5 ms·

Yeah I feel like the “people shouldn’t profit from catastrophe” thing is a big part of why it’s still hard to get PPE (no one can justify extra manufacturing et

by swiley 6y ago

Yeah I feel like the “people shouldn’t profit from catastrophe” thing is a big part of why it’s still hard to get PPE (no one can justify extra manufacturing etc.)

tasty_freeze 6y ago
You misunderstand the difference between profiting and profiteering. Nobody is claiming companies should sell toilet paper at cost, but they are saying toilet paper shouldn't get 5x more expensive.
- Retric 6y ago
  IMO some price increase is a good idea to discourage hoarding, promote investment, and promote alternatives like a bidet. But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good.
  - lotsofpulp 6y ago
    > But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good. How can one make such a vast claim without knowing things such as cost of input materials, machinery, labor, etc?
    - Retric 6y ago
      The profit in a competitive market is usually ~5%. Double prices while selling out and profit increases by 21x if not vastly more which is a huge incentive. To the point where doubling the profit again is unlikely result in meaningfully increased production. PS: And yea it’s more complex than that, you can generally skip out in advertising but may be paying significant overtime etc. But that’s rarely particularly important as there are so many inputs involved in ramping up production that you hit multiple different limits.
      - lotsofpulp 6y ago
        How is that not particularly important? In a shortage scenario, you don’t just crank up a dial to make the factory output more. You might need additional facilities, new factories, new workers, etc at the same time others are trying to secure resources too. People in short supply also don’t just work additional hours for double pay. An hour of my leisure time is worth far more than double.
        sokoloff 6y ago
        Though I believe you would not work overtime for double time, I also believe that an enormous number of people would do so.
      - JamesBarney 6y ago
        To argue that every possible choice to both produce and conserve toilet paper is incentivized at $1.68 is an extraordinary claim. Almost all supply and demand curves don't have cliffs. And without extraordinary knowledge of toilet paper manufacturing and consumption how would you know this cliff exists at $1.68 per roll.
- MattGaiser 6y ago
  But that constricts the supply because if you want to make a short term investment (the length of the pandemic) to increase the supply of home toilet paper, you can't as that investment can't generate a return. Most production is based on demand being there for 5+ years the current prices. If home toilet paper demand will only be high for 2 years you can't make money. You also want prices to increase to discourage hoarding. Otherwise what happens is that people with disposable income just strip the shelves because there is no possible downside to hoarding toilet paper. They can just not buy it later with no loss to themselves if the price is the same.
  - tasty_freeze 6y ago
    That is addressing a different point. The comment I was responding to claimed people were upset that companies are making a profit. I countered that profit is OK, profiteering is what has people irate. What is the ideal pricing to achieve long term goals wasn't something I was addressing.
    - threatofrain 6y ago
      And MattGaiser's point is that the line between profit and profiteering is vague. The claim is that by saying no to vague "profiteering", we have at least discouraged some of the morally healthy profit that would've encouraged otherwise inefficient production.
  - pjc50 6y ago
    The short term is too short: the investment won't pay back. Almost all profiteering reduces supply by causing hoarding and waste rather than use. Plus the dead weight loss of people killed by lack of PPE.
    - true_religion 6y ago
      I agree if the disaster is truly short term, but is an 8 month rolling quarantine short enough to count?
- mhh__ 6y ago
  That's true but there are quite a few people out there who don't understand/believe in that. Talking about buying your own health insurance is taboo amongst some in the UK, even though it reduces pressure on the (I should "our") NHS, because to them it's immoral to have capitalism in healthcare or something like that
- TuringNYC 6y ago
  5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc. Further, just as the US abandoned domestically made masks after the H1N1 epidemic, and went back to inexpensive overseas versions -- they may do it again with PPE. So you also need to cover the costs for quite-possibly a factory you are building that might stop operating in a year or two.
  - otterley 6y ago
    > 5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc. Perhaps so, but if that were the case, the producer wouldn't be fairly accused of profiteering. Usually these accusations arise when the production or acquisition cost for the seller is low and the sale price is very high.
deleted 6y ago
[deleted]
vdnkh 6y ago
> (no one can justify extra manufacturing etc. In cases where the free market isn't incentivized to make the supplies we need, it's the job of the government to take over and make them. "Profiting from catastrophe" as you put it will result in price gouging.
- mhh__ 6y ago
  I think they were arguing that measures intended to stop price gouging can disincentivize an increase in supply, e.g. it's a lot harder to undercut someone selling a pack of toilet paper for £10 than £1. Definitely possible but I'm not sure it's happening specifically at the moment.
- dehrmann 6y ago
  In the US, especially at the current federal level, the market is better at making a profit than the government is at governing.
- MattGaiser 6y ago
  > it's the job of the government to take over and make them And how that usually works is that the government offers to pay a very high price to someone willing to doing so. This isn't all that different as the government then pays 5x for the item.
  - jimktrains2 6y ago
    It need not be a high unit price, often a sufficiently large order could do the same as well.
    - MattGaiser 6y ago
      Depends on the timeframe. If you want 5 million masks next week and each machine produces 1 million a week, you need 5 machines. If you can wait 5 weeks, then one machine will do. But yes, this certainly could be true.
backtoyoujim 6y ago
Seems like that means of productions being shuttered to protect humans might have a bigger play on that.

by swiley 6y ago

Yeah I feel like the “people shouldn’t profit from catastrophe” thing is a big part of why it’s still hard to get PPE (no one can justify extra manufacturing etc.)

tasty_freeze 6y ago

You misunderstand the difference between profiting and profiteering. Nobody is claiming companies should sell toilet paper at cost, but they are saying toilet paper shouldn't get 5x more expensive.

Retric 6y ago
IMO some price increase is a good idea to discourage hoarding, promote investment, and promote alternatives like a bidet. But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good.
- lotsofpulp 6y ago
  > But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good. How can one make such a vast claim without knowing things such as cost of input materials, machinery, labor, etc?
  - Retric 6y ago
    The profit in a competitive market is usually ~5%. Double prices while selling out and profit increases by 21x if not vastly more which is a huge incentive. To the point where doubling the profit again is unlikely result in meaningfully increased production. PS: And yea it’s more complex than that, you can generally skip out in advertising but may be paying significant overtime etc. But that’s rarely particularly important as there are so many inputs involved in ramping up production that you hit multiple different limits.
    - lotsofpulp 6y ago
      How is that not particularly important? In a shortage scenario, you don’t just crank up a dial to make the factory output more. You might need additional facilities, new factories, new workers, etc at the same time others are trying to secure resources too. People in short supply also don’t just work additional hours for double pay. An hour of my leisure time is worth far more than double.
      - sokoloff 6y ago
        Though I believe you would not work overtime for double time, I also believe that an enormous number of people would do so.
    - JamesBarney 6y ago
      To argue that every possible choice to both produce and conserve toilet paper is incentivized at $1.68 is an extraordinary claim. Almost all supply and demand curves don't have cliffs. And without extraordinary knowledge of toilet paper manufacturing and consumption how would you know this cliff exists at $1.68 per roll.
MattGaiser 6y ago
But that constricts the supply because if you want to make a short term investment (the length of the pandemic) to increase the supply of home toilet paper, you can't as that investment can't generate a return. Most production is based on demand being there for 5+ years the current prices. If home toilet paper demand will only be high for 2 years you can't make money. You also want prices to increase to discourage hoarding. Otherwise what happens is that people with disposable income just strip the shelves because there is no possible downside to hoarding toilet paper. They can just not buy it later with no loss to themselves if the price is the same.
- tasty_freeze 6y ago
  That is addressing a different point. The comment I was responding to claimed people were upset that companies are making a profit. I countered that profit is OK, profiteering is what has people irate. What is the ideal pricing to achieve long term goals wasn't something I was addressing.
  - threatofrain 6y ago
    And MattGaiser's point is that the line between profit and profiteering is vague. The claim is that by saying no to vague "profiteering", we have at least discouraged some of the morally healthy profit that would've encouraged otherwise inefficient production.
- pjc50 6y ago
  The short term is too short: the investment won't pay back. Almost all profiteering reduces supply by causing hoarding and waste rather than use. Plus the dead weight loss of people killed by lack of PPE.
  - true_religion 6y ago
    I agree if the disaster is truly short term, but is an 8 month rolling quarantine short enough to count?
mhh__ 6y ago
That's true but there are quite a few people out there who don't understand/believe in that. Talking about buying your own health insurance is taboo amongst some in the UK, even though it reduces pressure on the (I should "our") NHS, because to them it's immoral to have capitalism in healthcare or something like that
TuringNYC 6y ago
5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc. Further, just as the US abandoned domestically made masks after the H1N1 epidemic, and went back to inexpensive overseas versions -- they may do it again with PPE. So you also need to cover the costs for quite-possibly a factory you are building that might stop operating in a year or two.
- otterley 6y ago
  > 5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc. Perhaps so, but if that were the case, the producer wouldn't be fairly accused of profiteering. Usually these accusations arise when the production or acquisition cost for the seller is low and the sale price is very high.

deleted 6y ago

[deleted]

vdnkh 6y ago

> (no one can justify extra manufacturing etc. In cases where the free market isn't incentivized to make the supplies we need, it's the job of the government to take over and make them. "Profiting from catastrophe" as you put it will result in price gouging.

mhh__ 6y ago
I think they were arguing that measures intended to stop price gouging can disincentivize an increase in supply, e.g. it's a lot harder to undercut someone selling a pack of toilet paper for £10 than £1. Definitely possible but I'm not sure it's happening specifically at the moment.
dehrmann 6y ago
In the US, especially at the current federal level, the market is better at making a profit than the government is at governing.
MattGaiser 6y ago
> it's the job of the government to take over and make them And how that usually works is that the government offers to pay a very high price to someone willing to doing so. This isn't all that different as the government then pays 5x for the item.
- jimktrains2 6y ago
  It need not be a high unit price, often a sufficiently large order could do the same as well.
  - MattGaiser 6y ago
    Depends on the timeframe. If you want 5 million masks next week and each machine produces 1 million a week, you need 5 machines. If you can wait 5 weeks, then one machine will do. But yes, this certainly could be true.

backtoyoujim 6y ago

Seems like that means of productions being shuttered to protect humans might have a bigger play on that.