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

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.

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.

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.

If we were talking about something really vital like food, those same 2 weeks become unacceptable.

It's a good thing that it did not happen at the same scale for food (supply is more elastic? demand is less elastic?) and that we can debate about an annoyance, not people starving.

The immediate result of price signals is huge amounts of money will become available to anyone who is producing a scarce good. If something in your scenario (government, public pressure, whatever) interferes with the market then the people who produce food will no longer be awash with money and will not produce more anywhere near as fast.

Even if people are starving the solution is not to ban disaster profiteers or implement price controls. The solution is for the government to start buying food at market prices and distributing it evenly. Working with the price signalling system, not against it. It isn't efficient but if people are starving then sure efficiency isn't the single biggest problem. At least it keeps the incentives where they need to be.

I think our divergence in opinion comes from how much extra incentives to produce there is between the normal margins and the supply-constrained margins and how helpful that incentives is.

My hunch is that as long as there is a profit to made, extra demand will be met as soon as possible. Massively increasing the profit would help only if it would go towards raising food faster, which I think is not something that can be meaningfully improved in the time-frame we are talking about. Yours seems to be that it would help us get food faster. I might be totally wrong, so any data is welcome.

Note that I am talking about a case where raising margin would be forbidden, not raising price if it is necessary to increase production. Also, this is only for the case where supply and demand did not change long term, and the current demand spike is caused by irrationality (panic buying or people trying to profiteer from panic buyers).

I can get a lot more for sale though; at some point it becomes cost effective for people to start moving chickens over from other countries by air freight.

There is a price where people will start going out and hunting too. In Australia if the price of meat went up enough we'd start harvesting kangaroos, for example. The meat is a bit tougher than chicken but it is pretty good.

The argument in that sentence, and I don't mean this unpleasantly, is that you are a limited human who can't imagine a way of getting food on the table quickly that costs a lot of money. That is a fault in your imagination rather than a real limit. And if the situation is so dire that no food can be found at any price, people are going to starve whatever is tried so it isn't like it makes much difference in the big picture of this hypothetical. But anything up to that and more people working on the problem will help.

> Massively increasing the profit would help only...

There is a price point where Goldman Sachs employees stop trying to figure out how to screw over the little guy and start trying to get food to people. Until prices have reached that point, more profits will help increase production ASAP.

There is ample evidence that a shortage problem is better solved with subsidies rather than quotas. The main complaint is that subsidies are too effective at triggering oversupplies. There is no faster way of going from shortage to sufficient than throwing money at the problem - so the suggestion here is maybe at least try throwing money at the problem. People don't have to starve; governments can step in and buy them food - but if we need more food paying more to food producers for food is the single most effective way to get it.

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.

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

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.

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

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

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.

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.

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.

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.

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.

> 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.

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.

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

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.

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.

In the current situation, if a business owner decides to drop you on the ground, you're literally gonna starve to death in the next month.

That's not true at all. We have an extensive network of assistance programs. Of course these programs can be better in numerous ways. Nevertheless, nobody is starving in the street in the US.

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.

Money is still really important, but it’s dishonest and counterfactual to argue that mere access to liquidity can determine the clearing price for a market.

We know it doesn’t. That’s why we have the Fed.

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.

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.

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.

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