Sure. Jeff Bezos could also purchase and set on fire entirety of this year's agricultural production of California. Will he? Unlikely, as he has no need for it. Same with PPE: if there are so few PPEs that the ultra wealthy can buy up all supply just to cover their needs, or even 10 times their needs, the hospitals are screwed either way, because 10 times the needs of ultra wealthy is a few days of needs of a single hospital.
However, imagine a single parent who just lost their job because of COVID, and thus living on a very restricted income. Is this person less important than me? I don't think so, the world needs service workers a lot more than they need yuppie software engineers like me, but I'm still more likely to be able to afford the necessities.
This is always my problem with people who defend price gauging; there's always this hidden implication that a rich person is more deserving of something vital than a poor person. You are entitled to that opinion, but I fundamentally and completely disagree with you.
We don't have to like capitalism, sometimes even its proponents refer to it "the worst system except for all the others."
But usually the alternative to capitalism isn't perfection, it's something worse. Like a political boss who abuses his power to seize the goods and hand them out as political favors.
The big mistake with COVID-19 was telling individuals to boycott masks and that it was wrong to buy or wear them. We could have opened whole new factories for producing them by now, if only demand had been encouraged rather than suppressed.
It's not like I found this really obscure edge case. Almost 30% of America has lost their job in some capacity; this isn't just some weird contrived example, and it's dishonest to act like it is.
Service workers, at least in the US (I haven't lived anywhere else) are pretty damn vital to the US economy, but are also less likely to be able to afford price-gauged supplies like masks and hand-sanitizer than a yuppie like me. If we don't have some form of regulation to stop price guaging, we are sending a signal to 30% of America that they are simply less deserving of life than the yuppies that depend on them.
I don't particularly care about people hiking up the price of bread machines and video games and whatnot, but I cannot in good conscience defend people who do things that will lead to poor people dying.
EDIT: A few typos.
While Americans were being told not to buy them, organized groups were buy them out of American supply channels and shipping them to mainland China.
It would have been better if Americans had bought them and kept them around. They could have been used here by individuals, donated to care providers, or even (horrors) sold for a profit.
They didn't tell people to "boycott" masks, they said that they weren't effective at stopping COVID and that people in hospitals needed them more than the average citizen.
The initial research for masks indicated that they weren't helpful, due to Coronaviruses showing up on the outside of the masks after asking an infected person to cough. It wasn't until a few weeks later when they noticed that the petri dishes that the patients had coughed into had substantially more virus reproduction without masks than with the masks. The people doing the research weren't lying, it was a very logical sequence of events. Sometimes initial research implies an incorrect conclusion, that's why it's called "initial research" and not "conclusive research", which is why they "changed their minds" afterward. This is well documented and is not controversial [0]. The way you frame it, and the use of the word "boycott" is incredibly disrespectful to the people studying this.
One cannot claim that both A) masks are "not effective at stopping COVID" and B) "people in hospitals needed them more than the average citizen". It's a laughably obvious contradiction.
This is a lie (sorry, yeah, it is) pushed by people who wanted to bully individuals out of their own PPE in a misguided attempt to make up for the failure to plan by the larger organizations (government, healthcare orgs) that were responsible for doing so.
The reality is that masks are effective in stopping the transmission of coronaviruses and every country in Asia knew this from experience with SARS-1.
EDIT: If this isn't urging a boycott, what is? https://twitter.com/Surgeon_General/status/12337257852839321...
Of course you can, and it's not a contradiction. It's true for surgical masks, whose purpose is to prevent the wearer from spreading the infection around; you can apply social distancing in lieu of these masks, which is not possible for medical staff. It's also true for respirators, which require specialized training to be worn correctly, which is something the medical staff has, and regular citizens don't. And again, most people can use social distancing as a substitute.
The problem with masks was always that there just wasn't, and isn't, enough of them available to equip everyone. So governments had to prioritize, and healthcare workers need PPE more than most people not in healthcare. That doesn't justify downplaying the actual effectiveness; if it were up to me, I'd just say that yes, they're effective if properly used, and refocus the propaganda efforts on guilt-tripping society into donating all the hoarded PPEs to hospitals and clinics.
This isn't an argument that they're ineffective for stopping transmission. It's an argument that there are alternatives. And many people aren't/weren't able to fully social distance either, which is why masks were (and are) still useful. Recommending against N95 use while encouraging the use of cloth barriers was an easy, obvious step to take that our structurally incompetent public health agencies failed to do (among many, many other failings).
> It's also true for respirators, which require specialized training to be worn correctly, which is something the medical staff has, and regular citizens don't.
A California study showed that 65%[0] of healthcare workers apply respirators incorrectly; the population baseline is 72%. Your argument proves too much, unless you think that respirators are useless for doctors and all the complaints about PPE shortages were pointless whining.
The point here is that the evidence we had in February and early March was more than enough to make a sane decision on masks, reducing spread and individual risk while not exacerbating hospital shortages (in and of itself a symptom of institutional incompetence). It's beyond me why people are bending over backwards to avoid admitting the institutional stupidity the early days of the pandemic were wracked with.
I don't think it does. Even the stats you quoted show that respirators will be more effective, on average, for doctors, than they will be for general population. At the same time, protecting a medical worker will give you "more bang for your buck" than protecting a random citizen. You should also count in the probability of actual exposure to the virus, which for general population is low, and for the hospitals (both the workers and the hospitalized) is absurdly high. All of this points towards strongly prioritizing PPE supply for medical facilities.
> The point here is that the evidence we had in February and early March was more than enough to make a sane decision on masks, reducing spread and individual risk while not exacerbating hospital shortages
The evidence I saw directly late February/early March was that hospitals around the world were complaining that they have days' worth of PPE supplies and started to cancel elective procedures to conserve them, while the PPE market pretty much entirely dried up (beyond the price gougers offering their hoards on-line). Why hospitals didn't have stockpiles is another matter (and IMO has a lot to do with optimizing costs, and - in countries with public healthcare - cries for leaner governments, cutting out fat, making things more market-driven). But my point is, there was never enough PPE on the market for everyone; there was barely enough for medical workers and industrial use, both of which had predictable demand around which the whole supply chain stabilized. So some kind of action that prevents general population from buying up all PPE on the market was warranted - though I don't like the one taken, which was lying to people about the effectiveness.
Preventing general population buying up all PPE does not necessary require lying about its effectiveness.
This lie has second level effects because now many people think that wearing mask is not effective and it is difficult to implement mask wearing practice.
I know that it has been impossible at least in one country to get people to wear masks because of this.
It's not a complete contradiction. Masks are required by hospitals for many reasons other than Covid. The initial logic was if everyone bought out masks there may not be a supply for even these other cases.
Though, I agree this was needed because of their failure to plan. If there was better planning the mask supply would be a lot better. I personally believe they held off on recommending the general public to wear masks because they knew they didn't have supply for medical staff.
Also, come on, don't taunt people to downvote you. That's really not productive. It's also against the HN guidelines.
One can claim that N95 masks are effective at reducing infection rate of hospital staff when properly fitted, changed regularly and worn by people who are trained not to move them around, touch their faces etc etc.
One can also claim that masks which are not well fitted, worn by untrained individuals, who may wear them wrong and who may touch their faces more as a result of wearing them, could cause more harm than good.
No inconsistency there.
From your link:
> This experiment did not include N95 masks and does not reflect the actual transmission of infection from patients with COVID-19 wearing different types of masks. We do not know whether masks shorten the travel distance of droplets during coughing. Further study is needed to recommend whether face masks decrease transmission of virus from asymptomatic individuals or those with suspected COVID-19 who are not coughing.
Masks aren't some cutting-edge, space-age drug that may cause cancer. They're a piece of material placed across the nose and mouth, and have been in use for literally thousands of years. We have strong priors on their value in preventing the spread of respiratory diseases in general, and in the absence of proof of their ineffectiveness at doing so for Sars-CoV2, recommending their use was obviously the prudent course of action.
None of the available information, including the study you link, made it a good idea to recommend strongly and repeatedly against wearing masks, up to and including the Surgeon General exhorting "Seriously, people - STOP BUYING MASKS".
The midwit religious adherence to scientism on parts of the left has been one of the biggest cultural failures of the pandemic, a mirror image to parts of the right's knee-jerk distrust of experts. The scientific method is the greatest knowledge-generation engine that's ever existed, but it doesn't mean forfeiting our inability to reason about anything until there's a micro-targeted peer-reviewed trial. Reasoning under uncertainty is difficult, but our public health authorities have proven themselves to be incapable of fairly basic critical thinking. The idea that this is a "logical sequence of events" is beyond laughable.
Classic market economics in a vacuum.
Without the suppression of masks, mass chaos and social unrest would have ensued. The societal fear and unease was easily diverted towards non-essentials (TP, hand sanitizer) - proper public health advice could be given long after shelter-in-place, and thus societal order was established. People would have died had authorities came out the gate stating masks were critical to one’s health.
So many people forget that you have to control the population in times of exceptional fear and anxiety or at any stage you risk a partial or complete societal collapse.
Consider if there's a fixed supply X and Y people. (Y - X) people aren't going to get it. With rationing, the government is going to decide who is more deserving. Naturally, those government officials are going to decide that themselves are the most deserving.
This happens under every socialist system.
When the US government built nuclear shelters, who were they built for? Not you and me. They were built for government officials, and built with every luxury.
The next tier of the "deserving" will be the supporters of those government officials. Next will be the politically popular groups of people who will be more deserving.
Is that fair?
But without rationing, the supply of X will increase to the point where everyone can afford it.
And here I thought they were built for everyone. Oh wait, that was on the Soviet side, where you could expect to find a shelter in any given neighborhood (at least in larger cities). They likely weren't anywhere near as luxury, though.
> But without rationing, the supply of X will increase to the point where everyone can afford it.
That's an assumption that works long-term. In an emergency, you can consider supply as fixed. Ramping up production takes many weeks at best, and producers are unwilling to invest in it anyway, unless they can expect the emergency to last for all these weeks. There's no point in upgrading your manufacturing capacity if, by the time you're done, the demand will be back to normal. It's a point that was explicitly raised by at least one US medical supplies manufacturer in the last two months (probably many more, but I remember that one interview).
In an emergency, your choices are to either a) ration the goods, b) let speculators hoard all the supply and make it unavailable until pretty much the last minute (and a big chunk of it not even then), or c) freeze prices, preventing hoarders from speculating on them while still maintaining basic market mechanisms.
You could, but that would be a mistake.
Consider gas rationing. Everyone gets 5 gallons. But everyone's utility for gas is different. Some need 10 gallons, some need 1 gallon. This reduces availability of gas, because the 1 gallon person is going to hoard the extra 4 "just in case".
Don't believe me? Check out gas rationing in the US in WW2.
Letting the price float means gas is reallocated from the least useful to the most useful uses, effectively increasing the supposedly "fixed" supply. (Hoarding is the least useful of the least useful uses, even if you're just hoarding the part of your ration you don't need.)
As for the Soviet Union, it was notorious for housing shortages. I bet if the supply of air raid shelters had been tested in an emergency, you and I both know it would be insufficient for those who weren't Party members.
> speculators hoard all the supply and make it unavailable
Speculators don't profit if they don't make it available.
Need to read up on that. I'd assume you'd get your allotment in form of a token, which you could trade for something else if you didn't need it. While this wouldn't solve the problem of the price gougers, it would at least ensure a baseline minimum for everyone.
> Speculators don't profit if they don't make it available.
Speculators profit best when they make it available at the point when they can command the highest price, not at the point where it could do most good to mitigate the crisis that's driving the prices up.
Black market gasoline was illegal, but of course that didn't stop a black market from happening, and at much higher prices than the market price would have been.
> Speculators profit best when they make it available at the point when they can command the highest price, not at the point where it could do most good to mitigate the crisis that's driving the prices up.
Those two points are the same.
Consider the problem you're having. We'll stipulate this person isn't less important than you. But there isn't enough supply for both, so one of you will go without. If we use pricing to determine who it is, the result is arbitrary -- not based on importance. But if we sell at the non-shortage price until we run out, the result is still arbitrary -- you haven't improved it, it's still not based on importance and someone equally deserving still goes without. The arbitrary method used is different, but it's neither worse nor better.
Meanwhile the higher prices deter the person who was going to go in and buy out the entire store, because they can't afford to do that at the higher price, and then the supply is at least more evenly distributed even if it isn't perfectly evenly distributed.
Better yet, the person who had foresight and spent resources to create a stockpile ahead of time then has a large financial incentive to distribute it instead of continuing to hoard it, and people have a greater incentive to do that again next time (which is good).
Many of the supplies issues aren’t due to actual limited supply but due to behavior patterns that stem from either fearing that something would run out or people taking advantage of the situation buy all the toilet paper in town and set your own price on the black/grey market.
The problem isn’t people having the foresight to spend resources it’s people creating artificial shortages. This isn’t the type of behavior you want to encourage.
This is also not a free market, the free market doesn’t work at short time frames and emergency situations.
At which point you're assuming everybody has the same need, which is completely wrong. Someone walks into the store to buy on behalf of six dozen people because their ordinary supplier is out of stock and you won't give them any more than what you will a single individual. Requiring every individual to come into the store one by one is both highly inefficient and, in this context, the exact opposite of social distancing.
Meanwhile every individual who comes into the store for unrelated reasons then also buys the individual limit on the scarce good even when they don't need it, because the price is still low.
> Many of the supplies issues aren’t due to actual limited supply but due to behavior patterns that stem from either fearing that something would run out or people taking advantage of the situation buy all the toilet paper in town and set your own price on the black/grey market.
Which higher prices prevent, because hoarding large quantities is very expensive when the price is high, and arbitrage is unprofitable because you can't buy low and sell high if you have to buy at the higher price.
> The problem isn’t people having the foresight to spend resources it’s people creating artificial shortages. This isn’t the type of behavior you want to encourage.
You can't corner the market on a global commodity by buying out local stores. If it's selling for $50 where you are and $5 in other places then enterprising people will get in their cars and undercut you until the price is much closer to uniform.
Meanwhile to make money the hoarders would essentially need to act as a cartel (not selling in order to keep the prices even higher), but with uncoordinated actors everybody has the incentive to defect and sell as soon as the price is above fair market value. If you're keeping prices high by hoarding that means somebody is going to be left holding the bag because the price came back down before they unloaded their hoard, and everybody has the incentive to sell first and not be that guy. The hoarder's greatest risk is a container ship full of product comes into port and resolves the shortage overnight -- and the higher the price the more likely that happens.
> This is also not a free market, the free market doesn’t work at short time frames and emergency situations.
There is no evidence for this. The amount of time it takes for people to respond to price signals and arbitrage opportunities is measured in hours, not days or weeks.
The assumption that everyone has the same need is less wrong than a system that implicitly assumes need is proportional to disposable income. Someone walking into a retail store to buy on behalf of six dozen people is theoretically possible, but definitely is not common, and almost certainly less common than someone trying to hoard excess supplies for personal use.
you keep mentioning disposable income, as tho that's a measure that determines buying power. It's not. The measure is available funds, regardless of source.
A person with a lot of available funds _do_ have a higher claim than someone who doesn't. The source of the funds may be their prior work and savings (aka, disposable funds), or it could be funds collected from many people (such as donations, or family pooling funds). It is not clear how you can make a distinction between many people pooling their funds, vs somebody who has collected large amount of funds prior (from income or wealth). This is why price fixing doesn't work well, except under quite exceptional circumstances (e.g., all transport infrastructure is disrupted), in which case, rationing by decree works better than price fixing.
But even if shopping on behalf of the entire neighborhood is common, is protecting that strategy more important than deterring hoarders and preserving the ability of underprivileged people to buy what they need for themselves?
It's easier to game, (eg. buy going to multiple stores or at different times of day) and it only solves the hoarding problem. Price increases solve hoarding, allocation, and encourage new production.
Yes, if prices are stable. But the market is not a vacuum of nothing but prices.
If the price is high and dPrice/dt has been zero for a year, then yes, what you're saying is true.
But if dPrice/dt is positively high, the market can overreact to the change from fear of missing out on the current price, and fear of missing out on an investment opportunity.
It's very similar to the price of a stock crashing. People don't know where the bottom is. Fear takes over. And the price will stop dropping when the fear stops.
Next time your area is hit with a widespread electric outage and all the generators are sold out, call Home Depots 500 and 1000 miles away. Chances are they’ll have a normal supply on-hand. Maybe some of those will find their way into your area, but I can be pretty damn sure it would happen faster if they were selling at 1.5x the normal price in your area.
Covid made this very clear. Countries that limited price gouging had far less panic buying and far fewer actual shortages than countries that ignored it.
Far from "creating supply" price gouging is read as a signal that supplies are precarious and may run out at any moment. So buyers tend to stock up, just in case. The result is widespread shortages.
And of course generators are useless if they're >500 miles away. No affordable markup is going to get essential goods into an emergency zone if they have to be trucked a long way.
Bottom line is you're going to get much better results from organised community preparedness and intelligent collective response than from a few random spivs hoping to make some extra dollars.
Where I live (NYC) there was pretty extreme panic buying despite laws against gouging. It’s only recently become easy to find toilet paper, masks, etc.
> allow supermarkets to raise the prices.
That would just price out anyone without $2k credit.
If the store itself is allowed to raise prices then there is no opportunity for profiteering because they'd have to pay the store the market price to begin with. The arbitrage opportunity only exists as a result of the price controls.
> That would just price out anyone without $2k credit.
It would price them out of buying out the whole store, not price them out of buying a few for their own use.
The way I see it, distributing universally needed goods in a crisis is about flattening the distribution of wealth one has vs. amount of goods one can get. Usually competition provides a downward pressure, but I think this fails in times of sudden demand shifts. As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices. Eventually, a peak is reached, all those pent-up stock starts getting unloaded on the market, prices go down - but this evolution takes time, and throughout all this, a lot of people cannot afford to buy the good.
So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies, and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
The price controls actually make the price higher, because then the normal channels run out of supply and if you need it you have to turn to the black market. The black market prices are higher both because the people who didn't need it very much but lucked into official supply weren't deterred by pricing (wasting supply) and because the black market operators can collect a risk premium for breaking the rules.
> As long as either the shop or the reseller can expect the demand to be stronger tomorrow than it is today, they have every reason to hold onto their stock and keep rising prices.
If they expect the price to be higher tomorrow then all they have to do is demand that price today. You can still get it from them.
And that's what you want, because if the shortage is going to get worse rather than better over time then you want the higher prices immediately to induce rationing and avoid an even worse shortage in the near future.
> So it seems better to me to prevent prices from going up, in order to prevent the least wealthy from being priced out of buying emergency supplies
The assumption is that this actually happens.
If the price of a mask triples from $1.50 to $4.50, even someone making minimum wage can afford a mask, or even ten masks, if they really need them. If they don't really need them then they may be deterred by the price, but that's the whole point.
> and at the same time eliminate the main incentive for excessive hoarding: the ability to sell the hoard back later, at a profit.
Which the high prices do by themselves. Paying an extra $30 for ten masks is one thing, but the hoarder who had been intent on buying ten thousand then has to pay a premium of $30,000, which leaves them with all risk and no profit.
That assumes the price is stable or near the peak. But if the price curve is rising, that's no different than a stock that's going up, is it?
You're still buying low and selling high. If the price goes up $10/week for 30 masks, you're making money by hoarding them.
Opportunist speculators who buy up all of supermarket's stock aren't going to be in it for a long term: it's super high risk. They want to buy it cheaper than it should be, and sell for it for what the price should actually be. Holding onto product for long is very risky.
In CA the bottom 1/4 of households make $35,000 a year. Without price controls, will they ever be able to afford PPE in an emergency when they have to compete with the 15% of people making $150,000 a year?
Are you sure? PPE might be a bad example, but back in March rumours have been circulating in my home country about ultra-wealthy "private persons" buying ventilator equipment to be put in their homes.
I don't know if those rumors were true, but they very well might have been - those ultra-wealthy used to fly to EU for treatments, but when the borders closed and they were faced with the reality of the medical care system they've built for "commoners"... "Better to buy a ventilator, just for me and for my family. Just in case, you know."
Usually the more of a product is bought, the more get produced. If the world will need more ventilators over the coming months, the best thing is for everyone to buy as many as they can right away.
There aren't that many "ultra-wealthy" people who are going to hoard ventilators. Even if they did buy them as an impulse, it would be an unusual scenario for them to sit unused in storage while the local hospital has patients going without them. Even the ultra-wealthy will value their friendly relations with the local ICU doctors more than that box gathering dust in the corner and donations will happen.