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> high prices direct resources to more important uses I don't think that that is always true. High prices will redirect scarce resources to those who have the
by SftwrSvior81 6y ago
> high prices direct resources to more important uses
I don't think that that is always true. High prices will redirect scarce resources to those who have the means and desire to pay for them. That doesn't necessarily mean that those uses are more important, regardless of how one defines what it means for the resource usage to be important.
- vlan0 6y agoYep, and if we need proof of that. See NBA COVID testing.
- jimmaswell 6y agoExactly this. Why is Scrooge McDuck buying the entire supply of something somehow better than evenly distributing it? I can't believe people actually think making toilet paper $20 a roll is the correct outcome instead of rationing with price controls. Maybe it's the Ferengi mentality of people seeing themselves as the exploiters.
- hamandcheese 6y agoIf toilet paper was $20/roll, people would think twice before hoarding, and would probably also use less squares overall.
- hannasanarion 6y agoHoarding isn't the (entire) problem, a bigger issue is the sudden shift in consumption from commercial to consumer. Nobody is pooping in office buildings, schools, or shopping centers anymore, everyone is doing it at home. Producers that uses to sell 50/50 consumer to commercial are now selling 90/10 in favor of consumer and they can't reconfigure their production lines fast enough. https://marker.medium.com/what-everyones-getting-wrong-about-the-toilet-paper-shortage-c812e1358fe0?utm_source=pocket-newtab https://marker.medium.com/what-everyones-getting-wrong-about...
- kortilla 6y agoAnd $20/roll would expedite the changeover pretty quickly.
- asdkjh345fd 6y agoNot if the producers believe that this is temporary and will go back to 50/50 again soon. It isn't worth the cost of making big changes just to have to change back again in a month.
- lukas099 6y agoIt may incentivize them to invest in the ability to quickly change the ratio.
- Robin_Message 6y agoFor a once every hundred years event? Probably not.
- jimmaswell 6y agoAnd a lot of people would just have to go without, As opposed to everyone getting a little with price controlled rationing.
- AnthonyMouse 6y agoI think this is the biggest flaw in your argument. If toilet paper was $20/roll, that wouldn't deter someone who has none in the slightest bit. They'd buy one roll and pay $20 in a second. But that guy who was trying to buy a thousand? He's thinking twice.
- jimmaswell 6y agoYes it is going to deter someone who has none. Is it impossible for you to imagine someone who couldn't afford that premium so they resort to using the shower or something? And do you really think a millionaire is going to be deterred from buying too much in that instance?
- AnthonyMouse 6y agoSomeone who couldn't afford $20 for something that lasts more than a month? If this person exists it's because they place a below-average value on toilet paper, not because they don't have $20. And there aren't enough millionaires for their toilet paper buying habits to have a meaningful effect on the market unless they each start buying millions of rolls, which is a ridiculous hypothetical with no chance of really happening.
- michaelmrose 6y agoRolls of TP don't last a month in most households. They normally last 1 to 2 days. You either own a bidet or need to see a doctor.
- ric2b 6y agoMost households have more than one person, so in that case the $20 is no longer for a single person.
- simonh 6y agoIf they thought it might increase to $40 a roll soon, they will hoard. They might not be able to hoard as much of it, but they might still do it. Doubling your money on $1000 worth of rolls is still the same outcome whether that represents 50 rolls or 500 rolls, excepting only the logistics.
- xorcist 6y ago> If toilet paper was $20/roll, people would think twice before hoarding, The rational response to $20/roll is to buy as much as possible. It will be worth $40 soon.
- aianus 6y agoAnecdotally, this fits with my observations at the grocery store in Canada. All the regularly priced milk, chicken, and eggs were sold out around March 25th but the "organic" milk and chicken at double the price was still in stock as was the AAA steak and the expensive Omega-3 eggs. It appears there is still a fair amount of price elasticity of demand even in a pandemic.
- alexmingoia 6y agoThe more you have to exchange for something, the more you're foregoing other forms of consumption. If toilet paper cost you your entire budget, you wouldn't buy toilet paper at all. You'd buy food instead. In that way, prices redirect your consumption to higher priority things. That's what is meant by "more important."
- kaitai 6y agoOnly if you have to think about money. What you point to is that poor and maybe middle-class people have to 'redirect' their consumption to 'higher priority things', which in some cases is equivalent to just going without. Insulin, rent, or food? Ah, just prioritize, honey!
- Kaiyou 6y agoIf the problem is only poor people, maybe they should figure out how to, y'know, stop being poor. Or maybe the answer is for poor people to be pruned. Not sure what the incentives are for keeping poor people alive. If there aren't any, it's just irrational behavior.
- SftwrSvior81 6y agoDefining "more important" this way seems limited to one actor. In your original post, you talk about multiple actors, namely hospitals and individual people. Different actors are going to have different budgets and preferences. Suppose you consider toilet paper to be an absolute necessity but at $20/roll, it is not affordable to you. I, on the other hand, don't value toilet paper as much but my budget is much bigger than yours so I can afford and am willing to pay $20/roll. When looking across both actors, could we still say that the "more important" need was met?
- roywiggins 6y agoIf many people can't afford TP, they will start flushing other things, which will block everyone else's toilets.
- Camas 6y agoIn real life the problem isn't Scrooge McDuck buying the entire supply. It's everyone who buys a few extra just to be safe that makes demand rocket.
- asiachick 6y agoIf I run out of TP and can't get any more at a reasonable price I will just use cloth towels and wash them right after use. Many people still use cloth diapers with their babies. Running out of TP is a first world problem.
- quotemstr 6y ago> High prices will redirect scarce resources to those who have the means and desire to pay for them. That's true. Don't you think it's also true that those who need a good more have a greater desire to pay for that good? I understand that not everyone has the same ability to pay, but we can't crucify the market on the cross of equity. History shows that when you try to allocate goods based on feelings (some random official's idea of "need") and not prices (which reflect true preferences), you create shortages, black markets, and misery. Command economies just don't work. There are ways of addressing monetary inequality (e.g., a stipend) in an emergency that don't break the fundamental resource allocation function of the market.
- numbsafari 6y agoIt is both immoral and incorrect to measure need based on who has the most liquidity.
- arcticbull 6y agoOr as we call it 'the US healthcare system'
- quotemstr 6y agoNo it isn't. Are you against the idea of prices and money generally? If yes, that's been tried. Doesn't work. If no, why are you carving out a special case in your general acceptance of the price mechanism for this particular family of goods? Why is it okay to charge for food?
- hannasanarion 6y agoThe opinion that charging people out the nose for basic necessities is a bad way to allocate resources isn't the same as being "opposed to money"
- numbsafari 6y ago100% Correct. Money is still really important, but it’s dishonest and counterfactual to argue that mere access to liquidity can determine the clearing price for a market. We know it doesn’t. That’s why we have the Fed.
- megous 6y agoWhile true, that doesn't really matter. Higher price attracts new producers to setup manfuacture for the now scarce and expensive product more quickly. These more wealthy buyers just end up paying for a quick rampup in manufacture. There's 0 financial reason to ramp up supply if the price is the same, and you're now suddenly in a heavily controlled market. It's risky by itself to ramp up production, because you may end up hiring 100 people and having to fire them 3 months later, which is not exactly pleasant for anyone.
- hannasanarion 6y agoIf ramping up production were as simple as hiring 100 more people, it would have been done even if there weren't a crisis. Capacity for manufacture is not infinite and it cannot be changed at a moments notice. It takes months or years to establish supply chains, facilities, machinery, and expertise needed to increase manufacture, and by that time the crisis is over and the extra demand is gone.
- zo1 6y agoOn a side note, one could argue that if we didn't have these sorts of "anti price-gauging" price-controls, the market would more readily keep itself open and malleable to quickly ramping up production to items whose price is spiking. I.e. if there is money to be had by jumping on "hot" production items, then there is utility in spending money on being able to jump on it when needed. So perhaps right now the supply chain isn't able to do this, but that doesn't mean it can't move towards it.
- imtringued 6y agoThat's only true because nobody can make a profit off extra capacity. If there was a way to make it profitable then the factories would have slack capacity built into them.
- tomp 6y agoHow do you know that? What if there was a factory running at less than 100% physically capacity? You could in theory ramp up production very quickly simply by hiring more people, but you won’t, because doing so incures costs (training them, giving them PPE, ...) and you can’t be sure about your income (price rises are banned, exporting is outlawed, your product might even be confiscated).
- CryptoPunk 6y agoIt doesn't map to desire perfectly, but it does generally. If anyone truly needs a mask, (e.g. a delivery driver delivering packages to customers, a doctor, a nurse), that represents an economic need for whatever service they provide. Their employer will be able to charge a high price for their service, and afford to pay a high price for PPE for them. Even when the mapping is imperfect, the fact that the rich guy was able to afford a mask while others weren't does some social good: it increases the reward for being wealthy, which promotes more productive behaviour from society at large.
- schoen 6y agoThe issue about how much the rewards for being wealthy promote productive behavior reminds me of the remark by David D. Friedman that > My imaginary capitalist has capital because he worked hard clearing part of the boundless forest while his employee to be was being lazy and living on what he could gather--so it is entirely just that the capitalist gets part of the output of his land and his employee's labor. But the leftist doesn't like that hypothetical. His imaginary capitalist inherited his capital from a father who stole it. I don't like that hypothetical. http://www.daviddfriedman.com/Libertarian/My_Posts/My_View_of_Oughts.html http://www.daviddfriedman.com/Libertarian/My_Posts/My_View_o... I often suspect Friedman is right that a lot of normative disagreements boil down to different intuitions about what people typically do to become wealthier.
- CryptoPunk 6y agoYes, agreed on the different intuitions on the source of wealth. The fact that market economies so vastly outperform non-market ones is a pretty clear indication that wealth-generation in market economies generally has positive economic externalities, and as such is socially beneficial on the balance.
- michaelmrose 6y ago>which promotes more productive behavior from society at large. Greed is good is an ideology for the morally impaired with limited attention span. A relatively small differential in wealth and large differential in social standing is arguably enough to achieve maximum "productive" behavior after which diminishing returns are had. As proof observe many European nations that are almost as productive wherein the wealth of most practitioners of most professions tops out much lower than their US counterparts and yet they produce similarly to our citizens.
- Kaiyou 6y agoWillingness to pay is a pretty good indicator of importance, I think. Where this falls apart is ability to pay. But that's life. If you can't pay, you won't get what you want, no matter how important it may be. Expecting other people to cover for you is called entitlement.
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- Nasrudith 6y agoIt sort of works long term but with an alien detached long term point of view. A bit more third order causes. Essentially if they can afford to pay higher prices continually then it implies some sort of sustained utility. If their decisions are foolish they would start losing said capability squandering it and give it to the "sources" one way or another. That doesn't say anything about the morality, sanity, or time pressures but I can see some truth to it.