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Those things are often suddenly rare because people hoard them, which can be prevented by allowing supply and demand to properly work. Prices should go up if go

Those things are often suddenly rare because people hoard them, which can be prevented by allowing supply and demand to properly work. Prices should go up if goods are in more demand. In addition, the higher prices will motivate sellers to send more products to the impacted area. That eventually leads to price stabilization at the intersection of the supply and demand curve, i.e. how things are supposed to work. Do the higher prices mean some people won't get any water? Yes! But if you artificially suppress prices, there will also be some people who don't get water, because other people will hoard it.

anigbrowl 4y ago
I don't need you to explain price theory to me, and also don't find your hoarding argument persuasive, for two reasons: one, much of the demand in the aftermath of a disaster is from people who need to consume a commodity and can't get any, and two, the hoarding behavior you describe is more likely to be by price gougers hoping to engage in arbitrage. > But if you artificially suppress prices, there will also be some people who don't get water, because other people will hoard it. Rationing the volume available for purchase by individual customers is the obvious solution, and seems to have worked out just fine in practice during things like the great toilet paper panic of 2020. I'm asking Walter how he explains the fact of people complaining about high prices in such a context, given his claim that it's government spoiling the price theory party. Why are the opinions of people who are priced out discounted?
- WalterBright 4y ago
  Hoarding toilet paper is only of value if you can resell it. Hence the total amount available remains the same. If hoarding fetches higher prices, that creates tremendous incentive to increase the supply (and/or find alternatives). If hoarding is illegal, and gouging is illegal, the result is shortages. Every time, since there is zero incentive to produce more. Rationing has other problems. It is based on the idea that everyone has the exact same need for the product. Of course, this is absurd. The result is misallocation, as some get more than they need, others get less. If reselling is made illegal (as it usually is in rationing setups), then the person with extra just throws it away, and the person who doesn't get enough has to do without. How is that better?
  - anigbrowl 4y ago
    This seems irrational. The need for many commodities like TP or water is fairly homogeneous and predictable, and excess is typically just used later or shared rather than abandoned. It's better in that you can maximize the number of people who have a sufficient supply to get through the emergency. Again, I'm still wondering why you cite government as the opponents of free market pricing, when the objections often originate with people who are mad about the idea of paying $75 for a bottle of hand sanitizer: https://www.today.com/news/brothers-who-hoarded-17-700-bottles-hand-sanitizer-forced-donate-t176028 https://www.today.com/news/brothers-who-hoarded-17-700-bottl...
    - WalterBright 4y ago
      Utility is maximized by allowing supply&demand to work. No two people have the same use for any commodity - rationing provides some people with too much and the rest with too little. Nobody gets just the right amount under rationing. > government as the opponents of free market pricing, when the objections often originate with people who are mad The government does what the people demand. The people demand the government outlaw gouging, the government outlaws it.

anigbrowl 4y ago

I don't need you to explain price theory to me, and also don't find your hoarding argument persuasive, for two reasons: one, much of the demand in the aftermath of a disaster is from people who need to consume a commodity and can't get any, and two, the hoarding behavior you describe is more likely to be by price gougers hoping to engage in arbitrage. > But if you artificially suppress prices, there will also be some people who don't get water, because other people will hoard it. Rationing the volume available for purchase by individual customers is the obvious solution, and seems to have worked out just fine in practice during things like the great toilet paper panic of 2020. I'm asking Walter how he explains the fact of people complaining about high prices in such a context, given his claim that it's government spoiling the price theory party. Why are the opinions of people who are priced out discounted?

WalterBright 4y ago
Hoarding toilet paper is only of value if you can resell it. Hence the total amount available remains the same. If hoarding fetches higher prices, that creates tremendous incentive to increase the supply (and/or find alternatives). If hoarding is illegal, and gouging is illegal, the result is shortages. Every time, since there is zero incentive to produce more. Rationing has other problems. It is based on the idea that everyone has the exact same need for the product. Of course, this is absurd. The result is misallocation, as some get more than they need, others get less. If reselling is made illegal (as it usually is in rationing setups), then the person with extra just throws it away, and the person who doesn't get enough has to do without. How is that better?
- anigbrowl 4y ago
  This seems irrational. The need for many commodities like TP or water is fairly homogeneous and predictable, and excess is typically just used later or shared rather than abandoned. It's better in that you can maximize the number of people who have a sufficient supply to get through the emergency. Again, I'm still wondering why you cite government as the opponents of free market pricing, when the objections often originate with people who are mad about the idea of paying $75 for a bottle of hand sanitizer: https://www.today.com/news/brothers-who-hoarded-17-700-bottles-hand-sanitizer-forced-donate-t176028 https://www.today.com/news/brothers-who-hoarded-17-700-bottl...
  - WalterBright 4y ago
    Utility is maximized by allowing supply&demand to work. No two people have the same use for any commodity - rationing provides some people with too much and the rest with too little. Nobody gets just the right amount under rationing. > government as the opponents of free market pricing, when the objections often originate with people who are mad The government does what the people demand. The people demand the government outlaw gouging, the government outlaws it.