12 ms·

This is all so silly. I work in the lumber business. We always, every day, at all times, sell our lumber to the highest bidder. But for the first ~3 weeks of

This is all so silly. I work in the lumber business. We always, every day, at all times, sell our lumber to the highest bidder. But for the first ~3 weeks of the pandemic, our sawmills ran flat out -- more production than ever. Notwithstanding that fact, we saw unprecedented pricing -- because demand was radically outpacing supply. A true "super cycle" driven, I believe, by robust federal stimulus. That's since corrected significantly as interest rates have cooled home building and repair/remodel. But the idea that we made a bunch of money during the pandemic because we were greedy and jacked up prices is hilarious. We are just as greedy today as we were a year ago -- and making very little. We always sell to the highest bidder. I have no idea how we'd even do it otherwise -- a lumber lottery? All of this reporting about corporate greed is truly dumb.

draw_down 4y ago
[dead]
superkuh 4y ago
Maybe for lumber. But the grocer CEOs are literally on record on a recorded phone conference explicitly stating that yes, they use inflationary periods to cover intentional price jacking because the customers won't revolt. https://pluralistic.net/2021/11/20/quiet-part-out-loud/ https://pluralistic.net/2021/11/20/quiet-part-out-loud/ https://pluralistic.net/2023/03/11/price-over-volume/ https://pluralistic.net/2023/03/11/price-over-volume/
- hcurtiss 4y ago
  I admit I don't know much about the grocery business. But you make it sound like those phone conferences were recorded surreptitiously, when in reality they were just their public earnings calls. And, by my read, they were saying that the consumer was willing to pay more and, in an effort to preserve their margin given increased supplier pricing, they were increasing store pricing. None of that strikes me as surprising. How else are they to set their pricing, other than to charge what people are willing to pay? At some point, large margins will cause more participants to enter the market, driving down pricing. Without that price signal, supply would never increase, leading either to increased prices or shortages. This is all Econ 101. I agree that a monopoly position can compromise market dynamics, and maybe that's the case with grocers, but I don't see that in the articles you link.
  - daveguy 4y ago
    Nowhere in the post you replied to is an implication that the record was recorded surreptitiously. It explicitly says, "on record."
  - aerotwelve 4y ago
    If they were only increasing prices to a degree that covered their (temporary) higher costs, they wouldn't be making record profits. Since they generally brag on these calls about their record-breaking profits, and say that their record-breaking profits are linked to the fact that they raised prices, we can safely deduce that they're increasing prices more than they had to.
    - ToValueFunfetti 4y ago
      No clue about the general topic, but if you hold margins constant during inflation, you should expect record-breaking nominal profits by default.
93po 4y ago
The article is specifically saying that in instances like yours, the problem isn't the large demand driving up prices - it's that businesses are driving it up even beyond the natural demand price having been emboldened by the former.
- hcurtiss 4y ago
  But I have no means of doing that. It's a commodity market, and there are many, many suppliers competing with me, and ruthlessly. As pricing rose, we even saw surges in European imports. The only thing that drove up lumber prices was extraordinary demand. And if that happened for lumber, I'm inclined to believe that was the driving factor in other product prices too.
  - iamwpj 4y ago
    If it's commodity, then it's traded on futures. Distributors would sell to retailers who shape consumer-facing pricing to maintain stability. Essentially, Home Depot sells out, looks to their supplier/distributor who says it'll be a few weeks to get enough to meet demand, commodity prices jump as demand increases for short term supply and Home Depot raises their prices. This is a fabricated sequence of events. It's the SEC/CME/FTC, etc's job to verify the following in this example: 1. Did Home Depot raise their prices _more_ than was necessary to respond to increasing consumer demand and decrease supply? 2. Did the suppliers stockpile or falsely report their availability to result in over charging? 3. Did pricing between sawmills/loggers and suppliers increases proportionally? Did pricing between retail and suppliers increase proportionally? These questions will help to understand possible unnatural inflation was introduced. In the sequence of events the sawmill behavior is just a single indicator along the way.
    - hcurtiss 4y ago
      Some lumber is traded on futures, some is not, but nearly all of it is manufactured to universal specifications (set dimensions and grades), making it a commodity market. Home Depot and the other box stores were constantly running out. We struggled for several quarters to keep the distribution centers supplied. The box stores were buying lumber everywhere they could. If they were price gouging, the consumer certainly didn't flinch, as quarter after quarter we witnessed historic take-away.
slg 4y ago
What you describe is the definition of price gouging. A global disaster occurred which caused supply shocks, demand shocks, or both in various industries which led to companies increasing their prices as a response. Society only has so much tolerance for selling to the highest bidder, especially when a product is more of a necessity than a luxury. People still have a fair price in their mind and it is viewed as unethical to charge more than that even if some people are still willing to pay that price.
- sokoloff 4y ago
  People who have a notion of the price last month as being the "fair price" are welcome to not buy the limited supply of sawmill output until the price recovers to something that they find fair. If there is only capacity to produce Y 2x4x8s, while there's demand for 1.3xY, how do you propose to allocate them? Pricing serves to tend to allocate them to the place where they will create the most value. This is not water in a several-week-long shortage after a hurricane. These are building supplies for several-quarters-long chronic shortages. Delaying having drinkable water is not feasible. Delaying building is.
  - slg 4y ago
    > Pricing serves to tend to allocate them to the place where they will create the most value. No, price just puts a floor on the value creation required. It doesn’t actually enforce the efficient use of scarce resources. Beyond that floor, higher prices tends to allocate goods to the people with the most money.
  - throw_a_grenade 4y ago
    > Pricing serves to tend to allocate them to the place where they will create the most value. Yeah, because my house is more valuable than yours, as exemplified by the fact that it costs more money to buy lumber for it, so it can create more value. Clearly I'm a more valuable human than you (because I've got more money), and I deserve better and more valuable house.
- hcurtiss 4y ago
  There was no supply shock. In the last three years, there was more lumber produced than ever. It was a demand shock driven by federal stimulus. And, again, what were we supposed to do? Tell the highest bidder we wouldn't sell to them? And then what? Lottery our lumber to lower bidders? That's ridiculous.
bcrl 4y ago
Lumber is not in quite the same boat as everything else: virtually every year the US reenacts protectionist import policies banning Canadian softwood lumber from being imported. The easiest way to lower lumber prices is to allow imports of Canadian lumber to resume.
- throwayyy479087 4y ago
  Canada cuts old growth. We don't. Until they quit, the import ban is very reasonable.
  - deleted 4y ago
    [deleted]
  - bcrl 4y ago
    Canada also replants the old growth that has been cut. Not sure what more people expect to be done. It's not like the US didn't cut their old growth in the past.
    - throwayyy479087 4y ago
      I expect them to leave it alone. We leave ours alone and Canada is supposed to be the more enlightened ones.
      - bcrl 4y ago
        That's a fantastical viewpoint that borders on hypocrisy if you look at what the US did over the past 300 years. Forestry is quite sustainable when old growth trees are re-planted with new trees that can be harvested in a few decades. It's not like oil, gas or minerals where once it's gone it is never coming back. Americans seems to be completely fine with exploiting those non-renewable resources until they're gone forever.
        throwayyy479087 4y ago
        That's exactly how old growth works - once it's gone, it's gone forever. https://www.theguardian.com/environment/gallery/2021/apr/16/forests-felling-swedens-ancient-trees-biodiversity-sami-environment https://www.theguardian.com/environment/gallery/2021/apr/16/... I promise, spend time in old growth vs forest cleared in the last 150 years. They're completely different places.
mhuffman 4y ago
> I work in the lumber business. We always, every day, at all times, sell our lumber to the highest bidder. This is auction-style pricing. Good for lumber and some other commodities, but not great if you want to buy eggs, bread, medicine, or gas on the way to work. >We always sell to the highest bidder. I have no idea how we'd even do it otherwise -- a lumber lottery? All of this reporting about corporate greed is truly dumb. Well, the other way to sell it is to put a price on it and sell it to the first person willing to pay that price! You mentioned that you have a lot of competition. That along with auction-style pricing will normally get very close the the WTP ("ideal") price of a product. This is not always possible. It is usually difficult to dial in the "right" price of a consumer product. They can just not buy your chips or cheese! It is no big issue for them and the psychological effect of raising prices for no reason will cause just that reaction. That is why shrinkflation has been a thing. Imagine having to outbid someone at the grocery store for milk. Or having to outbid someone at the pharmacy for your child's insulin. You can see why certain products cannot be sold to people that way. Another way of looking at this whole situation is that every company is greedy to some extent. Pricing is hard. And they took advantage of certain events and situations to try new pricing. Many lied about why (claiming supply issues, because saying "we just want more of your money" doesn't sit well with people), which is not cool. If the new pricing sticks then it is probably closer to the "real" price. If it is too high, people will not buy the products and the price may go back down. I say "may" because there is always the possibility that selling fewer items at a higher price might produce more end profit than selling more items at a lower price.
- hcurtiss 4y ago
  And what price would we choose? Yesterday's price? Last year's price? And if we sold out immediately, what then? Would we just have a race every morning for buyers to secure the prior day's production? Why wouldn't we increase price and see if we sold out again? And do the same the next day? You'd quickly wind up at the same place -- that is, charging what the market will bear. And while I was doddling along, my many competitors would be selling to the highest bidder, then using that money to bid up the logs I have to buy, thereby putting me out of business.
  - 4y ago
tangjurine 4y ago
Maybe you don't understand how the average person thinks of corporations, if you think all this reporting about corporate greed is so dumb. There's all this reporting about corporate greed because the average person think corporations wouldn't do this, and that it is quite bad for corporations to do this. Or that the media is making a mountain out of a molehill, like they often do.
kevstev 4y ago
I agree with your overall post, but the demand was likely less driven by federal stimulus, than everyone being stuck home and looking around and realizing maybe its time to finally fix that fence/deck, and knock out that project I have had on the to-do list for years now... I mean maybe the injection of the stimulus helped turbocharge it, but three years ago virtually all of my discretionary spending just stopped overnight. There were no restaurants or movies to go to, practically all activities were canceled, etc. I mean its a real indictment of the state of America if a $1200 check can just radically reshape the economy. I guess its possible the even larger corporate checks were a factor here too, but I was really surprised that restaurants and other establishments didn't take the time as an opportunity to remodel or update, but obviously there was a lot of fear, probably a lack of willing workers, etc that prevented a lot of that. As a personal anecdote, I didn't receive any stimulus funds of any sort, but thought a nice covid-safe project would be to get my driveway redone- its a pretty simple outdoor concrete driveway, but no one would do this in all of 2020. I still can't get anyone to do my punch list of small $5-15k projects.
- ROTMetro 4y ago
  The demand was driven by REQUIRED construction to meet safety measures. Instead of the attack on 'free money' he thinks he is making he is showing that his company profited from big government (IE rent seeking).
  - kevstev 4y ago
    I am sorry, I don't understand- can you explain this? What construction was required for safety measures? Especially such that required wood specifically?
    - gcr 4y ago
      In NYC, some restaurants could reopen and conduct business as usual if they were classified as outdoor venues. This interacted oddly with another regulation that let a restaurant count as “outdoor” if part of its seating area had outdoor seats, so you had a lot of restaurants in the middle of the bustling city build these gazebo-type structures that put some number of tables right on the sidewalk in the midst of pedestrian foot traffic. For a small restaurant owner, the combination of these two loopholes created an intense pressure where building out this outdoor seating was simply a requirement of doing business
fallingfrog 4y ago
OK, but lumber isn't a monopoly controlled market, whereas a lot of other things in this country (medications, eggs, real estate recently, power, lysine, cable internet) are and are therefore subject to price fixing. I remember that the day before gmail went into beta, yahoo mail was charging 25 dollars a month for 100mB of storage. Gmail went beta and offered 1 GB for free, and the next day, yahoo mail offered the same thing. They always could have done that, they just had no competition to force them to do it. So they charged artificially inflated prices. This is what many older people don't understand. Back when they were young, there were many competing businesses in many fields, but now, there are often one or a small number, and they engage in widespread price gouging. Because they can. This is the natural evolution of a capitalist economy- no conspiracy is required. The point of competition is, after all, to win, and after you win, you get to set the price of goods and services to be whatever you want it to be. Just ask Martin Skreli. Price fixing in this country is ubiquitous and standard practice. In that case, sometimes the government can step in and introduce competition to a market where there is none- as California is doing to insulin- or they can regulate prices- as they do with power.
- vba616 4y ago
  >This is what many older people don't understand. If you remember before gmail, then you are ancient. Tell us, gramps, more about these $25/month Yahoo! email accounts.
  - fallingfrog 4y ago
    I’m 43, gmail was in beta when I was a teenager. I’m gen x, born 1 year too early to be a millennial. It was just an example. I think it’s a pretty good example, I remember thinking, wait, yesterday it was 25 a month and now you get 10 times as much for free?? How does supply and demand explain that? Anyways the people making most of the decisions in our society are 30 years older than me.
ROTMetro 4y ago
If the pandemic MANDATEs new isolation systems, I have to build them, whether you charge me a fair price for lumber I am now required to purchase or you choose to jack the price up. My only other option is to CLOSE MY BUSINESS. You definitely price gauged, your company acted shady and is not a responsible member of society. Flat out. Period. You took advantage of government mandated demand that was in response to keeping people safe in order for you to make more $$$. Your business is a profiter at others expense.
cudgy 4y ago
Lumber is a homogenous commodity in a transparent market that is auction driven, so of course it will be more difficult to control pricing … there is little pricing power. Now, your iPhone, prescription drugs, favorite personal products, chicken, meat and eggs are a different story. These markets are controlled by a few dominant producers that distribute through tightly controlled retail markets and hold great pricing power.
- hcurtiss 4y ago
  Yet, even with so little pricing power, lumber witnessed extraordinary price increases. Why would we expect anything different in other product categories? If anything, most products witnessed less price inflation than lumber. My point is that lumber makes for an excellent case-study in demand driven inflation. Everyone wants to point to supply shortages and cartelization -- and greedy corporations -- when given what we saw in commodity pricing, there's plenty of reason to conclude the rest of the market was adjusting rationally in the face of increased demand and money supply, and without collusion or monopoly influence.
  - cudgy 4y ago
    Lack of pricing power does not mean that the fundamental forces driving prices cannot have an impact like increased prices. It means that the industry/company/supplier cannot solely or significantly control the price. Lumber initially shot up if I recall due to a supply issue when covid caused mills to shut down with limited labor supply and even outright restrictions to operation by local governments. It subsequently whipsawed to much lower prices once mills came back online as evidenced by the volatile lumber spot prices shown here: https://markets.businessinsider.com/commodities/lumber-price https://markets.businessinsider.com/commodities/lumber-price As for corporate profits and their impact on recent inflation, see the following article which states: “Since the trough of the COVID-19 recession in the second quarter of 2020, overall prices in the NFC sector have risen at an annualized rate of 6.1%—a pronounced acceleration over the 1.8% price growth that characterized the pre-pandemic business cycle of 2007–2019. Strikingly, over half of this increase (53.9%) can be attributed to fatter profit margins, with labor costs contributing less than 8% of this increase. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth and labor costs over 60% …” https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-...

draw_down 4y ago

[dead]

superkuh 4y ago

Maybe for lumber. But the grocer CEOs are literally on record on a recorded phone conference explicitly stating that yes, they use inflationary periods to cover intentional price jacking because the customers won't revolt. https://pluralistic.net/2021/11/20/quiet-part-out-loud/ https://pluralistic.net/2021/11/20/quiet-part-out-loud/ https://pluralistic.net/2023/03/11/price-over-volume/ https://pluralistic.net/2023/03/11/price-over-volume/

hcurtiss 4y ago
I admit I don't know much about the grocery business. But you make it sound like those phone conferences were recorded surreptitiously, when in reality they were just their public earnings calls. And, by my read, they were saying that the consumer was willing to pay more and, in an effort to preserve their margin given increased supplier pricing, they were increasing store pricing. None of that strikes me as surprising. How else are they to set their pricing, other than to charge what people are willing to pay? At some point, large margins will cause more participants to enter the market, driving down pricing. Without that price signal, supply would never increase, leading either to increased prices or shortages. This is all Econ 101. I agree that a monopoly position can compromise market dynamics, and maybe that's the case with grocers, but I don't see that in the articles you link.
- daveguy 4y ago
  Nowhere in the post you replied to is an implication that the record was recorded surreptitiously. It explicitly says, "on record."
- aerotwelve 4y ago
  If they were only increasing prices to a degree that covered their (temporary) higher costs, they wouldn't be making record profits. Since they generally brag on these calls about their record-breaking profits, and say that their record-breaking profits are linked to the fact that they raised prices, we can safely deduce that they're increasing prices more than they had to.
  - ToValueFunfetti 4y ago
    No clue about the general topic, but if you hold margins constant during inflation, you should expect record-breaking nominal profits by default.

93po 4y ago

The article is specifically saying that in instances like yours, the problem isn't the large demand driving up prices - it's that businesses are driving it up even beyond the natural demand price having been emboldened by the former.

hcurtiss 4y ago
But I have no means of doing that. It's a commodity market, and there are many, many suppliers competing with me, and ruthlessly. As pricing rose, we even saw surges in European imports. The only thing that drove up lumber prices was extraordinary demand. And if that happened for lumber, I'm inclined to believe that was the driving factor in other product prices too.
- iamwpj 4y ago
  If it's commodity, then it's traded on futures. Distributors would sell to retailers who shape consumer-facing pricing to maintain stability. Essentially, Home Depot sells out, looks to their supplier/distributor who says it'll be a few weeks to get enough to meet demand, commodity prices jump as demand increases for short term supply and Home Depot raises their prices. This is a fabricated sequence of events. It's the SEC/CME/FTC, etc's job to verify the following in this example: 1. Did Home Depot raise their prices _more_ than was necessary to respond to increasing consumer demand and decrease supply? 2. Did the suppliers stockpile or falsely report their availability to result in over charging? 3. Did pricing between sawmills/loggers and suppliers increases proportionally? Did pricing between retail and suppliers increase proportionally? These questions will help to understand possible unnatural inflation was introduced. In the sequence of events the sawmill behavior is just a single indicator along the way.
  - hcurtiss 4y ago
    Some lumber is traded on futures, some is not, but nearly all of it is manufactured to universal specifications (set dimensions and grades), making it a commodity market. Home Depot and the other box stores were constantly running out. We struggled for several quarters to keep the distribution centers supplied. The box stores were buying lumber everywhere they could. If they were price gouging, the consumer certainly didn't flinch, as quarter after quarter we witnessed historic take-away.

slg 4y ago

What you describe is the definition of price gouging. A global disaster occurred which caused supply shocks, demand shocks, or both in various industries which led to companies increasing their prices as a response. Society only has so much tolerance for selling to the highest bidder, especially when a product is more of a necessity than a luxury. People still have a fair price in their mind and it is viewed as unethical to charge more than that even if some people are still willing to pay that price.

sokoloff 4y ago
People who have a notion of the price last month as being the "fair price" are welcome to not buy the limited supply of sawmill output until the price recovers to something that they find fair. If there is only capacity to produce Y 2x4x8s, while there's demand for 1.3xY, how do you propose to allocate them? Pricing serves to tend to allocate them to the place where they will create the most value. This is not water in a several-week-long shortage after a hurricane. These are building supplies for several-quarters-long chronic shortages. Delaying having drinkable water is not feasible. Delaying building is.
- slg 4y ago
  > Pricing serves to tend to allocate them to the place where they will create the most value. No, price just puts a floor on the value creation required. It doesn’t actually enforce the efficient use of scarce resources. Beyond that floor, higher prices tends to allocate goods to the people with the most money.
- throw_a_grenade 4y ago
  > Pricing serves to tend to allocate them to the place where they will create the most value. Yeah, because my house is more valuable than yours, as exemplified by the fact that it costs more money to buy lumber for it, so it can create more value. Clearly I'm a more valuable human than you (because I've got more money), and I deserve better and more valuable house.
hcurtiss 4y ago
There was no supply shock. In the last three years, there was more lumber produced than ever. It was a demand shock driven by federal stimulus. And, again, what were we supposed to do? Tell the highest bidder we wouldn't sell to them? And then what? Lottery our lumber to lower bidders? That's ridiculous.

bcrl 4y ago

Lumber is not in quite the same boat as everything else: virtually every year the US reenacts protectionist import policies banning Canadian softwood lumber from being imported. The easiest way to lower lumber prices is to allow imports of Canadian lumber to resume.

throwayyy479087 4y ago
Canada cuts old growth. We don't. Until they quit, the import ban is very reasonable.
- deleted 4y ago
  [deleted]
- bcrl 4y ago
  Canada also replants the old growth that has been cut. Not sure what more people expect to be done. It's not like the US didn't cut their old growth in the past.
  - throwayyy479087 4y ago
    I expect them to leave it alone. We leave ours alone and Canada is supposed to be the more enlightened ones.
    - bcrl 4y ago
      That's a fantastical viewpoint that borders on hypocrisy if you look at what the US did over the past 300 years. Forestry is quite sustainable when old growth trees are re-planted with new trees that can be harvested in a few decades. It's not like oil, gas or minerals where once it's gone it is never coming back. Americans seems to be completely fine with exploiting those non-renewable resources until they're gone forever.
      - throwayyy479087 4y ago
        That's exactly how old growth works - once it's gone, it's gone forever. https://www.theguardian.com/environment/gallery/2021/apr/16/forests-felling-swedens-ancient-trees-biodiversity-sami-environment https://www.theguardian.com/environment/gallery/2021/apr/16/... I promise, spend time in old growth vs forest cleared in the last 150 years. They're completely different places.

mhuffman 4y ago

> I work in the lumber business. We always, every day, at all times, sell our lumber to the highest bidder. This is auction-style pricing. Good for lumber and some other commodities, but not great if you want to buy eggs, bread, medicine, or gas on the way to work. >We always sell to the highest bidder. I have no idea how we'd even do it otherwise -- a lumber lottery? All of this reporting about corporate greed is truly dumb. Well, the other way to sell it is to put a price on it and sell it to the first person willing to pay that price! You mentioned that you have a lot of competition. That along with auction-style pricing will normally get very close the the WTP ("ideal") price of a product. This is not always possible. It is usually difficult to dial in the "right" price of a consumer product. They can just not buy your chips or cheese! It is no big issue for them and the psychological effect of raising prices for no reason will cause just that reaction. That is why shrinkflation has been a thing. Imagine having to outbid someone at the grocery store for milk. Or having to outbid someone at the pharmacy for your child's insulin. You can see why certain products cannot be sold to people that way. Another way of looking at this whole situation is that every company is greedy to some extent. Pricing is hard. And they took advantage of certain events and situations to try new pricing. Many lied about why (claiming supply issues, because saying "we just want more of your money" doesn't sit well with people), which is not cool. If the new pricing sticks then it is probably closer to the "real" price. If it is too high, people will not buy the products and the price may go back down. I say "may" because there is always the possibility that selling fewer items at a higher price might produce more end profit than selling more items at a lower price.

hcurtiss 4y ago
And what price would we choose? Yesterday's price? Last year's price? And if we sold out immediately, what then? Would we just have a race every morning for buyers to secure the prior day's production? Why wouldn't we increase price and see if we sold out again? And do the same the next day? You'd quickly wind up at the same place -- that is, charging what the market will bear. And while I was doddling along, my many competitors would be selling to the highest bidder, then using that money to bid up the logs I have to buy, thereby putting me out of business.
- 4y ago

tangjurine 4y ago

Maybe you don't understand how the average person thinks of corporations, if you think all this reporting about corporate greed is so dumb. There's all this reporting about corporate greed because the average person think corporations wouldn't do this, and that it is quite bad for corporations to do this. Or that the media is making a mountain out of a molehill, like they often do.

kevstev 4y ago

I agree with your overall post, but the demand was likely less driven by federal stimulus, than everyone being stuck home and looking around and realizing maybe its time to finally fix that fence/deck, and knock out that project I have had on the to-do list for years now... I mean maybe the injection of the stimulus helped turbocharge it, but three years ago virtually all of my discretionary spending just stopped overnight. There were no restaurants or movies to go to, practically all activities were canceled, etc. I mean its a real indictment of the state of America if a $1200 check can just radically reshape the economy. I guess its possible the even larger corporate checks were a factor here too, but I was really surprised that restaurants and other establishments didn't take the time as an opportunity to remodel or update, but obviously there was a lot of fear, probably a lack of willing workers, etc that prevented a lot of that. As a personal anecdote, I didn't receive any stimulus funds of any sort, but thought a nice covid-safe project would be to get my driveway redone- its a pretty simple outdoor concrete driveway, but no one would do this in all of 2020. I still can't get anyone to do my punch list of small $5-15k projects.

ROTMetro 4y ago
The demand was driven by REQUIRED construction to meet safety measures. Instead of the attack on 'free money' he thinks he is making he is showing that his company profited from big government (IE rent seeking).
- kevstev 4y ago
  I am sorry, I don't understand- can you explain this? What construction was required for safety measures? Especially such that required wood specifically?
  - gcr 4y ago
    In NYC, some restaurants could reopen and conduct business as usual if they were classified as outdoor venues. This interacted oddly with another regulation that let a restaurant count as “outdoor” if part of its seating area had outdoor seats, so you had a lot of restaurants in the middle of the bustling city build these gazebo-type structures that put some number of tables right on the sidewalk in the midst of pedestrian foot traffic. For a small restaurant owner, the combination of these two loopholes created an intense pressure where building out this outdoor seating was simply a requirement of doing business

fallingfrog 4y ago

OK, but lumber isn't a monopoly controlled market, whereas a lot of other things in this country (medications, eggs, real estate recently, power, lysine, cable internet) are and are therefore subject to price fixing. I remember that the day before gmail went into beta, yahoo mail was charging 25 dollars a month for 100mB of storage. Gmail went beta and offered 1 GB for free, and the next day, yahoo mail offered the same thing. They always could have done that, they just had no competition to force them to do it. So they charged artificially inflated prices. This is what many older people don't understand. Back when they were young, there were many competing businesses in many fields, but now, there are often one or a small number, and they engage in widespread price gouging. Because they can. This is the natural evolution of a capitalist economy- no conspiracy is required. The point of competition is, after all, to win, and after you win, you get to set the price of goods and services to be whatever you want it to be. Just ask Martin Skreli. Price fixing in this country is ubiquitous and standard practice. In that case, sometimes the government can step in and introduce competition to a market where there is none- as California is doing to insulin- or they can regulate prices- as they do with power.

vba616 4y ago
>This is what many older people don't understand. If you remember before gmail, then you are ancient. Tell us, gramps, more about these $25/month Yahoo! email accounts.
- fallingfrog 4y ago
  I’m 43, gmail was in beta when I was a teenager. I’m gen x, born 1 year too early to be a millennial. It was just an example. I think it’s a pretty good example, I remember thinking, wait, yesterday it was 25 a month and now you get 10 times as much for free?? How does supply and demand explain that? Anyways the people making most of the decisions in our society are 30 years older than me.

ROTMetro 4y ago

If the pandemic MANDATEs new isolation systems, I have to build them, whether you charge me a fair price for lumber I am now required to purchase or you choose to jack the price up. My only other option is to CLOSE MY BUSINESS. You definitely price gauged, your company acted shady and is not a responsible member of society. Flat out. Period. You took advantage of government mandated demand that was in response to keeping people safe in order for you to make more $$$. Your business is a profiter at others expense.

cudgy 4y ago

Lumber is a homogenous commodity in a transparent market that is auction driven, so of course it will be more difficult to control pricing … there is little pricing power. Now, your iPhone, prescription drugs, favorite personal products, chicken, meat and eggs are a different story. These markets are controlled by a few dominant producers that distribute through tightly controlled retail markets and hold great pricing power.

hcurtiss 4y ago
Yet, even with so little pricing power, lumber witnessed extraordinary price increases. Why would we expect anything different in other product categories? If anything, most products witnessed less price inflation than lumber. My point is that lumber makes for an excellent case-study in demand driven inflation. Everyone wants to point to supply shortages and cartelization -- and greedy corporations -- when given what we saw in commodity pricing, there's plenty of reason to conclude the rest of the market was adjusting rationally in the face of increased demand and money supply, and without collusion or monopoly influence.
- cudgy 4y ago
  Lack of pricing power does not mean that the fundamental forces driving prices cannot have an impact like increased prices. It means that the industry/company/supplier cannot solely or significantly control the price. Lumber initially shot up if I recall due to a supply issue when covid caused mills to shut down with limited labor supply and even outright restrictions to operation by local governments. It subsequently whipsawed to much lower prices once mills came back online as evidenced by the volatile lumber spot prices shown here: https://markets.businessinsider.com/commodities/lumber-price https://markets.businessinsider.com/commodities/lumber-price As for corporate profits and their impact on recent inflation, see the following article which states: “Since the trough of the COVID-19 recession in the second quarter of 2020, overall prices in the NFC sector have risen at an annualized rate of 6.1%—a pronounced acceleration over the 1.8% price growth that characterized the pre-pandemic business cycle of 2007–2019. Strikingly, over half of this increase (53.9%) can be attributed to fatter profit margins, with labor costs contributing less than 8% of this increase. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth and labor costs over 60% …” https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-...