[dTal]

What the "gouger" is doing is correcting a market inefficiency by performing arbitrage through time. In order to turn any sort of profit, they must have more accurate information than the rest of the market. The guy who chooses to buy $10,000 bucks of masks on day 1 of a crisis is sending a message to the market - "I believe that masks are currently undervalued." If they are right, it might indeed hasten the day you can no longer buy the masks at their original, undervalued price. It might also spike demand earlier than it would have spiked, which sends a signal to ramp up production. That is a market correction they are helping to realize. And the result is it prolongs the time you can buy any masks at all, at any price. 1 person snapping up 10,000 masks with intent to sell is better than 100 people snapping up 100 masks each that they intend to stick in their closet "just in case", while people that really need them find empty shelves.

Nothing is exempt from market forces. Masks are more valuable now than they used to be, that's just a fact. If you try and hide that fact, you will prolong the shortage and cause more harm than good. If you don't like the idea of the government having to pay more to procure this essential commodity in this time of sudden shortage, the people you should be annoyed with are the ones who depleted the national PPE stockpile in time of plenty, when it existed for this very reason. Don't shoot the messenger.

[stainforth]

I don't see it that way at all. Grocery stores are now rationing which is fair to all consumers. If one rich person is able to buy up an entire store and then resell it, all it's done is made the food more expensive for the people, and funneled wealth towards an already wealthy person. I don't think we should advantage those types of people. Market forces seem to always benefit just a few. In all of history market forces have not resulted in an equitable situation for everyone.

[Consultant32452]

I would like to recommend "Basic Economics" by Thomas Sowell. It provides an excellent understanding of economics in language that is accessible to everyone and uses historical examples to demonstrate all of the concepts. I think if you understood markets and pricing better, you would have a different opinion. Your grocery store example would not turn out the way you're describing.

[stainforth]

Thomas Sowell is a right wing ideologue.

[Consultant32452]

Verify any of the historical accounts you think are inaccurate.

You might also enjoy wikipedia. https://en.wikipedia.org/wiki/Economic_efficiency#Mainstream...

The "mainstream views" section suggests that market economies are believed to be closer to efficient than other known alternatives. The mainstream only recommends macroeconomic type interventions to counteract the economic cycle. Macroeconomic interventions are monetary policy, not price fixing, confiscation, etc.

Or how about the wikipedia on price gouging: https://en.wikipedia.org/wiki/Price_gouging#Opposition_to_la...

In a survey of economists, only 8% supported legislation against price gouging. 51% were against. The economists opposing the proposal argued that such legislation would lead to a misallocation of resources and lead to lower supply and greater scarcity of the resources, or argued that the proposal in question was vague.

Or how about the wikipedia on economic planning: https://en.wikipedia.org/wiki/Planned_economy#Advantages_of_...

The advantages show the Soviet Union industrializing... while starving to death because the central planners did not have infinite knowledge, which the central planning idea requires.

https://en.wikipedia.org/wiki/Planned_economy#Disadvantages_... This section of the same wikipedia article shows that markets are more efficient at allocating resources.

#############

It doesn't matter where you go, everywhere you will see markets are better at allocating resources. Politicians implement bad policy because voters demand action. Trump can use the Defense Production Act to command masks be confiscated and sent to a hospital, and he will act like he's a savior, and economically ignorant people will believe it because action looks better than inaction. But he's not doing that because all the economists have said that's the best way to get masks where they need to be. In the end, he's killing people with these kinds of actions, not saving them.

[ardy42]

> In a survey of economists, only 8% supported legislation against price gouging. 51% were against. The economists opposing the proposal argued that such legislation would lead to a misallocation of resources and lead to lower supply and greater scarcity of the resources, or argued that the proposal in question was vague.

I wouldn't put too much stock in that survey. It was about a specific Connecticut law, it only included 40 economists, many chose not to answer, and many of the others took issue with some vagueness in the wording. Furthermore, I wouldn't blindly follow "economists" on any policy matter. Sure, their ideas have some merit, but their discipline has its biases, too.

> The advantages show the Soviet Union industrializing... while starving to death because the central planners did not have infinite knowledge, which the central planning idea requires.

Oh, please. Anti-price gauging legislation is not central planning. It's pretty weak to trot out the Soviet Union to refute anything but the purest capitalism.

> It doesn't matter where you go, everywhere you will see markets are better at allocating resources.

The first army to learn to allocate supplies to the front lines on free market principles will be unstoppable! /s

[Consultant32452]

I DDG searched "do economists support anti price gouging laws". Here's the top results. Every one of them disagrees with you.

https://www.marketplace.org/2017/09/01/why-economists-dont-t... "Economists don't think price gouging is a problem"

https://www.forbes.com/sites/jeffreydorfman/2016/09/23/price... "Price gouging laws are good politics but bad economics"

https://hbr.org/2013/07/the-problem-with-price-gouging-laws "The problem with price gouging laws"

https://www.thoughtco.com/the-economics-of-price-gouging-114... supports price gouging

Can you provide ANY literature suggesting mainstream economists, on average, support price fixing, confiscation, or purchase limits as a means to allocate resources effectively in a crisis?

>The first army to learn to allocate supplies to the front lines on free market principles will be unstoppable! /s

The military primarily gets work done by allowing private contractors to bid on projects. In order to get troops near the front lines, most military personnel take commercial airline flights to get there because it's more efficient. Military operations are wildly inefficient, but they still use markets wherever possible because it gets things done as efficiently as possible.

[ardy42]

> What the "gouger" is doing is correcting a market inefficiency by performing arbitrage through time. In order to turn any sort of profit, they must have more accurate information than the rest of the market.

No, that's only true if you believe the simplistic myth that a price-driven market is always the best and fairest way to allocate scarce resources, in all circumstances. That myth is false, but it's a seductive myth because the market works very well in many situations.

Price gougers operate only in crises, inserting themselves as middlemen to extract a profit on emergency essentials. They can't do anything to increase supply, because there's no time for that. They don't direct resources to where they're most needed, rather they direct them wherever the most profit is. They perform no social good, and are actually a form of market failure.

> It might also spike demand earlier than it would have spiked, which sends a signal to ramp up production.

That's a fairy tale. The manufacturers aren't solely reliant on price to learn about demand, and they have clearer and more direct ways to communicate with their customers in situations like this. Do you think Purell and 3M needed guys like this [1] to tell them demand for their products was spiking due to an incipient pandemic? No. 3M was literally ramping up in late January [2], before the COVID-19 was even a blip on the price-gouger's radar.

> 1 person snapping up 10,000 masks with intent to sell is better than 100 people snapping up 100 masks each that they intend to stick in their closet "just in case", while people that really need them find empty shelves.

Firstly, there are better ways to manage the surge demand, which the actual businesses involved are implementing: prioritizing sales to customers based on need and implementing retail purchase quotas to prevent people (usually gougers) from buying everything up and creating artificial scarcity.

Secondly, it's likely that the 100 people in your example who bought from the gouger just put the masks in their closest anyway. Gougers take supply out of the normal channels and inflate prices so much that the people who bought from them are worried people with more money than sense, rather than those with real need like nurses and hospitals.

Thirdly, at the maximally inflated prices gougers often sell for, they may end up functionally becoming hoarders themselves and still make a profit. If a gouger buys 1000 masks at $1/per, sells 100 at $10/per, 200 at $5/per, 300 at $2.50/per, and unloads the rest at the original $1/per after it's all over, he's more than doubled his money while wasting half his inventory. He's not looking to speed resources to where they're needed, but milk every cent out of them that he can. The supplies do no more good in a profiteer's garage than in a prepper's closet.

[1] He Has 17,700 Bottles of Hand Sanitizer and Nowhere to Sell Them (https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...)

[2] How 3M Plans to Make More Than a Billion Masks By End of Year (https://www.bloomberg.com/news/features/2020-03-25/3m-double...): "Andrew Rehder, manager of 3M Co.’s respirator mask factory in Aberdeen, S.D., got the call from headquarters on Tuesday, Jan. 21....Rehder told them that a new virus was spreading rapidly in China and that 3M was expecting demand for protective gear to jump....Now, Rehder told his charges, Aberdeen would shift to “surge capacity.” Idle machinery installed for precisely this purpose would be activated, and many of the plant’s 650 employees would immediately start working overtime."