[SftwrSvior81]

> high prices direct resources to more important uses

I don't think that that is always true. High prices will redirect scarce resources to those who have the means and desire to pay for them. That doesn't necessarily mean that those uses are more important, regardless of how one defines what it means for the resource usage to be important.

[jimmaswell]

Exactly this. Why is Scrooge McDuck buying the entire supply of something somehow better than evenly distributing it? I can't believe people actually think making toilet paper $20 a roll is the correct outcome instead of rationing with price controls. Maybe it's the Ferengi mentality of people seeing themselves as the exploiters.

[hamandcheese]

If toilet paper was $20/roll, people would think twice before hoarding, and would probably also use less squares overall.

[hannasanarion]

Hoarding isn't the (entire) problem, a bigger issue is the sudden shift in consumption from commercial to consumer. Nobody is pooping in office buildings, schools, or shopping centers anymore, everyone is doing it at home. Producers that uses to sell 50/50 consumer to commercial are now selling 90/10 in favor of consumer and they can't reconfigure their production lines fast enough.

https://marker.medium.com/what-everyones-getting-wrong-about...

[kortilla]

And $20/roll would expedite the changeover pretty quickly.

[asdkjh345fd]

Not if the producers believe that this is temporary and will go back to 50/50 again soon. It isn't worth the cost of making big changes just to have to change back again in a month.

[lukas099]

It may incentivize them to invest in the ability to quickly change the ratio.

[simonh]

If they thought it might increase to $40 a roll soon, they will hoard. They might not be able to hoard as much of it, but they might still do it. Doubling your money on $1000 worth of rolls is still the same outcome whether that represents 50 rolls or 500 rolls, excepting only the logistics.

[aianus]

Anecdotally, this fits with my observations at the grocery store in Canada.

All the regularly priced milk, chicken, and eggs were sold out around March 25th but the "organic" milk and chicken at double the price was still in stock as was the AAA steak and the expensive Omega-3 eggs.

It appears there is still a fair amount of price elasticity of demand even in a pandemic.

[jimmaswell]

And a lot of people would just have to go without, As opposed to everyone getting a little with price controlled rationing.

[AnthonyMouse]

I think this is the biggest flaw in your argument. If toilet paper was $20/roll, that wouldn't deter someone who has none in the slightest bit. They'd buy one roll and pay $20 in a second. But that guy who was trying to buy a thousand? He's thinking twice.

[neilwilson]

"But that guy who was trying to buy a thousand? He's thinking twice."

Why wouldn't he just borrow the money to pay for it, hoard the supply and then flip it back onto the market when the price hits $40?

You're assuming a finite amount of money, but the monetary system is necessarily elastic.

Then the hoard, because it has gone up in value, becomes collateral for more loans.

Whereas rationing necessarily solves the distributional conflict instantly.

Price auctions only work when the demand is optional and the supply is elastic.

[roenxi]

Because they are running an enormous risk of a 50 crates of toilet paper being driven up in a hastily hired farm truck direct from a commercial factory at $19 a roll. Then they lose money per roll and that has a crippling effect on their finances because debt magnifies gains and losses.

We know that the amount of toilet paper being produced matches how much is being consumed because it did pre-crisis and consumption/production aren't really changing. Any ramp up at all from the factories will quickly lead to a glut of the stuff. The problem is the commercial-private shift causing a mismatch between the orders for consumers and the supply for commercial toilets. If the price goes high enough someone will figure out how to match the two and it will happen really quickly. The price isn't going to climb after the initial spike; it is going to fall.

[bb88]

> Why wouldn't he just borrow the money to pay for it, hoard the supply and then flip it back onto the market when the price hits $40?

Interesting data point: about three weeks ago a guy was selling single rolls for $5 a piece outside our development. He put his kids in gas masks and had them prance around with a big sign. I'm sure he wasn't doing it for the kindness of his heart.

[sokoloff]

Because at some point, TP will go back to $0.50/roll essentially permanently.

You can’t be sure that you’re buying on a sustained upswing in prices.

[jimmaswell]

Yes it is going to deter someone who has none. Is it impossible for you to imagine someone who couldn't afford that premium so they resort to using the shower or something? And do you really think a millionaire is going to be deterred from buying too much in that instance?

[AnthonyMouse]

Someone who couldn't afford $20 for something that lasts more than a month? If this person exists it's because they place a below-average value on toilet paper, not because they don't have $20.

And there aren't enough millionaires for their toilet paper buying habits to have a meaningful effect on the market unless they each start buying millions of rolls, which is a ridiculous hypothetical with no chance of really happening.

[xorcist]

> If toilet paper was $20/roll, people would think twice before hoarding,

The rational response to $20/roll is to buy as much as possible. It will be worth $40 soon.

[Camas]

In real life the problem isn't Scrooge McDuck buying the entire supply. It's everyone who buys a few extra just to be safe that makes demand rocket.

[alexmingoia]

The more you have to exchange for something, the more you're foregoing other forms of consumption. If toilet paper cost you your entire budget, you wouldn't buy toilet paper at all. You'd buy food instead. In that way, prices redirect your consumption to higher priority things. That's what is meant by "more important."

[kaitai]

Only if you have to think about money. What you point to is that poor and maybe middle-class people have to 'redirect' their consumption to 'higher priority things', which in some cases is equivalent to just going without.

Insulin, rent, or food? Ah, just prioritize, honey!

[SftwrSvior81]

Defining "more important" this way seems limited to one actor. In your original post, you talk about multiple actors, namely hospitals and individual people. Different actors are going to have different budgets and preferences. Suppose you consider toilet paper to be an absolute necessity but at $20/roll, it is not affordable to you. I, on the other hand, don't value toilet paper as much but my budget is much bigger than yours so I can afford and am willing to pay $20/roll. When looking across both actors, could we still say that the "more important" need was met?

[roywiggins]

If many people can't afford TP, they will start flushing other things, which will block everyone else's toilets.

[asiachick]

If I run out of TP and can't get any more at a reasonable price I will just use cloth towels and wash them right after use. Many people still use cloth diapers with their babies. Running out of TP is a first world problem.

[Nasrudith]

It sort of works long term but with an alien detached long term point of view. A bit more third order causes.

Essentially if they can afford to pay higher prices continually then it implies some sort of sustained utility. If their decisions are foolish they would start losing said capability squandering it and give it to the "sources" one way or another.

That doesn't say anything about the morality, sanity, or time pressures but I can see some truth to it.

[vlan0]

Yep, and if we need proof of that. See NBA COVID testing.

[Kaiyou]

Willingness to pay is a pretty good indicator of importance, I think. Where this falls apart is ability to pay.

But that's life. If you can't pay, you won't get what you want, no matter how important it may be. Expecting other people to cover for you is called entitlement.

[XorNot]

What do you call it when you expect to be able to screw over your fellow man, and have the state's monopoly on violence protect you for it?

[Kaiyou]

Reasonable.

[CryptoPunk]

It doesn't map to desire perfectly, but it does generally.

If anyone truly needs a mask, (e.g. a delivery driver delivering packages to customers, a doctor, a nurse), that represents an economic need for whatever service they provide.

Their employer will be able to charge a high price for their service, and afford to pay a high price for PPE for them.

Even when the mapping is imperfect, the fact that the rich guy was able to afford a mask while others weren't does some social good: it increases the reward for being wealthy, which promotes more productive behaviour from society at large.

[michaelmrose]

>which promotes more productive behavior from society at large.

Greed is good is an ideology for the morally impaired with limited attention span. A relatively small differential in wealth and large differential in social standing is arguably enough to achieve maximum "productive" behavior after which diminishing returns are had.

As proof observe many European nations that are almost as productive wherein the wealth of most practitioners of most professions tops out much lower than their US counterparts and yet they produce similarly to our citizens.

[CryptoPunk]

Greed is not good. Productive behaviour is good. Market economies encourage people to be productive in order to satisfy their self-interest.

Defining pursuit of self-interest as greed is the type of ideologically motivated moralizing that leads to people ignoring rational arguments and the evidence on what types of laws work and what don't.

>>As proof observe many European nations that are almost as productive wherein the wealth of most practitioners of most professions tops out much lower than their US counterparts and yet they produce similarly to our citizens.

1. The U.S. is significantly more productive than Europe on a per capita basis.

2. Even if 1 weren't true, your argument would prove nothing, as there are a vast array of differences between the EU and the US that could explain your observation. Your 'proof' is nothing of the sort. It's lazy confirmation bias. The empirical evidence, in the form of analysis on large datasets, strongly suggests being more market-based is associated with more rapid economic development. For example see this study: https://web.archive.org/web/20170821004405/http://ime.bg/upl... There's no evidence of any threshold where that benefit diminishes. These empirical observations are strongly supported by the basic economic theory.

[schoen]

The issue about how much the rewards for being wealthy promote productive behavior reminds me of the remark by David D. Friedman that

> My imaginary capitalist has capital because he worked hard clearing part of the boundless forest while his employee to be was being lazy and living on what he could gather--so it is entirely just that the capitalist gets part of the output of his land and his employee's labor. But the leftist doesn't like that hypothetical. His imaginary capitalist inherited his capital from a father who stole it. I don't like that hypothetical.

http://www.daviddfriedman.com/Libertarian/My_Posts/My_View_o...

I often suspect Friedman is right that a lot of normative disagreements boil down to different intuitions about what people typically do to become wealthier.

[CryptoPunk]

Yes, agreed on the different intuitions on the source of wealth.

The fact that market economies so vastly outperform non-market ones is a pretty clear indication that wealth-generation in market economies generally has positive economic externalities, and as such is socially beneficial on the balance.

[fatbird]

it increases the reward for being wealthy, which promotes more productive behaviour from society at large.

It encourages rent-seeking behaviour, which is not necessarily productive, and in times of crisis, demonstrably not so.

[quotemstr]

> High prices will redirect scarce resources to those who have the means and desire to pay for them.

That's true. Don't you think it's also true that those who need a good more have a greater desire to pay for that good? I understand that not everyone has the same ability to pay, but we can't crucify the market on the cross of equity. History shows that when you try to allocate goods based on feelings (some random official's idea of "need") and not prices (which reflect true preferences), you create shortages, black markets, and misery. Command economies just don't work.

There are ways of addressing monetary inequality (e.g., a stipend) in an emergency that don't break the fundamental resource allocation function of the market.

[numbsafari]

It is both immoral and incorrect to measure need based on who has the most liquidity.

[arcticbull]

Or as we call it 'the US healthcare system'

[someguydave]

I’m assuming this is sarcasm. Can you propose an alternative method of measuring need?

[numbsafari]

It's not sarcasm at all.

Does one person with a million dollars in excess liquidity to spend on water represent a greater "need" than one million people with no liquidity to spare?

Would it be moral for that person to buy more than they need, solely to inflate prices? Would the resulting spot price in the market be in any way a meaningful gauge of the actual need?

Market prices are only one gauge, and they are pretty faulty, easily manipulated one at that.

Next up, you'll probably tell me that story points are a solid basis for predicting delivery times and making decisions about resource allocation.

[fatbird]

The field of moral philosophy has extensive literature on exactly this subject. The NYTimes has an 'ask an ethicist' column. Every hospital has an ethics board with prepared guidelines on patient triage in times of crisis.

That the accepted answer to this question has become "who has the most money?" is a victory for... well, the people with the most money, so I guess we can call this a sterling example of the effects of income inequality. The vast majority not only don't have the majority of the money; they don't even have the moral standing of "legitimate" need.

[someguydave]

The only alternative to “highest bidder wins” is “third party decides”. If people need charity, seeking that charity should be a private matter, not one enforced out the barrel of a gun by uninformed third parties.

[fatbird]

Except the whole point of human governance is to delegate that enforcement to a third party that is a just and neutral arbiter. Unless you want to revert to a state of nature and anarchy without laws or money, you're going to have that third party, and if you have it, then you have other options than "highest bidder", which is itself a value choice enforced on other, non-consenting citizens at the the point of a gun.

[saghm]

> I understand that not everyone has the same ability to pay, but we can't crucify the market on the cross of equity

It's mildly astonishing to me that someone would attempt to make an argument in favor of not regulating absurd prices by comparing the alternative to gruesome public execution. Even ignoring the hyperbole, it isn't a very compelling argument; yes, we all agree that destroying the economy is bad, but the whole discussion is about whether enacting these regulations would _actually_ harm the economy more than it helps, so just asserting that it would with an exaggerated metaphor doesn't really add anything useful.

[dahart]

What’s the economic difference between a stipend to consumers and a price cap on suppliers? It sounds like you just suggested regulation as an alternative to regulation...

[megous]

While true, that doesn't really matter. Higher price attracts new producers to setup manfuacture for the now scarce and expensive product more quickly. These more wealthy buyers just end up paying for a quick rampup in manufacture.

There's 0 financial reason to ramp up supply if the price is the same, and you're now suddenly in a heavily controlled market.

It's risky by itself to ramp up production, because you may end up hiring 100 people and having to fire them 3 months later, which is not exactly pleasant for anyone.

[hannasanarion]

If ramping up production were as simple as hiring 100 more people, it would have been done even if there weren't a crisis.

Capacity for manufacture is not infinite and it cannot be changed at a moments notice. It takes months or years to establish supply chains, facilities, machinery, and expertise needed to increase manufacture, and by that time the crisis is over and the extra demand is gone.

[imtringued]

That's only true because nobody can make a profit off extra capacity. If there was a way to make it profitable then the factories would have slack capacity built into them.

[tomp]

How do you know that? What if there was a factory running at less than 100% physically capacity? You could in theory ramp up production very quickly simply by hiring more people, but you won’t, because doing so incures costs (training them, giving them PPE, ...) and you can’t be sure about your income (price rises are banned, exporting is outlawed, your product might even be confiscated).

[TeMPOraL]

Because there were PPE manufacturers giving interviews in the press in which they pointed out that the last time they did expand their production during the crisis, the crisis ended and the demand evaporated before they've managed to recoup their investment - so they're reluctant to do the same now, unless governments sign on with long-term repeat purchase contracts.

[zo1]

On a side note, one could argue that if we didn't have these sorts of "anti price-gauging" price-controls, the market would more readily keep itself open and malleable to quickly ramping up production to items whose price is spiking. I.e. if there is money to be had by jumping on "hot" production items, then there is utility in spending money on being able to jump on it when needed.

So perhaps right now the supply chain isn't able to do this, but that doesn't mean it can't move towards it.