4 ms·

The problem isn't anti-gouging laws, it's that medical customers aren't willing to commit to long-term contracts to justify the investment to increase productio

by ardy42 7y ago

The problem isn't anti-gouging laws, it's that medical customers aren't willing to commit to long-term contracts to justify the investment to increase production. https://www.dallasnews.com/news/watchdog/2020/04/03/if-you-imagine-that-a-local-business-making-surgical-face-masks-is-working-247-guess-again/ https://www.dallasnews.com/news/watchdog/2020/04/03/if-you-i... > ...during an outbreak like this, everybody wants to be [an American mask/respirator maker's] customer. But as soon as an outbreak subsides, his customers dump him and run back to China. The reason? His masks may cost a dime each, but a made-in-China mask might go for two cents. > “Last time he geared up and went three shifts a day working his tail off,” the mayor recalled. “As soon as the issue died, he didn’t have any sales. He had to pay unemployment for all these people, and he had to gear down.” Also, why would you think anti-gouging laws would be the problem? The only thing raising prices would do is send PPE towards people with money who may or may not have actual need. No one sensible is going to ramp up extra capacity or create stockpiles of perishable goods with the idea that they'd be able to gouge during infrequent, unpredictable crises. The only people that price gouging helps are the parasitic middlemen who make a profit engaging in it, and the fools with money to burn who can't demonstrate priority need.

bluGill 7y ago
Gouging helps those who have the foresight to stock up long before. If I knew I could see large amounts of 2 cent masks for $10 every few years I could stock up, and throw away expired masks. Every few years my profit more than makes up for the losses every other year. Of course it is unlikely someone would take the risk, but gouging laws make it impossible.
- ardy42 7y ago
  I already said gauging helps parasitic middlemen who are just out to make a profit for themselves. It just doesn't do anything to actually help society in a crisis. For every $10 of masks some wannabe gouger was motivated to buy and store in their closest for years, a professional gouger will buy $10,000 worth the day the crisis starts and help hasten the arrival of empty shelves and shortages. Then he'll turn around and ask those who truly need them for $100,000. If he can't sell all his inventory at his markup, he'll just dump the remainder after it's no longer needed for the crisis at the regular market price.
  - dTal 7y ago
    What the "gouger" is doing is correcting a market inefficiency by performing arbitrage through time. In order to turn any sort of profit, they must have more accurate information than the rest of the market. The guy who chooses to buy $10,000 bucks of masks on day 1 of a crisis is sending a message to the market - "I believe that masks are currently undervalued." If they are right, it might indeed hasten the day you can no longer buy the masks at their original, undervalued price. It might also spike demand earlier than it would have spiked, which sends a signal to ramp up production. That is a market correction they are helping to realize. And the result is it prolongs the time you can buy any masks at all, at any price. 1 person snapping up 10,000 masks with intent to sell is better than 100 people snapping up 100 masks each that they intend to stick in their closet "just in case", while people that really need them find empty shelves. Nothing is exempt from market forces. Masks are more valuable now than they used to be, that's just a fact. If you try and hide that fact, you will prolong the shortage and cause more harm than good. If you don't like the idea of the government having to pay more to procure this essential commodity in this time of sudden shortage, the people you should be annoyed with are the ones who depleted the national PPE stockpile in time of plenty, when it existed for this very reason. Don't shoot the messenger.
    - stainforth 7y ago
      I don't see it that way at all. Grocery stores are now rationing which is fair to all consumers. If one rich person is able to buy up an entire store and then resell it, all it's done is made the food more expensive for the people, and funneled wealth towards an already wealthy person. I don't think we should advantage those types of people. Market forces seem to always benefit just a few. In all of history market forces have not resulted in an equitable situation for everyone.
      - Consultant32452 7y ago
        I would like to recommend "Basic Economics" by Thomas Sowell. It provides an excellent understanding of economics in language that is accessible to everyone and uses historical examples to demonstrate all of the concepts. I think if you understood markets and pricing better, you would have a different opinion. Your grocery store example would not turn out the way you're describing.
makomk 7y ago
That's more of a problem for surgical face masks, where customers seem to be more cost sensitive. A reasonable chunk of N95 masks are made locally in the US and other countries and 3M apparently has a certain amount of surge capacity ready in case of emergencies like SARS, the trouble is that the current demand is so far beyond what's been needed before that they literally can't be made fast enough.

by ardy42 7y ago

bluGill 7y ago

Gouging helps those who have the foresight to stock up long before. If I knew I could see large amounts of 2 cent masks for $10 every few years I could stock up, and throw away expired masks. Every few years my profit more than makes up for the losses every other year. Of course it is unlikely someone would take the risk, but gouging laws make it impossible.

ardy42 7y ago
I already said gauging helps parasitic middlemen who are just out to make a profit for themselves. It just doesn't do anything to actually help society in a crisis. For every $10 of masks some wannabe gouger was motivated to buy and store in their closest for years, a professional gouger will buy $10,000 worth the day the crisis starts and help hasten the arrival of empty shelves and shortages. Then he'll turn around and ask those who truly need them for $100,000. If he can't sell all his inventory at his markup, he'll just dump the remainder after it's no longer needed for the crisis at the regular market price.
- dTal 7y ago
  What the "gouger" is doing is correcting a market inefficiency by performing arbitrage through time. In order to turn any sort of profit, they must have more accurate information than the rest of the market. The guy who chooses to buy $10,000 bucks of masks on day 1 of a crisis is sending a message to the market - "I believe that masks are currently undervalued." If they are right, it might indeed hasten the day you can no longer buy the masks at their original, undervalued price. It might also spike demand earlier than it would have spiked, which sends a signal to ramp up production. That is a market correction they are helping to realize. And the result is it prolongs the time you can buy any masks at all, at any price. 1 person snapping up 10,000 masks with intent to sell is better than 100 people snapping up 100 masks each that they intend to stick in their closet "just in case", while people that really need them find empty shelves. Nothing is exempt from market forces. Masks are more valuable now than they used to be, that's just a fact. If you try and hide that fact, you will prolong the shortage and cause more harm than good. If you don't like the idea of the government having to pay more to procure this essential commodity in this time of sudden shortage, the people you should be annoyed with are the ones who depleted the national PPE stockpile in time of plenty, when it existed for this very reason. Don't shoot the messenger.
  - stainforth 7y ago
    I don't see it that way at all. Grocery stores are now rationing which is fair to all consumers. If one rich person is able to buy up an entire store and then resell it, all it's done is made the food more expensive for the people, and funneled wealth towards an already wealthy person. I don't think we should advantage those types of people. Market forces seem to always benefit just a few. In all of history market forces have not resulted in an equitable situation for everyone.
    - Consultant32452 7y ago
      I would like to recommend "Basic Economics" by Thomas Sowell. It provides an excellent understanding of economics in language that is accessible to everyone and uses historical examples to demonstrate all of the concepts. I think if you understood markets and pricing better, you would have a different opinion. Your grocery store example would not turn out the way you're describing.

makomk 7y ago

That's more of a problem for surgical face masks, where customers seem to be more cost sensitive. A reasonable chunk of N95 masks are made locally in the US and other countries and 3M apparently has a certain amount of surge capacity ready in case of emergencies like SARS, the trouble is that the current demand is so far beyond what's been needed before that they literally can't be made fast enough.