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Not only does it actually pass the sniff test, but allowing price gouging creates a market incentive for people to hoard supplies until they think prices are at

Not only does it actually pass the sniff test, but allowing price gouging creates a market incentive for people to hoard supplies until they think prices are at their highest, then try to sell their stock for maximum price: https://www.timesfreepress.com/news/local/story/2020/mar/14/he-has-17700-bottles-hand-sanitizer-and-nowhere-sell-them-amid-coronavirus-outbreak/518190/ https://www.timesfreepress.com/news/local/story/2020/mar/14/... Hoarding artificially drives up the prices and keeps emergency supplies out of the hands of those who need it most. When you disallow price gouging, you remove one of the worst incentives for hoarding of critical supplies. You still get some people who think anti-price-gouging laws don't apply to them, or who have never heard of such laws, but that doesn't mean allowing price gouging would improve the situation by any means. On the contrary, more people would hoard for longer, because they see the available supply constricting even faster (due to more people hoarding), driving prices even higher, making their own hoard of supplies seem even more likely to be their ticket to wealth, and if it's perfectly legal, nothing is going to rain on their early retirement. In the above case of someone hoarding 17,700 bottles of hand sanitizer, they ended up donating the entire stock to avoid being fined for price gouging, which seems like an example of the system working correctly to disincentivize hoarding during an emergency: https://www.nytimes.com/2020/04/22/us/hand-sanitizer-matt-colvin-noah-coronavirus.html https://www.nytimes.com/2020/04/22/us/hand-sanitizer-matt-co...

ggreer 6y ago
That man bought a good in a place where there was high supply and low demand. He wanted to sell it in a place that had low supply and high demand. There were people who were desperate for hand sanitizer in coastal urban areas. They were willing to pay this man for it. Had he been left alone, at the end of the day everyone would have been better off. The people who sold him the hand sanitizer are better off (otherwise why are they selling hand sanitizer?). The people who most wanted hand sanitizer would have gotten it, and this man would have been compensated for his foresight and scrappiness. All voluntary transactions with no coercion. Instead the local government sent men with guns to his home and "encouraged" him to "donate" his hand sanitizer. Then it sat in a church until it was eventually distributed to local firemen, policemen, and medics... in a county that (at the time) had a total of 1 confirmed case of coronavirus. Now he's poorer and potentially facing jail time. And thousands of people in places like New York and New Jersey went without hand sanitizer and were more likely to spread the disease. I'm guessing at least a few people died because of this. My go-to story of price-gouging laws causing more problems is Michael Munger's They Clapped: Can Price-Gouging Laws Prohibit Scarcity?[1], which details the effect these laws had after Hurricane Fran struck Raleigh, NC. It's yet another instance of a well-intentioned law that makes people worse-off. 1. https://www.econlib.org/library/Columns/y2007/Mungergouging.html https://www.econlib.org/library/Columns/y2007/Mungergouging....
- coder543 6y ago
  I completely disagree. Your comments on the example I referenced don’t match reality or what was in the article at all. Read the first paragraph of the first article: > On March 1, the day after the first coronavirus death in the United States, brothers Matt and Noah Colvin set out in a silver SUV to pick up some hand sanitizer. Driving around Chattanooga, Tennessee, they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves. These people did not buy hand sanitizer in an area with high supply with an intention of getting it to people in need. They recognized that the value of hand sanitizer was about to go up, so they acted faster than everyone else to scoop up as much stock as they could, with the intention of charging people much more than they paid for it. This had nothing to do with supply chain inefficiency, where supply is sometimes available in the wrong geographic location. They acted before the pandemic was a major national issue, in anticipation that it would become such a thing, in order that they would stand to profit from it without actually bringing any additional value to anyone.
  - ggreer 6y ago
    That's the great thing about commerce: It makes selfish greedy people beneficial to society. It doesn't matter what this guy's intent was. The end result would have been to move a scarce resource from the shelves of some stores in Tennessee to where it was desperately needed. Instead, the resource sat in a church in Tennessee while thousands of people in New York and New Jersey were getting infected. Here's a hypothetical: Imagine that instead of those stores having hand sanitizer for him to buy, they'd taken it off their shelves and sold it online at market prices (much higher than the price a few weeks before). The end effect would be the same, except without him as a middle-man. Would you prefer that the police go to those stores and "encourage" them to "donate" the supplies? In this hypothetical there's no middle-man, making it purely a distribution issue. So if you still have qualms about this hypothetical, then it's the price mechanism that bothers you and not the middle-men. People love to hate on middle-men and claim they're not creating any value. But large companies are often too sclerotic to do things like arbitrage a couple products in their inventory for a short time. If not for the middle-men, many more people would have to endure shortages. That's the value they create.
WalterBright 6y ago
Anti-gouging laws always come with anti-hoarding laws. That's because the first always causes the second.
- coder543 6y ago
  That doesn’t pass the smell test. It’s much more likely that anti-hoarding laws are passed in order to prosecute people who are planning to price gouge but haven’t been caught in the act. Would you care to explain why lots of people would hoard when it’s both unprofitable and unnecessary to do so? Once you have a supply of toilet paper, most people are not going to buy a ten year supply of toilet paper just because it isn’t exorbitantly priced. People who think they can make a profit absolutely will buy a ten year supply of toilet paper.
  - kortilla 6y ago
    > Once you have a supply of toilet paper, most people are Let me stop you there. The TP shortage was because of normal people buying enough toilet paper to stay at home full time. That’s it. About half of the TP production goes to giant commercial rolls that go in businesses. The other half for home brands. The commercial factories need to be retooled for smaller rolls and new supply chains need to be setup for commercial to fill the home demand. With absolutely no hoarding, the home demand would increase at least a 1/4. Then throw in people just buying multiple packs to make it 2 weeks without shopping and you’ve already wiped out the supply. > People who think they can make a profit absolutely will Good. I would rather have the option to pay twice the normal price than to wipe my ass with a rock because my government rationed supply ran out. Finally, anti price gouging behavior encourages poor planning by the population at large. Maybe paying $50 for a flat of water bottles will teach you to fucking think ahead and spend $150 on a critical supplies kit.

ggreer 6y ago

That man bought a good in a place where there was high supply and low demand. He wanted to sell it in a place that had low supply and high demand. There were people who were desperate for hand sanitizer in coastal urban areas. They were willing to pay this man for it. Had he been left alone, at the end of the day everyone would have been better off. The people who sold him the hand sanitizer are better off (otherwise why are they selling hand sanitizer?). The people who most wanted hand sanitizer would have gotten it, and this man would have been compensated for his foresight and scrappiness. All voluntary transactions with no coercion. Instead the local government sent men with guns to his home and "encouraged" him to "donate" his hand sanitizer. Then it sat in a church until it was eventually distributed to local firemen, policemen, and medics... in a county that (at the time) had a total of 1 confirmed case of coronavirus. Now he's poorer and potentially facing jail time. And thousands of people in places like New York and New Jersey went without hand sanitizer and were more likely to spread the disease. I'm guessing at least a few people died because of this. My go-to story of price-gouging laws causing more problems is Michael Munger's They Clapped: Can Price-Gouging Laws Prohibit Scarcity?[1], which details the effect these laws had after Hurricane Fran struck Raleigh, NC. It's yet another instance of a well-intentioned law that makes people worse-off. 1. https://www.econlib.org/library/Columns/y2007/Mungergouging.html https://www.econlib.org/library/Columns/y2007/Mungergouging....

coder543 6y ago
I completely disagree. Your comments on the example I referenced don’t match reality or what was in the article at all. Read the first paragraph of the first article: > On March 1, the day after the first coronavirus death in the United States, brothers Matt and Noah Colvin set out in a silver SUV to pick up some hand sanitizer. Driving around Chattanooga, Tennessee, they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves. These people did not buy hand sanitizer in an area with high supply with an intention of getting it to people in need. They recognized that the value of hand sanitizer was about to go up, so they acted faster than everyone else to scoop up as much stock as they could, with the intention of charging people much more than they paid for it. This had nothing to do with supply chain inefficiency, where supply is sometimes available in the wrong geographic location. They acted before the pandemic was a major national issue, in anticipation that it would become such a thing, in order that they would stand to profit from it without actually bringing any additional value to anyone.
- ggreer 6y ago
  That's the great thing about commerce: It makes selfish greedy people beneficial to society. It doesn't matter what this guy's intent was. The end result would have been to move a scarce resource from the shelves of some stores in Tennessee to where it was desperately needed. Instead, the resource sat in a church in Tennessee while thousands of people in New York and New Jersey were getting infected. Here's a hypothetical: Imagine that instead of those stores having hand sanitizer for him to buy, they'd taken it off their shelves and sold it online at market prices (much higher than the price a few weeks before). The end effect would be the same, except without him as a middle-man. Would you prefer that the police go to those stores and "encourage" them to "donate" the supplies? In this hypothetical there's no middle-man, making it purely a distribution issue. So if you still have qualms about this hypothetical, then it's the price mechanism that bothers you and not the middle-men. People love to hate on middle-men and claim they're not creating any value. But large companies are often too sclerotic to do things like arbitrage a couple products in their inventory for a short time. If not for the middle-men, many more people would have to endure shortages. That's the value they create.

WalterBright 6y ago

Anti-gouging laws always come with anti-hoarding laws. That's because the first always causes the second.

coder543 6y ago
That doesn’t pass the smell test. It’s much more likely that anti-hoarding laws are passed in order to prosecute people who are planning to price gouge but haven’t been caught in the act. Would you care to explain why lots of people would hoard when it’s both unprofitable and unnecessary to do so? Once you have a supply of toilet paper, most people are not going to buy a ten year supply of toilet paper just because it isn’t exorbitantly priced. People who think they can make a profit absolutely will buy a ten year supply of toilet paper.
- kortilla 6y ago
  > Once you have a supply of toilet paper, most people are Let me stop you there. The TP shortage was because of normal people buying enough toilet paper to stay at home full time. That’s it. About half of the TP production goes to giant commercial rolls that go in businesses. The other half for home brands. The commercial factories need to be retooled for smaller rolls and new supply chains need to be setup for commercial to fill the home demand. With absolutely no hoarding, the home demand would increase at least a 1/4. Then throw in people just buying multiple packs to make it 2 weeks without shopping and you’ve already wiped out the supply. > People who think they can make a profit absolutely will Good. I would rather have the option to pay twice the normal price than to wipe my ass with a rock because my government rationed supply ran out. Finally, anti price gouging behavior encourages poor planning by the population at large. Maybe paying $50 for a flat of water bottles will teach you to fucking think ahead and spend $150 on a critical supplies kit.