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Actually, there was a post on HN from a guy who makes medical masks that isn't ramping up production as much as he can. The article's headline was basically ju

Actually, there was a post on HN from a guy who makes medical masks that isn't ramping up production as much as he can. The article's headline was basically just that, trying to get as many clicks as possible. The real story was that last time there was a shortage, he did ramp up production. But after the shortage ended, his customers dried up immediately and he was left with paying unemployment for all the new workers that he had to fire now. It nearly destroyed his business, and he's not making the same mistake again. His masks cost 10c where Chinese-made masks cost 2c. There's no way to get hospitals to keep him in business during non-crisis times at 5x the price. If there were, he'd do it. So it isn't just inability to physically increase production. Economics factors in heavily, too. If he could charge more for these masks, he could bank that extra and pay the unemployment (and other business expenses from ramping down) after this crisis ends.

polskibus 7y ago
So the 8c is the price of economic independence from China and stability in times of crisis, could be subsidized just like agriculture is in many countries.
- ed_balls 7y ago
  A repost from my other comment: You don't need to subsidise anything. > On March 1, 2018, Trump announced his intention to impose a 25% tariff on steel and a 10% tariff on aluminum imports. > Trade Act of 1974 allows the president to impose a 15% tariff for 150 days if there is "an adverse impact on national security from imports >NAFTA originally required automakers to use 62.5% of North American-made parts in their cars to be imported duty free You can just require that 25% of PPE purchased by the government has to be made domestically. That would give you 3-4 factories. You make a requirement so they are 1000 miles away from each other and be able to 4x capacity within 2 weeks.
goatinaboat 7y ago
His masks cost 10c where Chinese-made masks cost 2c. Once you factor in the cost of this crisis as an externality, the cost of Chinese-made anything skyrockets. Outsourcing is a bait-and-switch, always was.
- onepointsixC 7y ago
  You're completely correct, but what guarantee does he have that the Government will account for this with tariffs?
- mobilefriendly 7y ago
  The other externalities being environmental degradation and, to some degree, labor abuse.
  - birdyrooster 7y ago
    Also ahem, world security risk to empower despotic regimes that force political and religious prisoners into concentration camps.
- valuearb 7y ago
  Coronavirus wasn’t created by cheap Chinese manufacturing.
  - goatinaboat 7y ago
    You’ve got it backwards. China’s lack of regulation is what makes both cheap manufacturing possible and spread of pandemics inevitable. The wet markets have gone straight back into business.
    - valuearb 7y ago
      Wet markets existed when it was a communist economy. Cheap manufacturing cones from cheap labor, which comes from recently being a third world nation.
      - goatinaboat 7y ago
        Wet markets existed when it was a communist economy Then as now, the only thing that is forbidden is criticism of The Party. Want to exploit your workers and ignore all environmental and hygienic concerns? That was and is OK there. That’s how they undercut the West in manufacturing, no other reason. Concepts of protecting the environment or workers rights ironically only exist in the capitalist West.
koheripbal 7y ago
Yeah, it's kind of impossible to argue that production costs haven't gone up for manufacturers. I have an employee who we need to still go into the office for some manual work 2x a week - he asked that we pay for an Uber for him because he doesn't want to ride public transport. That's just one of many additional costs companies that struggle to continue working are paying. Some degree (within reason) of increased prices for an high-in-demand product is a necessary if you want to convince employees to work longer hours and through tough conditions. ...not to mention many of their underlying fabric costs are probably higher as well.
- XorNot 7y ago
  There's a difference between price gouging and covering expenses. The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything. If a manufacturer ramped production and billed the current inventory to cover costs, then that's a very different thing. Of course all of this is why the Defense Production Act even exists. A perfect use of the DPA would be a mask manufacturer ramping up local production - if they had predictability of pricing beyond the current crisis, then it would let them forecast what they could and could not make, or get subsidized at the higher rate to ensure their business could ramp down gradually (or be retained at the subsidy price to ensure local availability for the next time).
  - Consultant32452 7y ago
    >The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything. The guy buying up all the masks and reselling them for 10x the price is making availability, which is highly important in a crisis.
    - treden 7y ago
      He's capturing availability, the manufacturer made the availability. There is no value-adding middle man role with a 10x value here (well value to anyone other than the middle man).
wavepruner 7y ago
During the Great Recession my industry was hit particularly hard (environmental engineering, pollution remediation). I remained on unemployment for the full 2 years while pursuing about 5 real job opportunities per year. 80% of the time employers told me they were very impressed, but decided not to hire, or promote internally, because they didn't want to be on the hook for unemployment if work dried up again. This is an anecdote, but if unemployment didn't exist I would have had a decent paying job within 4 months of being laid off. IMO this is preferable to being trapped in an unemployment system with terrible incentives. I ultimately changed industries after realizing that cleaning up pollution is the last thing people will pay for during economic downturns.

polskibus 7y ago

So the 8c is the price of economic independence from China and stability in times of crisis, could be subsidized just like agriculture is in many countries.

ed_balls 7y ago
A repost from my other comment: You don't need to subsidise anything. > On March 1, 2018, Trump announced his intention to impose a 25% tariff on steel and a 10% tariff on aluminum imports. > Trade Act of 1974 allows the president to impose a 15% tariff for 150 days if there is "an adverse impact on national security from imports >NAFTA originally required automakers to use 62.5% of North American-made parts in their cars to be imported duty free You can just require that 25% of PPE purchased by the government has to be made domestically. That would give you 3-4 factories. You make a requirement so they are 1000 miles away from each other and be able to 4x capacity within 2 weeks.

goatinaboat 7y ago

His masks cost 10c where Chinese-made masks cost 2c. Once you factor in the cost of this crisis as an externality, the cost of Chinese-made anything skyrockets. Outsourcing is a bait-and-switch, always was.

onepointsixC 7y ago
You're completely correct, but what guarantee does he have that the Government will account for this with tariffs?
mobilefriendly 7y ago
The other externalities being environmental degradation and, to some degree, labor abuse.
- birdyrooster 7y ago
  Also ahem, world security risk to empower despotic regimes that force political and religious prisoners into concentration camps.
valuearb 7y ago
Coronavirus wasn’t created by cheap Chinese manufacturing.
- goatinaboat 7y ago
  You’ve got it backwards. China’s lack of regulation is what makes both cheap manufacturing possible and spread of pandemics inevitable. The wet markets have gone straight back into business.
  - valuearb 7y ago
    Wet markets existed when it was a communist economy. Cheap manufacturing cones from cheap labor, which comes from recently being a third world nation.
    - goatinaboat 7y ago
      Wet markets existed when it was a communist economy Then as now, the only thing that is forbidden is criticism of The Party. Want to exploit your workers and ignore all environmental and hygienic concerns? That was and is OK there. That’s how they undercut the West in manufacturing, no other reason. Concepts of protecting the environment or workers rights ironically only exist in the capitalist West.

koheripbal 7y ago

Yeah, it's kind of impossible to argue that production costs haven't gone up for manufacturers. I have an employee who we need to still go into the office for some manual work 2x a week - he asked that we pay for an Uber for him because he doesn't want to ride public transport. That's just one of many additional costs companies that struggle to continue working are paying. Some degree (within reason) of increased prices for an high-in-demand product is a necessary if you want to convince employees to work longer hours and through tough conditions. ...not to mention many of their underlying fabric costs are probably higher as well.

XorNot 7y ago
There's a difference between price gouging and covering expenses. The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything. If a manufacturer ramped production and billed the current inventory to cover costs, then that's a very different thing. Of course all of this is why the Defense Production Act even exists. A perfect use of the DPA would be a mask manufacturer ramping up local production - if they had predictability of pricing beyond the current crisis, then it would let them forecast what they could and could not make, or get subsidized at the higher rate to ensure their business could ramp down gradually (or be retained at the subsidy price to ensure local availability for the next time).
- Consultant32452 7y ago
  >The guy buying up all the masks and reselling them for 10x the price is price gouging. He doesn't make anything. The guy buying up all the masks and reselling them for 10x the price is making availability, which is highly important in a crisis.
  - treden 7y ago
    He's capturing availability, the manufacturer made the availability. There is no value-adding middle man role with a 10x value here (well value to anyone other than the middle man).

wavepruner 7y ago

During the Great Recession my industry was hit particularly hard (environmental engineering, pollution remediation). I remained on unemployment for the full 2 years while pursuing about 5 real job opportunities per year. 80% of the time employers told me they were very impressed, but decided not to hire, or promote internally, because they didn't want to be on the hook for unemployment if work dried up again. This is an anecdote, but if unemployment didn't exist I would have had a decent paying job within 4 months of being laid off. IMO this is preferable to being trapped in an unemployment system with terrible incentives. I ultimately changed industries after realizing that cleaning up pollution is the last thing people will pay for during economic downturns.