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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,

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.
  - linuxftw 6y ago
    > Of course, just as with #1 politically connected people will protect themselves first, and their wealthy benefactors. The inner party, as it were.
  - bleepblorp 6y ago
    Meanwhile, Korea: https://www.nytimes.com/2020/04/01/opinion/covid-face-mask-shortage.html https://www.nytimes.com/2020/04/01/opinion/covid-face-mask-s... Faced with a similar shortage of masks early in the year, the Korean government bought up the overwhelming majority of it's domestic mask production, and directed pharmacies to distribute them to the public at a fixed price according to a rationing system. As a result, every Korean has access to two N95-equivalent masks a week and the vast majority of Koreans wear them in public. In Libertopia^wAmerica, the free market solution has trickled down unrated fabric masks to the general public and trickled up N95 masks according to the whims of Trumpworld. In part due to universal masking with high-quality PPE, the South Korean death toll is 7 per million. In Galt's Gulch^w^wAmerica, the death toll is 597 per million.[0] Government can work for the majority of people. The American free market does not. [0] https://www.statista.com/statistics/1104709/coronavirus-deaths-worldwide-per-million-inhabitants/ https://www.statista.com/statistics/1104709/coronavirus-deat...

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.
- linuxftw 6y ago
  > Of course, just as with #1 politically connected people will protect themselves first, and their wealthy benefactors. The inner party, as it were.
- bleepblorp 6y ago
  Meanwhile, Korea: https://www.nytimes.com/2020/04/01/opinion/covid-face-mask-shortage.html https://www.nytimes.com/2020/04/01/opinion/covid-face-mask-s... Faced with a similar shortage of masks early in the year, the Korean government bought up the overwhelming majority of it's domestic mask production, and directed pharmacies to distribute them to the public at a fixed price according to a rationing system. As a result, every Korean has access to two N95-equivalent masks a week and the vast majority of Koreans wear them in public. In Libertopia^wAmerica, the free market solution has trickled down unrated fabric masks to the general public and trickled up N95 masks according to the whims of Trumpworld. In part due to universal masking with high-quality PPE, the South Korean death toll is 7 per million. In Galt's Gulch^w^wAmerica, the death toll is 597 per million.[0] Government can work for the majority of people. The American free market does not. [0] https://www.statista.com/statistics/1104709/coronavirus-deaths-worldwide-per-million-inhabitants/ https://www.statista.com/statistics/1104709/coronavirus-deat...