4 ms·

Even if we could easily draw a line between essential and non-essential goods (pretty much impossible), you'd still have the problem that banning "price gouging

by pitaj 6y ago

Even if we could easily draw a line between essential and non-essential goods (pretty much impossible), you'd still have the problem that banning "price gouging" doesn't help anyone. Sure, it keeps prices down, but by artificially lowering prices when under high demand, it incentivizes hoarding and exploitation. It also decreases the incentive for increased supply. When local prices increase drastically, it gives incentive for non-local suppliers to enter the market, increasing the quantity of supply.

cwilkes 6y ago
That’s what I don’t understand about the argument against price gouging. Fresh water is hard to come by, ergo the price goes up. If the product wasn’t in demand it wouldn’t go up in price. By artificially forcing a low price it guarantees there’s going to be shortages. By allowing the price to go up it will also enforce people use water wisely. That is they won’t start taking showers or watering plants with bottled water as it will be expensive.
- jariel 6y ago
  When the price of water spikes: + Some people in need are priced-out, which is very bad. + Many for whom the price isn't really a problem given it's become a 'health issue' will stock up dramatically, further driving prices up and hoarding from others. The 'shortage' FYI is probably inherent in a flood type situation. By far a better solution is rationing, which is exactly what is done in these situations and has been for quite some time. Rationing can be enforced at the point of sale i.e. 'Max 3 per household', definitely through social conditioning, i.e. making sure community members are aware of the need to do this, much like mask-wearing and social distancing, and possibly through more specific measures, i.e. 'ration cards'. The immediate problem with rationing maybe 'lineups' which is the visual epitome that many people like to point to from the Soviet Era as an example of 'bad economics' from centrally planned economies, and it surely is in the long run, but in the short-run, i.e. in disaster type scenarios, rationing is often a very obvious and useful strategy.
jariel 6y ago
This is upside down. >>>> First - we 100% can draw the line between 'essential goods'. We already do, we've been doing it long before the pandemic and we continue to do it. We classify all sorts of goods, for all sorts of reasons. Just because at any given time, the hard-line in the sand may be a little fuzzy, does not mean that we can't still continue to reasonably category goods. Depending on your country, things like food, drugs, healthcare, dental, water, childcare service, tobacco, cigarettes, alcohol, luxuries - are taxed differently due to their different meaning to society. And yes, there are always fuzzy areas where the lines are drawn. In trade agreements, we make all sorts of distinctions for a variety of reasons. Anyone who believes in 'Socialized Medicine' to any extent must grasp the obvious - that this is a social recognition of a separate class of services that are going to be managed differently. Literally, if you support even Medicare, then you need to grasp this is what happening. >>>> Second - stopping 'gouging' is absolutely beneficial to people and society at large. 'Price gouging' is bad captialism. Understand what price gouging is, and that it's different from normal market conditions. Price-gouging happens when events cause a spike in supply or demand that's typically much faster than the systems to support supply (or demand) can manage effectively. A factory cannot 'product and ship barbells' on a dime. Over months, yes, but immediately no. The negative effects to the system of price-gouging can definitely be bad, and we should try to stop it where it makes sense. A simple example would be 'bottled water during a flood'. The local store could very well charge such vastly high prices that people would be seriously inconvenienced, or worse - not be able to afford it, while the wealthier people stockpile. The 'free market' (really not in any real sense, just the sense some HN commenters here think) is utterly dysfunctional in that sense, as pooling swaths of capital in the hands of the owner of the 'service station' because he just happened to be sitting on something that became a hyper valuable commodity ... is absolutely, positively, in no way beneficial for anyone in the long run. The 'local store' gouging people during a flood is in fact one of the better examples of 'bad capitalism' and how in certain circumstances, capitalism completely fails to be an intelligent means to manage goods and services, if fact, at least at that moment, it's maybe the absolute worst kind of system. Consider a more extreme example of market imperfection related to, but not precisely 'price gouging': Company ABC develops a COVID vaccine. The spent $1B developing it (doesn't matter), and they determine that the 'profit-maximizing price' for their vaccine is $1000 per person, and they'll sell it on credit, i.e. people pay it off $50 a month. They don't care that most of planet earth cannot afford it, because that's not part of the equation. More nefariously, the company literally does not want large swaths of the world to get it also because they literally want COVID to keep spreading, thereby keeping the demand for their vaccine high. This example is obviously extreme, but these kinds of dynamics are absolutely already at play, all over the world, in many markets - especially in healthcare, and especially with respect to vaccine development. On the whole, price-gouging is bad. That it's sometimes a little grey means we have to wade through the subject intelligently.

by pitaj 6y ago

cwilkes 6y ago

That’s what I don’t understand about the argument against price gouging. Fresh water is hard to come by, ergo the price goes up. If the product wasn’t in demand it wouldn’t go up in price. By artificially forcing a low price it guarantees there’s going to be shortages. By allowing the price to go up it will also enforce people use water wisely. That is they won’t start taking showers or watering plants with bottled water as it will be expensive.

jariel 6y ago
When the price of water spikes: + Some people in need are priced-out, which is very bad. + Many for whom the price isn't really a problem given it's become a 'health issue' will stock up dramatically, further driving prices up and hoarding from others. The 'shortage' FYI is probably inherent in a flood type situation. By far a better solution is rationing, which is exactly what is done in these situations and has been for quite some time. Rationing can be enforced at the point of sale i.e. 'Max 3 per household', definitely through social conditioning, i.e. making sure community members are aware of the need to do this, much like mask-wearing and social distancing, and possibly through more specific measures, i.e. 'ration cards'. The immediate problem with rationing maybe 'lineups' which is the visual epitome that many people like to point to from the Soviet Era as an example of 'bad economics' from centrally planned economies, and it surely is in the long run, but in the short-run, i.e. in disaster type scenarios, rationing is often a very obvious and useful strategy.

jariel 6y ago

This is upside down. >>>> First - we 100% can draw the line between 'essential goods'. We already do, we've been doing it long before the pandemic and we continue to do it. We classify all sorts of goods, for all sorts of reasons. Just because at any given time, the hard-line in the sand may be a little fuzzy, does not mean that we can't still continue to reasonably category goods. Depending on your country, things like food, drugs, healthcare, dental, water, childcare service, tobacco, cigarettes, alcohol, luxuries - are taxed differently due to their different meaning to society. And yes, there are always fuzzy areas where the lines are drawn. In trade agreements, we make all sorts of distinctions for a variety of reasons. Anyone who believes in 'Socialized Medicine' to any extent must grasp the obvious - that this is a social recognition of a separate class of services that are going to be managed differently. Literally, if you support even Medicare, then you need to grasp this is what happening. >>>> Second - stopping 'gouging' is absolutely beneficial to people and society at large. 'Price gouging' is bad captialism. Understand what price gouging is, and that it's different from normal market conditions. Price-gouging happens when events cause a spike in supply or demand that's typically much faster than the systems to support supply (or demand) can manage effectively. A factory cannot 'product and ship barbells' on a dime. Over months, yes, but immediately no. The negative effects to the system of price-gouging can definitely be bad, and we should try to stop it where it makes sense. A simple example would be 'bottled water during a flood'. The local store could very well charge such vastly high prices that people would be seriously inconvenienced, or worse - not be able to afford it, while the wealthier people stockpile. The 'free market' (really not in any real sense, just the sense some HN commenters here think) is utterly dysfunctional in that sense, as pooling swaths of capital in the hands of the owner of the 'service station' because he just happened to be sitting on something that became a hyper valuable commodity ... is absolutely, positively, in no way beneficial for anyone in the long run. The 'local store' gouging people during a flood is in fact one of the better examples of 'bad capitalism' and how in certain circumstances, capitalism completely fails to be an intelligent means to manage goods and services, if fact, at least at that moment, it's maybe the absolute worst kind of system. Consider a more extreme example of market imperfection related to, but not precisely 'price gouging': Company ABC develops a COVID vaccine. The spent $1B developing it (doesn't matter), and they determine that the 'profit-maximizing price' for their vaccine is $1000 per person, and they'll sell it on credit, i.e. people pay it off $50 a month. They don't care that most of planet earth cannot afford it, because that's not part of the equation. More nefariously, the company literally does not want large swaths of the world to get it also because they literally want COVID to keep spreading, thereby keeping the demand for their vaccine high. This example is obviously extreme, but these kinds of dynamics are absolutely already at play, all over the world, in many markets - especially in healthcare, and especially with respect to vaccine development. On the whole, price-gouging is bad. That it's sometimes a little grey means we have to wade through the subject intelligently.