industry. So, instead of maintaining stockpiles of input materials with associated costs of storage space and idle capital, they spend costs to manage networks to try to ensure that it arrives "Just In Time". Great while it works, and if done properly, it can be robust to handle single supplier disasters. But, the more rare broad events like this kill everything. The MBAs might even argue that paying 10x to ensure availability isn't even economical, as the events requiring you to pay 100x don't add up to the total 10x cost. But the real issue is that no business is managed to handle the tail risk (the rare, low-likelihood events with disastrous consequenses). Any business that does manage for tail risk -especially at the level that a govt should manage for tail risk- will be outperformed by any biz that manages for normal circumstances. They will likely fail. Consider trying to setup a for-profit local fire department. You are paying $$millions for equipment and must pay skilled workers to sit around and polish the equipment almost every day. The customers and other regulators are actively working to ensure that you are never needed. When a fire does happen, and you show up and demand payment or ccard (assuming the homeowner is even present and not inside the fire), most of the time they can't pay, so you have no sale. Your fire department would go bankrupt quickly. The only solution would be for everyone in the coverage area to pay into a fund supporting your company, and get service whenever they need it. You'd need to make sure that EVERYONE paid in and there were no freeloaders. Congratulations - you've just invented government, not a business.
  - akvadrako 7y ago
    > But the real issue is that no business is managed to handle the tail risk (the rare, low-likelihood events with disastrous consequenses). There is an entire industry devoted to this. It's what made Warren Buffet rich.
    - toss1 7y ago
      Yes, that's called insurance, and it is about ordinary risks not tail risks, and about only the financial component, not the real-world component. Having fire insurance is NOT the same as installing detection and response systems and having a prepared and active fire department. Getting an insurance payout for your dead children is not the same as having the fireman with his ladder and gear go into the building and rescue them. Insurance manages only PART of the financial component of risk. Read an insurance policy and you will find dozens of pages AVOIDING the real tail risks - the rare events with massive potential losses. If you really want to insure against tail risk, you need to go, not to the overall insurance industry but a small subset of specialty insurers, such as Lloyd's of London (which actually isn't even actually an insurance company). Even with those specialty insurance-type products, no amount of insurance can protect you from the practical consequences of not being prepared for tail risk. As in the firemen example above, you might be able to get a massive payout for your inability to buy masks this week, but no payout will guarantee that you can actually get the items you need if they don't exist. In contrast, a properly prepared govt would spend the funds to have them on hand, just as we have on hand an inventory of fire trucks, water pipes and hydrants, etc. So, no, insurance not an example where a business runs like a govt. should The goals of a business vs a competent govt are fundamentally different. Business is run for current profit, govt is all about building infrastructure, both physical & institutional and preparing for (not insuring against) massive tail risk.

benjohnson 7y ago

>>It costs money to have storage space for them. $40 per employee. My five-man IT company have enough PPE to keep going for 120 days. It cost us $200 a year to maintain it - or $40 per employee. We have N95, face-shields, and Tyvek bunny suits. We even have N100 half-face respirators for a really serious pathogen. EDIT: It does cost for storage. At $25 per sq-ft for real estate, it add $50 to the cost. So a total of $50 per employee. (We have prudently given a lot to the local hospital as we've been working primarily from home. We've also been 3D printing face-shields.)

greedo 7y ago
Not judging, but why does a five-man IT company require PPE? I've been involved with DR/BCP for 20 years and this has never come across my radar.
- dylz 7y ago
  California OSHA has made it a legal requirement for companies to have N95 masks for employees in the past.
  - greedo 7y ago
    Thanks! I haven't worked in CA for over 2 decades, and in the Midwest this requirement would be viewed with a jaundiced eye.
    - dylz 7y ago
      A lot of people were asking WTF about Facebook, Apple, etc having tons of masks - CA pretty much had temporary mandatory "you must have enough for all of your workers" declarations during wildfires.
- benjohnson 7y ago
  Great question! Day to day it's quite useful - I don't want to send my guys into a sketchy attic that may have glass fibers, rat turds, black mold, and asbestos to check on a network cable and I don't want them to lose and eyeball when using a power drill. We also spend a fair amount of money on ladder safety - looking at the OSHA data, that a great way to maim yourself.