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I agree, although the toilet paper situation was a bit different IMO because the shortage wasn't in the supply chain -- it was absolutely clear that inventories
by codeflo 6y ago
I agree, although the toilet paper situation was a bit different IMO because the shortage wasn't in the supply chain -- it was absolutely clear that inventories would restock sooner or later. In that situation, higher prices wouldn't have incentivized more production.
Still, supermarkets could have temporarily raised prices 10x and still sold their inventory. Why didn't more of them do it? Presumably, they made the rational calculation that the bad reputation they'd get from such a move would outweigh any short-term profits.
- sokoloff 6y agoIf the shortage of consumer form-factor toilet paper wasn't in the supply chain, where was it?
- codeflo 6y agoI don't like "gotcha" style discussions, but I admit I could have worded that more precisely. What I meant is: There was no reduction in overall toilet paper production, and people didn't suddenly start to shit more. The shortage was mostly a distribution/packaging issue in the form of "not available in packaging X at location Y". Markets tend to solve that kind of problem incredibly quickly.
- sokoloff 6y agoI wasn't trying to "getcha", but I do think this genuinely is a supply chain issue. Consumer form factor toilet paper is still being rationed for me right now (in Cambridge, MA-max 1). That's a year after the start of this.
- codeflo 6y agoVery interesting, I guess my experience here in Germany was very different. No toilet paper anywhere for 2-3 weeks last March/April, and then suddenly supermarkets drowned in it. Do you know if these are really meaningful shortages, or if businesses have just kept the signs up to make people feel taken care of?
- sokoloff 6y agoI don't know for sure, but even with the max-1 purchase limit, the toilet paper section of the aisle is somewhat lightly stocked on some of my visits. (Of course, if you've told me for a year that TP is in short supply, you can bet that I have a lot of it on hand in the basement, so it's hard to get a clean read. "If there's space in the cart and TP on the shelf, why not pick one up? It's $10, never spoils, and never goes out of style.")
- djoldman 6y agoThere were some interesting theories floating around about how everyone was home so the residential TP market demand jumped but the commercial demand fell.
- AdrianB1 6y agoA toilet paper factory has a long planning cycle and supply contracts, so it cannot react very fast to large changes in demand. The machinery also costs a lot, so they cannot increase the capacity for every spike in demand that will usually disappear in a few weeks. The weakest chain is the Wall Street pressure on these companies to "improve cash flow or else" that lead to reducing the stocks (product and raw materials alike) to minimum, so any surge is even harder to compensate. I worked in this area for some years, this is how it's done.
- davidw 6y agoI think this is part of the nuance: we've gotten ourselves into such a bind with housing in so many places that it feels like we need the short term, crisis relief that rent control provides. For some people, it absolutely means not being kicked out into the streets. Go tell that mom and her kids about 'the market'. Yet at the same time, markets, supply and demand are real, and we need to bring them back into balance by at the very least not artificially constraining housing supply in so many places. It's a tricky problem.
- Kalium 6y agoThe political complication is that it's very easy for people to be convinced that the short-term answer is the only one that will ever be needed. Addressing long-term problems often involves painful choices that people would rather not face.
- davidw 6y agoThat's part of it. The "losers" with rent control are newcomers who may have a harder time finding housing, and some landlords. They're kind of anonymous. But turn up to a public hearing on building some new housing, and the people there to yell about it are your neighbors, ordinary people who "got theirs".
- Kalium 6y agoYup, that's the core of it. The future has no constituency. The past has.
- kapp_in_life 6y agoThe losers also include the children of those benefiting from rent control, just a decade or two in the future.
- nicoburns 6y ago> Yet at the same time, markets, supply and demand are real, and we need to bring them back into balance by at the very least not artificially constraining housing supply in so many places. Or we could just go ahead and find local governments to directly build houses like we used to (at least here in the UK). If you know what the desired result is then why not enact it directly rather than incentivising it. Markets are most useful when you don't what you (we) want.
- dnadler 6y agoI'm not sure on the specific timing but price gouging during an emergency is illegal, so there's one other reason why they didn't do it.