If only we could get rid of this widespread notion that price gouging is bad/evil...
It would be a different matter if these people were actually sourcing masks from places where they are plentiful, and sending them on to places where they are not. Right now, masks are in short supply everywhere.
It would dissuade people from buying more than they need, possibly in hopes of reselling, as the prices would already be elevated.
The proper control is limit purchase per person per day. Raising prices on things like masks in a viral contagion like this is unconscionable
It's not "putting words in other people's mouths" to explicitly spell out the direct consequences of what they're saying. When the price of a good spikes to several times its everyday market price or even higher, it's reasonable to assume that it's gone up by enough to make it inaccessible to a meaningful portion of the usual customer base.
If the manufacturer prices are allowed to rise, the profits incentivize increased manufacturing. If the prices aren’t allowed to rise, the rationally selfish strategy is to hoard the entire stock of any non-gouging manufacturer and sell the product on a gray market like Amazon where anti-gouging rules are poorly enforced. The profits obtained by resellers could have instead gone to manufacturers, encouraging more people to become manufacturers until prices return to normal.
Nobody wants masks to be unavailable to the poor. The disagreement is what measures will best make them available to everyone, the poor included.
It’s reasonable for people to disagree on whether relaxing price controls would achieve this end. But to say that free-market advocates believe the poor “don’t deserve” access to masks is as disingenuous as saying anti-gouging advocates believe the public “deserves shortages”, or that people who aren’t tenacious enough to find masks at any price in a hoarding-dominated environment deserve to die. Any sane person acknowledges both solutions have major drawbacks.
That fits your narrative, no?
Free market ultimately amounts to how much can we push people's capacity to suffer in order to profit the Capitalists, can we raise the price of water, can we raise the price of food, can we work people 20 hours a day, will they still work if they can't afford clothes, can we psychological convince them not to riot and so remove even more of their humanity; will the poor still work if life-expectancy is down to 60 years, howabout 59?
Also, in a situation like this, how many people would choose to be an agent for someone else, versus buying for themselves?
Hoarders and scalpers don't drive up the prices, they just reveal a market clearing price. Attempts to restrict market clearing mechanisms make scalpers and hoarders spring up in the first place.
In a less restricted economy, producers of masks would capture the price increases. And that would serve as a good incentive for them to keep extra capacity around.
If your ration coupons for face masks were freely tradeable, the resulting system wouldn't look that much different from letting the price of face masks themselves freely fluctuate; and giving people the right amount of money. (It would still be a bit more awkward in comparison.)
Your remark is right for things like land that's in fixed supply.
I'd argue that people shouldn't even buy masks during pandemics and they should be reserved for medical staff who actually need them and know how to use them properly.
You distribute according to highest need. Which is what you said.
It's strange that you said "socialism doesn't work here" and then in the next sentence gave the socialist solution "distribute according to the greatest need"; which here would be medical staff.
The difficulty with that is human greed. Capitalism embodies human greed and turns it, with careful intervention, towards a relatively useful force (when resources are limitless!). Communism tries to fight human greed, which is why it can't be imposed and must be adopted. Communistic systems readily get overrun by capitalistic actions - under war-time rationing, for example, black markets rise up ... one greedy person ruins the whole system, one generous person does not.
t. nonessential worker
Lol, no way. The need is for medical staff. These will either sit in some gouger's garage waiting for a premium price, or be needlessly used by someone affluent. Neither which is "need".
[0] https://www.econlib.org/archives/2017/09/a_poll_of_econo.htm...
If you can legally sell your masks in time of crisis for a hundred dollar a piece, that's a great incentive to keep some spare capacity around that doesn't rely on global supply chains. Price controls dull the edge of that incentive.
(If more people were allowed to raise prices and thus kept spare capacity around, prices wouldn't rise so much in the first place.)
Aren't you making a fairly unreasonable assumption that need is also accompanied by ability to pay elevated prices?
Price gouging can easily make a scarce critical good unobtainable to poor people who need it before the price is high enough to discourage all the rich panicking hoarders/preppers.
In emergencies like this, there isn't enough supply available anywhere to meet demand. The manufacturers can't scale fast enough - and even if they could, they're often unwilling; scaling up has large up-front costs, so it's not worth doing if the demand is going to evaporate before they can recoup their costs.
The right solution here is for the governments to start issuing very large orders, thus ensuring the manufacturers can scale up without worries, while distributing the masks to everyone in an equal fashion. And jailing the price gougers for profiteering off global emergency while we're at it.
In the presence of price gouging laws perhaps, but not in general. I of course acknowledge the overhead cost of retrofitting existing manufacturing setups to produce masks, but that doesn't mean they can't still turn a profit, especially if they are not prevented from selling internationally by well intended but misguided laws.
Price gouging laws do not change the underlying facts of how long it takes to spin up new production lines. In an emergency, suppliers cannot respond quickly enough, by definition. The problem to be solved is how best to allocate existing stocks and production output, not how to incentivize new producers.
Of course they don't. What they do accomplish is preventing prices from rising quickly enough to justify new production lines. It really comes down to if manufacturers think they can make enough to cover the costs of changing production lines to the emergency good, then turning them back, and then some. This is compared to how much they make doing what they have always done. Price gouging laws lower the profits they would make.
How does this matter, if either way the new production line won't be up and running until after the emergency is either over or has been seriously exacerbated by poor allocation of goods? It seems like you're still trying to pretend that markets are efficient and can always respond quickly, and that's simply not true.
Price increases also discourage the wealthy from buying more than they need. There is no doubt that the effect of higher prices matters less to them, but it still will encourage them to buy less on average. There is also a very small chance that a "rich asshole" purchases much more than they need, but this is the exception, not the rule.
> ... any talk of market efficiency should go out of the window
Quite the contrary actually. Emergencies are at least one of and potentially the most important case where the (on average) efficiencies of the market are needed.
> we may just as well start analysing market efficiency of slave ownership
Slave ownership is by definition extremely inefficient. That's obviously not to say that someone couldn't treat humans like cattle and turn their investments into a profit (as we are all unfortunately aware of), but if you consider the system as a whole including the alternatives (and their impacts across the economy) that could be pursued by the slaves the entire thing is a big net negative for society to the benefit of the few (slave owners). Slavery is not only evil by virtually everyone's definition of morality, it is also just plain stupid.
But it’s also the optimal solution to handling demand for numerous other reasons. See https://fee.org/articles/let-prices-rise-to-combat-the-coron...
Markets are not efficient. Especially not on short timescales where even FedEx deliveries aren't quick enough to reallocate supplies and keep shelves from going bare. And especially not during an emergency that is very obviously triggering widespread irrational behavior. And especially not when consumers are working with insufficient information, because literally nobody on earth knows to a high degree of certainty or precision just what degree of risk we're facing.