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Comment by rahimnathwani | Hacker News Reader

"There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product."

People hoarding aren't trying to create artificial scarcity. They are buying because they anticipate scarcity, and want to either (i) be prepared, or (ii) profit from resale.

Hoarding has caused shortages which, in turn, justify the original hoarding. This is a sad situation, but capping prices isn't a solution. If anything, I would expect higher prices would discourage hoarding, resulting in a more even allocation of TP/whatever between people.

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> People hoarding aren't trying to create artificial scarcity

https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...

> On March 1, the day after the first coronavirus death in the United States was announced, brothers Matt and Noah Colvin set out in a silver S.U.V. to pick up some hand sanitizer. Driving around Chattanooga, Tenn., they hit a Dollar Tree, then a Walmart, a Staples and a Home Depot. At each store, they cleaned out the shelves. Over the next three days, Noah Colvin took a 1,300-mile road trip across Tennessee and into Kentucky, filling a U-Haul truck with thousands of bottles of hand sanitizer and thousands of packs of antibacterial wipes, mostly from “little hole-in-the-wall dollar stores in the backwoods,” his brother said. “The major metro areas were cleaned out.”

Another example:

https://www.thestar.com/news/canada/2020/03/13/amazon-blocks...

> Ranga said that a six-pack of wipes, which might sell for $20 at Costco, could fetch four times that online, representing a “big opportunity.” He said the couple had spent about $70,000 on Lysol wipes and liquid cleaners over the past few weeks

I don't think someone buying $70k of Lysol is doing it because they're worried they'll run of enough for themselves!

And nobody would buy from them if there was stock remaining at Costco.

I don't think "hoarding" is the right term to describe this behavior. "Profiteering", "scalping", "gouging", etc.

"Arbitrage."

I think the argument being made is that these individuals are creating scarcity as a byproduct of their intended goal, not as a goal in itself. If they wanted to profit from the scarcity they induced, they would attempt to resell the items they bought in the original locales rather than at online venues.

I think Costco would void their membership pretty quick if they were reselling right there in the parking lot.

Edit -- but apparently that's not enough to deter some from trying:

https://www.reddit.com/r/vancouver/comments/fimz9k/was_leavi...

They can't realize their goal of profit if the scarcity doesn't exist, now can they?

Not everyone is scalping, but everyone is buying more for themselves because they're suddenly worried about future supply. There would still be a temporary shortage without the scalpers, maybe slightly less severe.

How much TP do people really need for themselves? Why are the shelves cleared out of TP and not, I don't know, dish detergent? Why is its future supply more in danger than any other good? If everyone coordinated buying a month's supply of TP one weekend, would all the stores really run out? I'm not so sure... At Costco it's hard to buy less than one month's supply at a time already, unless you have a big family

If a pack of TP lasted as long as a jug of dish detergent, it wouldn't fit in a car trunk. In volume/day TP is second only to water and food and much higher than any other staples.

If a million people normally buy one pack per month spread out evenly on weekends, but all of them think hey, maybe it's a good idea to get two packs this weekend, that's 2M packs where they had stocked for typical sales of 1M / (52 / 12) = 230K.

> People hoarding aren't trying to create artificial scarcity. They are buying because they anticipate scarcity, and want to either (i) be prepared, or (ii) profit from resale

How would (ii) be a profitable activity if buying in bulk wasn't creating artificial scarcity? I mean, I guess you could argue that the scarcity isn't "artificial", but like, when someone is literally buying more hand sanitizer than they could possibly want to actual use themselves, that seems pretty artificial to me.

It's a profitable activity if there is scarcity in the future, regardless of whether I can influence that scarcity.

smallnamespace's made the same point as I made in the portion you quoted, but made it much more clearly:

"To a very good approximation, the marginal impact of any hoarders on the scarcity of a product is zero. Hoarders are not trying to drive scarcity themselves, they are trying to buy a product now because they think the price will rise, but they're not trying to make the price rise by buying it. The distinction is important!"

Both you and smallnamespace are using the same strawman. Who cares about the marginal impact of an individual's actions?

The situation in practice is dead simple: widespread hoarding is creating ongoing shortages of various products, and some of these hoarders are using that temporary scarcity to profit from other peoples' desperation. This is entirely predictable and uncomplicated, and it's both ridiculous and irrelevant to quibble over whether the profiteers are "trying to drive" the artificial scarcity to which they're contributing. I honestly don't even know what you're arguing about.

'Who cares about the marginal impact of an individual's actions?'

Someone who is trying to understand their motivation (what they're trying to do).

'it's both ridiculous and irrelevant to quibble over whether the profiteers are "trying to drive" the artificial scarcity to which they're contributing'

It's not irrelevant. I responded directly to a claim in the comment to which I replied. No tangent.

'I honestly don't even know what you're arguing about.'

I'm really interested to know why some folks (not you) are so insistent that the hoarders/profiteers are trying to create a situation (rig the game) rather than just being players in it. I thought the logic of my original point was pretty obvious and, as you say, it's not even that interesting compared with the wider point about the collective effects of the individual actions. So why are people so interested in this small point?

it's difficult for speculators to create artificial scarcity for products that are being actively produced. producers will always be able to undercut them making the whole matter pointless.

Higher prices may encourage hoarding, as people might see the higher prices as a sign of scarcity and want to buy as much as possible before prices increase further or stores run out.

But they also decrease hoarding in that the higher the price, the fewer items people can afford to buy and hoard.

Hoarding is a temporally displaced behavior that begins before crisis happens. Artificial scarcity is created in pockets spurned on by time itself. Artificial Scarcity is capable of riding Real Demand as long as Real Demand exists.

I believe the poster was referring to bad actors who have tried to buy up all the local supply so they can resell it at higher prices, not people just stocking up a bit on toiletries for their personal use. Yes, the latter can also cause a shortage but that’s not the cause of the ethical dilemma here nor is it the motivation for price gouging laws.

Yes, exactly: there's a definite distinction between hoarding from fear and hoarding for a desire to profit/exploit disasters. The latter just make the former worse in a disturbing feedback loop that has led to empty shelves.

If you know your actions are going to lead to shortages and you pursue them anyway to make profit (rather than meet your minimum personal needs), then you're absolutely trying to create it.

The statement's conclusion doesn't follow from its assumptions.

And, in any case, you ignored the point made myself and others in this thread, that any individual's actions have ~zero impact on whether there is a shortage. It's the collective result of many individual actions.

Your claim is BS. If someone is buying the whole stock of multiple store, of course they're having an impact now matter how strenuously you insist otherwise.

> If anything, I would expect higher prices would discourage hoarding

This is false. We are seeing artificial shortages due to hoarding that has already occurred. Higher prices would encourage hoarders to profit from their hoarding. I think it’s fair for people to stock up on a few weeks to a month’s worth of food and toiletries to avoid unnecessary trips to the store until they need to stock back up again, but if a hoarder bought way more than they’ll ever need and they can’t profit by selling their wares at higher prices, then they might as well just give them to those in need, or be left with a lifetime supply of toilet paper occupying their guest room.

The stores will restock. This is not a shortage due to production deficits. This is just people taking everything off the shelves as soon as they are restocked. These stores are just going to keep restocking and the panic buying will subside.

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