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E.g. the ultra wealthy can easily outbid hospitals for PPE. Sure. Jeff Bezos could also purchase and set on fire entirety of this year's agricultural productio

by xyzzyz 6y ago

E.g. the ultra wealthy can easily outbid hospitals for PPE. Sure. Jeff Bezos could also purchase and set on fire entirety of this year's agricultural production of California. Will he? Unlikely, as he has no need for it. Same with PPE: if there are so few PPEs that the ultra wealthy can buy up all supply just to cover their needs, or even 10 times their needs, the hospitals are screwed either way, because 10 times the needs of ultra wealthy is a few days of needs of a single hospital.

ssully 6y ago
It doesn't have to be Jeff Bezos. At the start of the pandemic in the US there were plenty of stories of bad actors leveraging their credit to buy up high demands items (toilet paper, hand sanitizer, etc) all around their local area and selling it at a premium online.
- xyzzyz 6y ago
  So the goalpost has been moved from ultra wealthy to anyone with a $2k limit credit card. There is actually an easy way to make it hard for anyone with a $2k credit card to buy up all the supplies: just allow supermarkets to raise the prices.
  - TeMPOraL 6y ago
    The goalpost was placed wrongly, likely by accident. It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis, of whom there's much more than the ultra-rich, and who have much stronger incentives to buy up the supply. > allow supermarkets to raise the prices. That would just price out anyone without $2k credit.
    - AnthonyMouse 6y ago
      > It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis If the store itself is allowed to raise prices then there is no opportunity for profiteering because they'd have to pay the store the market price to begin with. The arbitrage opportunity only exists as a result of the price controls. > That would just price out anyone without $2k credit. It would price them out of buying out the whole store, not price them out of buying a few for their own use.
      - TeMPOraL 6y ago
        It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The way I see it, distributing universally needed goods in a crisis is about flattening the distribution of wealth one has vs. amount of goods one can get. Usually competition provides a downward pressure, but I think this fails in times of sudden demand shifts. As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. Eventually, a peak is reached, all those pent-up stock starts getting unloaded on the market, prices go down - but this evolution takes time, and throughout all this, a lot of people cannot afford to buy the good. So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies, and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
        AnthonyMouse 6y ago
        > It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The price controls actually make the price higher, because then the normal channels run out of supply and if you need it you have to turn to the black market. The black market prices are higher both because the people who didn't need it very much but lucked into official supply weren't deterred by pricing (wasting supply) and because the black market operators can collect a risk premium for breaking the rules. > As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. If they expect the price to be higher tomorrow then all they have to do is demand that price today. You can still get it from them. And that's what you want, because if the shortage is going to get worse rather than better over time then you want the higher prices immediately to induce rationing and avoid an even worse shortage in the near future. > So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies The assumption is that this actually happens. If the price of a mask triples from $1.50 to $4.50, even someone making minimum wage can afford a mask, or even ten masks, if they really need them. If they don't really need them then they may be deterred by the price, but that's the whole point. > and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit. Which the high prices do by themselves. Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit.
yakireev 6y ago
> Unlikely, as he has no need for it. Are you sure? PPE might be a bad example, but back in March rumours have been circulating in my home country about ultra-wealthy "private persons" buying ventilator equipment to be put in their homes. I don't know if those rumors were true, but they very well might have been - those ultra-wealthy used to fly to EU for treatments, but when the borders closed and they were faced with the reality of the medical care system they've built for "commoners"... "Better to buy a ventilator, just for me and for my family. Just in case, you know."
- marshray 6y ago
  Shortages happen when demand exceeds production capacity, or if prices are artificially capped to make increased production unprofitable. Usually the more of a product is bought, the more get produced. If the world will need more ventilators over the coming months, the best thing is for everyone to buy as many as they can right away. There aren't that many "ultra-wealthy" people who are going to hoard ventilators. Even if they did buy them as an impulse, it would be an unusual scenario for them to sit unused in storage while the local hospital has patients going without them. Even the ultra-wealthy will value their friendly relations with the local ICU doctors more than that box gathering dust in the corner and donations will happen.
- sjf 6y ago
  I personally know a couple of very wealthy individuals who bought ventilators.
- xyzzyz 6y ago
  So they bought ventilators. Did hospitals run out of ventilators? No. Did they even get to use the ventilators they bought? No. What's the problem then?
  - yakireev 6y ago
    Actually, yes, there was a lack of ventilators in hospitals in my home country at some point. Luckily, not for long, as it's one of the countries which produces them. I can imagine that some of the neighbouring countries had it worse.
tombert 6y ago
I think the GP post was a bit overzealous when they said "ultra wealthy", because even the more-or-less middle class (I'm assuming virtually everyone posting on HN) could afford to pay the ridiculous rates for hand sanitizer and toilet paper. I would complain about the prices but it wouldn't bankrupt me. However, imagine a single parent who just lost their job because of COVID, and thus living on a very restricted income. Is this person less important than me? I don't think so, the world needs service workers a lot more than they need yuppie software engineers like me, but I'm still more likely to be able to afford the necessities. This is always my problem with people who defend price gauging; there's always this hidden implication that a rich person is more deserving of something vital than a poor person. You are entitled to that opinion, but I fundamentally and completely disagree with you.
- marshray 6y ago
  For any system, one can always construct scenarios where resources are allocated sub-optimally or unfairly. We don't have to like capitalism, sometimes even its proponents refer to it "the worst system except for all the others." But usually the alternative to capitalism isn't perfection, it's something worse. Like a political boss who abuses his power to seize the goods and hand them out as political favors. The big mistake with COVID-19 was telling individuals to boycott masks and that it was wrong to buy or wear them. We could have opened whole new factories for producing them by now, if only demand had been encouraged rather than suppressed.
  - tombert 6y ago
    I'm not a socialist, I more or less support capitalism, but there's a reasonable middle ground between Laissez-faire capitalism and Stalin-esque socialism. It's not like I found this really obscure edge case. Almost 30% of America has lost their job in some capacity; this isn't just some weird contrived example, and it's dishonest to act like it is. Service workers, at least in the US (I haven't lived anywhere else) are pretty damn vital to the US economy, but are also less likely to be able to afford price-gauged supplies like masks and hand-sanitizer than a yuppie like me. If we don't have some form of regulation to stop price guaging, we are sending a signal to 30% of America that they are simply less deserving of life than the yuppies that depend on them. I don't particularly care about people hiking up the price of bread machines and video games and whatnot, but I cannot in good conscience defend people who do things that will lead to poor people dying. EDIT: A few typos.
varenc 6y ago
Ultra wealthy aside, what about the slightly wealthy? In CA the bottom 1/4 of households make $35,000 a year. Without price controls, will they ever be able to afford PPE in an emergency when they have to compete with the 15% of people making $150,000 a year?

by xyzzyz 6y ago

ssully 6y ago

It doesn't have to be Jeff Bezos. At the start of the pandemic in the US there were plenty of stories of bad actors leveraging their credit to buy up high demands items (toilet paper, hand sanitizer, etc) all around their local area and selling it at a premium online.

xyzzyz 6y ago
So the goalpost has been moved from ultra wealthy to anyone with a $2k limit credit card. There is actually an easy way to make it hard for anyone with a $2k credit card to buy up all the supplies: just allow supermarkets to raise the prices.
- TeMPOraL 6y ago
  The goalpost was placed wrongly, likely by accident. It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis, of whom there's much more than the ultra-rich, and who have much stronger incentives to buy up the supply. > allow supermarkets to raise the prices. That would just price out anyone without $2k credit.
  - AnthonyMouse 6y ago
    > It's rather obvious the problem are the people with a $2k credit card who want to profiteer off a crisis If the store itself is allowed to raise prices then there is no opportunity for profiteering because they'd have to pay the store the market price to begin with. The arbitrage opportunity only exists as a result of the price controls. > That would just price out anyone without $2k credit. It would price them out of buying out the whole store, not price them out of buying a few for their own use.
    - TeMPOraL 6y ago
      It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The way I see it, distributing universally needed goods in a crisis is about flattening the distribution of wealth one has vs. amount of goods one can get. Usually competition provides a downward pressure, but I think this fails in times of sudden demand shifts. As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. Eventually, a peak is reached, all those pent-up stock starts getting unloaded on the market, prices go down - but this evolution takes time, and throughout all this, a lot of people cannot afford to buy the good. So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies, and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
      - AnthonyMouse 6y ago
        > It's not the arbitrage that's the problem, it's the high prices - no matter whether it's the store or a speculator that sells them. The price controls actually make the price higher, because then the normal channels run out of supply and if you need it you have to turn to the black market. The black market prices are higher both because the people who didn't need it very much but lucked into official supply weren't deterred by pricing (wasting supply) and because the black market operators can collect a risk premium for breaking the rules. > As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. If they expect the price to be higher tomorrow then all they have to do is demand that price today. You can still get it from them. And that's what you want, because if the shortage is going to get worse rather than better over time then you want the higher prices immediately to induce rationing and avoid an even worse shortage in the near future. > So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies The assumption is that this actually happens. If the price of a mask triples from $1.50 to $4.50, even someone making minimum wage can afford a mask, or even ten masks, if they really need them. If they don't really need them then they may be deterred by the price, but that's the whole point. > and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit. Which the high prices do by themselves. Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit.

yakireev 6y ago

> Unlikely, as he has no need for it. Are you sure? PPE might be a bad example, but back in March rumours have been circulating in my home country about ultra-wealthy "private persons" buying ventilator equipment to be put in their homes. I don't know if those rumors were true, but they very well might have been - those ultra-wealthy used to fly to EU for treatments, but when the borders closed and they were faced with the reality of the medical care system they've built for "commoners"... "Better to buy a ventilator, just for me and for my family. Just in case, you know."

marshray 6y ago
Shortages happen when demand exceeds production capacity, or if prices are artificially capped to make increased production unprofitable. Usually the more of a product is bought, the more get produced. If the world will need more ventilators over the coming months, the best thing is for everyone to buy as many as they can right away. There aren't that many "ultra-wealthy" people who are going to hoard ventilators. Even if they did buy them as an impulse, it would be an unusual scenario for them to sit unused in storage while the local hospital has patients going without them. Even the ultra-wealthy will value their friendly relations with the local ICU doctors more than that box gathering dust in the corner and donations will happen.
sjf 6y ago
I personally know a couple of very wealthy individuals who bought ventilators.
xyzzyz 6y ago
So they bought ventilators. Did hospitals run out of ventilators? No. Did they even get to use the ventilators they bought? No. What's the problem then?
- yakireev 6y ago
  Actually, yes, there was a lack of ventilators in hospitals in my home country at some point. Luckily, not for long, as it's one of the countries which produces them. I can imagine that some of the neighbouring countries had it worse.

tombert 6y ago

I think the GP post was a bit overzealous when they said "ultra wealthy", because even the more-or-less middle class (I'm assuming virtually everyone posting on HN) could afford to pay the ridiculous rates for hand sanitizer and toilet paper. I would complain about the prices but it wouldn't bankrupt me. However, imagine a single parent who just lost their job because of COVID, and thus living on a very restricted income. Is this person less important than me? I don't think so, the world needs service workers a lot more than they need yuppie software engineers like me, but I'm still more likely to be able to afford the necessities. This is always my problem with people who defend price gauging; there's always this hidden implication that a rich person is more deserving of something vital than a poor person. You are entitled to that opinion, but I fundamentally and completely disagree with you.

marshray 6y ago
For any system, one can always construct scenarios where resources are allocated sub-optimally or unfairly. We don't have to like capitalism, sometimes even its proponents refer to it "the worst system except for all the others." But usually the alternative to capitalism isn't perfection, it's something worse. Like a political boss who abuses his power to seize the goods and hand them out as political favors. The big mistake with COVID-19 was telling individuals to boycott masks and that it was wrong to buy or wear them. We could have opened whole new factories for producing them by now, if only demand had been encouraged rather than suppressed.
- tombert 6y ago
  I'm not a socialist, I more or less support capitalism, but there's a reasonable middle ground between Laissez-faire capitalism and Stalin-esque socialism. It's not like I found this really obscure edge case. Almost 30% of America has lost their job in some capacity; this isn't just some weird contrived example, and it's dishonest to act like it is. Service workers, at least in the US (I haven't lived anywhere else) are pretty damn vital to the US economy, but are also less likely to be able to afford price-gauged supplies like masks and hand-sanitizer than a yuppie like me. If we don't have some form of regulation to stop price guaging, we are sending a signal to 30% of America that they are simply less deserving of life than the yuppies that depend on them. I don't particularly care about people hiking up the price of bread machines and video games and whatnot, but I cannot in good conscience defend people who do things that will lead to poor people dying. EDIT: A few typos.

varenc 6y ago

Ultra wealthy aside, what about the slightly wealthy? In CA the bottom 1/4 of households make $35,000 a year. Without price controls, will they ever be able to afford PPE in an emergency when they have to compete with the 15% of people making $150,000 a year?