Also, if someone is selling anything on eBay for above MSRP I report them for price gouging. Masks, sanitizer, drives, Ubiquiti cameras, anything. All reported.
> If it's an emergency situation they they're assholes for trying to profit off the emergency and should be reported.
But if its an emergency then giving the limited resource to people who already have too much of it is a waste.
How about we meet in the middle? Rather than go full free market or full government why not just let sellers declare the product an "emergency service" which allows the buyer to delay his payment. The invoice is sent to the government who then gets in contact with the seller. The seller presents his costs to provide the emergency service and then the government finally decides upon a fair price and gives the emergency seller a small commission for the trouble of providing an emergency service (this lowers the price the consumer has to pay in the end).
That way the price will still help as a discovery mechanism but have no gouging effect on the wallet of desperate people. Meanwhile people who do not need emergency service will not buy the product because they would be stuck with a large bill as the government would be less likely to negotiate in your favor.
You need to revisit Economics 101. High demand -> price rise -> more supply -> price drop. If you set a price ceiling, this will make the shortage worse as the market cannot properly function.
> You need to revisit Economics 101. High demand -> price rise -> more supply -> price drop. If you set a price ceiling, this will make the shortage worse as the market cannot properly function.
And you need to revisit Economics 102 where they talk about inelastic demand and why some prices are usually controlled at least to an extent ( food, medication, electricity), and Economics 103 where they mention they real world and economy are slightly more complex and have slightly more variables than what Economics 101 started with.
Your are right about your last point as in real world there is no such thing as inelastic demand.
Food definitely is not as in that case there will be no need to pour the milk into the river during the Great Depression. Basic medication such NSAID are cheap because there's no patent and can be mass produced and things like Novartis’ Zolgensma is apparently a different story. For electricity, don't get me started with Texas... I agree it probably a problem that is it is not controlled there.
The point is, yes there will be more variables in the real world, but the most basic rules still applies.
Economics isn't a science, so this class is essentially as valuable as any art or philosophy class at prediction reality or informing us of how we are supposed to act: Not at all, unless you put significant amounts of personal effort in.
I would say economics is more like historical studies. It is not trying to predict anything, it just give you some tools to learn from the past.
It is not supposed to be a crystal ball that you can see thought the future. Actually, I am not sure if such thing actually exists, but probably a physicist can prove that.
> If you set a price ceiling, this will make the shortage worse
No. You may perceive the shortage as worse, but in reality, 100% of the supplies will be going to people who need them, as opposed to 30% sitting unused in hoarders' warehouses not helping anyone. Having 70% of the supplies in the field and 30% sitting in a warehouse, appearing for sale, but outside anyone's budget, is not an efficient use of supplies in an emergency.
If there is a mask shortage, I want every single mask strapped to a face, somewhere, somehow, and zero masks in a warehouse.
If you don't regulate it, it means the rich get essential items while the poor don't. Instead of the people who have the greatest legitimate need for the essential items getting access to them.
> as opposed to 30% sitting unused in hoarders' warehouses not helping anyone. Having 70% of the supplies in the field and 30% sitting in a warehouse, appearing for sale, but outside anyone's budget, is not an efficient use of supplies in an emergency.
If the items are "outside anyone's budget", then the price gouger will not make money and they will lower the price until someone buys them. Thus, your goal of 100% usage of supplies is still eventually achieved.
> If you don't regulate it, it means the rich get essential items while the poor don't.
If the items are truly essential, and there are not enough to go around, what difference does it make if the rich get them and the poor don't? This seems like you just want to find an excuse to stick it to the rich.
> Instead of the people who have the greatest legitimate need for the essential items getting access to them.
How do you propose determining who has the "greatest legitimate need" more accurately than just seeing who is willing to pay the most?
> as opposed to 30% sitting unused in hoarders' warehouses
It's interesting that you started off talking about price gouging but have now switched to using the term "hoarding".
The thing is, "price gouging" discourages hoarding. If the price is not increased in response to a shortage, then everyone (rich and poor) is incentivized to buy as much as they can whenever an item is available for sale (even if it's well in excess of their actual need). This is basically the definition of "hoarding". Whereas, if the price were allowed to increase, people are discouraged from buying more than they need, and more supply is available for all.
This is almost exactly what happened with toilet paper last year. Toilet paper costs about $1 / roll. Most people can afford to buy extra toilet paper, and so very quickly the entire stock of toilet paper was bought up and there was none available for sale. If the price had increased to (say) $5 / roll, people would have been disincentivized from hoarding it. As it was, the people who had the "greatest legitimate need" - those that actually ran out of TP - were unable to purchase any.
Additionally, the fact that people like you demonize manufacturers and retailers who raise prices in emergencies as "price gouging" also provides a disincentive for manufacturers and retailers to invest in spare capacity for these very emergencies. If "price gouging" is illegal, there is no good way for manufacturers and retailers to recoup the cost of temporarily increasing production, or maintaining a buffer of inventory for temporary spikes in demand.
I am not sure if indicating anyone lack of basic understanding of economics counts a personal attack, but calling people as assholes surely is.
Since you talked about PPEs, you can check what happened in Wuhan during the first outbreak. The Chinese government demands no price increase for PPEs such as face masks... and what happened? The hospitals asked the public for donation of N95 facemasks because they cannot get those from the market. Every one in China are of course entitled for protecting themselves, but the truth is, at that time supply is simply not enough for the whole population and medical workers who needed those most cannot get them even the hospitals have enough dry powder to pay up. The market was awfully inefficient at that time.
Having every single mask strapped to a face and zero masks in a warehouse is far from enough. In a shortage, you need MORE facemasks. You need to make sure there will be enough are being supplied at the market. With a pricing cap, there will be no incentive for putting stock in the warehouse on sale and producing more, and it makes things worse.
Apparently you don't understand what the word Suggested means. Do you also report every single classic car that is selling for higher value that it was initially sold for? If not then you're pretty much just being an asshole for no reason.
