5 ms·

> The machinery to make this is extremely complicated and takes 6 months or more to build, by which time there may be no demand. No amount of invoking the defen

> The machinery to make this is extremely complicated and takes 6 months or more to build, by which time there may be no demand. No amount of invoking the defense production act would change this reality. Allowing mask manufacturers to charge the market price for their masks, though, might have made it worthwhile to build out the necessary capacity (I am pretty sure that it would have, but I could be wrong, so I will hedge my bets). But then, grandstanding politicians would have claimed it was 'price-gouging' (which simply cannot exist) and might even have tried to send the mask-makers to jail. Who would take that risk?

gridlockd 6y ago
The market price is still too volatile to make such decisions. This is the problem that options trading solves, but we don't have an options market for N95 masks. Even if we did, there would be tons of complaints about speculators turning a profit on people's health.
x86_64Ubuntu 6y ago
So the reason we don't have masks is because the "Free Market" was constrained by the government? You do understand that increasing the price of masks will restrict their availability right, which to some hospitals will be as good as having no masks at all right?
- linuxftw 6y ago
  As the parent said, a rising price will more efficiently allocate a scarce resource and ensure that people only purchase what is actually needed. Additionally, this will signal the market to produce more. A large hospital conglomerate could sign a deal with an upstart manufacturing firm to get the masks from the newly formed line. They could strike a deal that reduces risk for each party. It's unlikely the Hospital will never need these in the future, so it's not like they're throwing money away.
  - komali2 6y ago
    Sounds like the smart solutions is to cut out this nebulous middle-man that must be motivated by ambiguous signals that we aren't actually sure will work, and instead just produce the masks directly. That is to say, seems like we could have avoided this mess by the state itself producing the necessary PPE. EDIT: If you disagree, tell me why. "Capitalists" and "communists" both are getting downvoted in this thread for what I assume are ideological reasons and it's annoying me.
    - eadmund 6y ago
      I think the issue is that the 'nebulous middle-men' actually provide value: they each make decisions based on ambiguous signals, resulting on the whole in better overall decision-making than a central production authority. As an example, a nation mask-making concern doesn't really know how many masks to make. It doesn't really have an accurate count of health-care interactions per day, so it doesn't know how many masks to make in order to provide one per professional-patient interaction. Given the relative political costs to central decisionmakers of a shortage versus a surplus, they will tend to overproduce. This is a kind of socialising costs while privatising profits: society pays for the overproduction both in terms of cost-to-produce and opportunity costs for other items (How many servings of formula for abandoned children is a mask worth? How many prison guards is a mask worth?); meanwhile, the individual decisionmakers enjoy increased social status for insuring supply. There simply isn't enough information to make good enough decisions centrally. There is waste associated with decentralisation, too (each of those middlemen gets his cut!), but it turns out that there is less waste and more wealth with a free market than with a centralised one.
  - eli 6y ago
    The people who need it the most and the people who are able to pay the most are not the same.
    - Consultant32452 6y ago
      Here's what the two options are in reality. If you need a mask, you can hope that: 1) The central planning authority sees you and allocates you some 2) Anyone with some $ sees you and allocates you some The study of economics tells us that #2 will tend to more successfully allocate the resources where they are needed. The confidence level is near that of how biologists talk about evolution. #2 does suffer from "but rich people will protect themselves first." Of course, just as with #1 politically connected people will protect themselves first, and their wealthy benefactors.
- edouard-harris 6y ago
  Increasing prices does restrict availability now, but as a step on a path to increasing availability in the future (because the higher prices incentivize eventual capacity-building, which lowers prices and increases quantities). Keeping prices low restricts availability now and in the foreseeable future.
  - bleepblorp 6y ago
    Executives are greedy, not stupid. They're not going to respond to a short-term increase in prices--in any market, not just pandemic-related PPE--by increasing long-term production capacity. They know that demand will eventually drop before they can pay off their capacity investments. Indeed, in the absence of price controls, cutting production in the face of increased short-term demand can increase profits by raising prices. There's a reason the oil industry routinely shuts down refineries, pipelines, and other infrastructure for 'scheduled maintenance' during long weekends, after all.
gentaro 6y ago
"The free market will fix it!" - If we're assuming invoking the Defence Production Act wouldn't work because the machines are too complex to prepare in time, why on earth do you believe the free market would succeed?
- deleted 6y ago
  [deleted]
jcranmer 6y ago
The Washington Post actually had an article about this back in March or so. The issue that you have is that there is a decently large capital cost to building new production, and once the pandemic is over, the budget hawks are going to swoop in and cut purchasing of masks down to below pre-pandemic levels because there's now a massive unused pile of the stuff, why do we need any more? So the guaranteed-purchase contracts are abrogated, and the manufacturers are saddled with a lot of debt and no prospective income. (This isn't a theoretical thought exercise, it actually happened during the H1N1 flu crisis).
- nthj 6y ago
  While the government absolutely should have fixed the incentives, I am a little puzzled why a huge private equity firm or a Bill-Gates-like figure didn’t fund more N95 machines when the government failed to. (Or at least, I haven’t heard that anyone has.) $25-100M for machines to help get the whole economy back on track seems like an obvious move on both economic and humanitarian grounds.
  - Consultant32452 6y ago
    I'm confident that the very tiny number of people with the expertise to build/maintain these melt-blown fabric machines is extremely busy right now. This is very different than building a tank where most of the parts can be built in basically any machine shop.
    - bleepblorp 6y ago
      Typical machine shops do not have the capabilities to make composite armor, gas turbine engine components, aluminium oxynitride vision blocks, night vision equipment, thermal IR sensors, encrypted radios, targeting computers, MEMS/laser ring gyroscopes, high precision servos, or range finders. Without these parts, you have a target rather than a tank. All modern production has bottlenecks. For items that governments consider important, they find ways to manage bottlenecks. The issue with US N95 availability is that no one in authority considers the problem important enough to be worth fixing.
ffdjjjffjj 6y ago
Why are other countries with comparatively less free markets and more regulations not experiencing this problem in a greater degree? Shouldn’t we be doing better if it’s really as simple as less government = better outcome?

gridlockd 6y ago

The market price is still too volatile to make such decisions. This is the problem that options trading solves, but we don't have an options market for N95 masks. Even if we did, there would be tons of complaints about speculators turning a profit on people's health.

x86_64Ubuntu 6y ago

So the reason we don't have masks is because the "Free Market" was constrained by the government? You do understand that increasing the price of masks will restrict their availability right, which to some hospitals will be as good as having no masks at all right?

linuxftw 6y ago
As the parent said, a rising price will more efficiently allocate a scarce resource and ensure that people only purchase what is actually needed. Additionally, this will signal the market to produce more. A large hospital conglomerate could sign a deal with an upstart manufacturing firm to get the masks from the newly formed line. They could strike a deal that reduces risk for each party. It's unlikely the Hospital will never need these in the future, so it's not like they're throwing money away.
- komali2 6y ago
  Sounds like the smart solutions is to cut out this nebulous middle-man that must be motivated by ambiguous signals that we aren't actually sure will work, and instead just produce the masks directly. That is to say, seems like we could have avoided this mess by the state itself producing the necessary PPE. EDIT: If you disagree, tell me why. "Capitalists" and "communists" both are getting downvoted in this thread for what I assume are ideological reasons and it's annoying me.
  - eadmund 6y ago
    I think the issue is that the 'nebulous middle-men' actually provide value: they each make decisions based on ambiguous signals, resulting on the whole in better overall decision-making than a central production authority. As an example, a nation mask-making concern doesn't really know how many masks to make. It doesn't really have an accurate count of health-care interactions per day, so it doesn't know how many masks to make in order to provide one per professional-patient interaction. Given the relative political costs to central decisionmakers of a shortage versus a surplus, they will tend to overproduce. This is a kind of socialising costs while privatising profits: society pays for the overproduction both in terms of cost-to-produce and opportunity costs for other items (How many servings of formula for abandoned children is a mask worth? How many prison guards is a mask worth?); meanwhile, the individual decisionmakers enjoy increased social status for insuring supply. There simply isn't enough information to make good enough decisions centrally. There is waste associated with decentralisation, too (each of those middlemen gets his cut!), but it turns out that there is less waste and more wealth with a free market than with a centralised one.
- eli 6y ago
  The people who need it the most and the people who are able to pay the most are not the same.
  - Consultant32452 6y ago
    Here's what the two options are in reality. If you need a mask, you can hope that: 1) The central planning authority sees you and allocates you some 2) Anyone with some $ sees you and allocates you some The study of economics tells us that #2 will tend to more successfully allocate the resources where they are needed. The confidence level is near that of how biologists talk about evolution. #2 does suffer from "but rich people will protect themselves first." Of course, just as with #1 politically connected people will protect themselves first, and their wealthy benefactors.
edouard-harris 6y ago
Increasing prices does restrict availability now, but as a step on a path to increasing availability in the future (because the higher prices incentivize eventual capacity-building, which lowers prices and increases quantities). Keeping prices low restricts availability now and in the foreseeable future.
- bleepblorp 6y ago
  Executives are greedy, not stupid. They're not going to respond to a short-term increase in prices--in any market, not just pandemic-related PPE--by increasing long-term production capacity. They know that demand will eventually drop before they can pay off their capacity investments. Indeed, in the absence of price controls, cutting production in the face of increased short-term demand can increase profits by raising prices. There's a reason the oil industry routinely shuts down refineries, pipelines, and other infrastructure for 'scheduled maintenance' during long weekends, after all.

gentaro 6y ago

"The free market will fix it!" - If we're assuming invoking the Defence Production Act wouldn't work because the machines are too complex to prepare in time, why on earth do you believe the free market would succeed?

deleted 6y ago
[deleted]

jcranmer 6y ago

The Washington Post actually had an article about this back in March or so. The issue that you have is that there is a decently large capital cost to building new production, and once the pandemic is over, the budget hawks are going to swoop in and cut purchasing of masks down to below pre-pandemic levels because there's now a massive unused pile of the stuff, why do we need any more? So the guaranteed-purchase contracts are abrogated, and the manufacturers are saddled with a lot of debt and no prospective income. (This isn't a theoretical thought exercise, it actually happened during the H1N1 flu crisis).

nthj 6y ago
While the government absolutely should have fixed the incentives, I am a little puzzled why a huge private equity firm or a Bill-Gates-like figure didn’t fund more N95 machines when the government failed to. (Or at least, I haven’t heard that anyone has.) $25-100M for machines to help get the whole economy back on track seems like an obvious move on both economic and humanitarian grounds.
- Consultant32452 6y ago
  I'm confident that the very tiny number of people with the expertise to build/maintain these melt-blown fabric machines is extremely busy right now. This is very different than building a tank where most of the parts can be built in basically any machine shop.
  - bleepblorp 6y ago
    Typical machine shops do not have the capabilities to make composite armor, gas turbine engine components, aluminium oxynitride vision blocks, night vision equipment, thermal IR sensors, encrypted radios, targeting computers, MEMS/laser ring gyroscopes, high precision servos, or range finders. Without these parts, you have a target rather than a tank. All modern production has bottlenecks. For items that governments consider important, they find ways to manage bottlenecks. The issue with US N95 availability is that no one in authority considers the problem important enough to be worth fixing.

ffdjjjffjj 6y ago

Why are other countries with comparatively less free markets and more regulations not experiencing this problem in a greater degree? Shouldn’t we be doing better if it’s really as simple as less government = better outcome?