Without those laws, the price going from $1 per mask to $10 per mask would still be very much affordable for everyone who really needs a mask, and factories who can successfully get decent production underway will earn lots, making it worthwhile to take on the risk of chasing a (possibly short lived) demand.
That can cut both ways: the possibility of "price gouging" can also encourage speculation, both for those hoping to turn a profit and for those who over-buy compared to expected use to ensure price stability.
Our local grocery chain had a quota on milk (for good reason) and the amount of fights and nearly brawls over it were amazing, despite being a need for some families and not others (it's inconvenient to me to not have cereal, it's a big deal for someone with young kids to not have milk) and generally reasonable limits (up to 2 gallons, more than enough for cereal/coffee/baking).
People go to crazy limits to evade the quotas (visiting multiple stores, making multiple purchases in the same trip, etc) and often times they do simply because the quota exists - how many people actually buy more than 2 gallons of milk normally?
TLDR, people are dumb fearful animals and that can cause quotas to backfire in a way that price controls don't (but they have other downsides).
That's not true, you just have to design them properly. For instance: 3M knows its customers, and can decide give retail hardware stores an N95 quota of zero and hospital systems large quotas, roughly based on need. Those organizations aren't going to get into slap fights in an aisle.
> Our local grocery chain had a quota on milk (for good reason) and the amount of fights and nearly brawls over it were amazing
An unsourced anecdote about a failure of an unspecified retail quota system is not good evidence against emergency quotas in general. It might not even be accurate.
> People go to crazy limits to evade the quotas (visiting multiple stores, making multiple purchases in the same trip, etc) and often times they do simply because the quota exists - how many people actually buy more than 2 gallons of milk normally?
IMHO, the main goal of loosely-enforced retail quotas like those is not so much to strictly limit people to the quota, but to increase friction to frustrate hoarders and profiteers.
See, this is a problem. Idiots/scalpers/resellers/paranoids raiding hardware stores for masks is terrible, but construction was considered an essential business country-wide and never halted meaning you still had minimum wage day laborers (not to mention unionized construction workers making well over that) working in environments N95 masks were designed for that had no access to PPE but still needed to report for work because they need to put food on the table and don’t legally qualify for unemployment (since the jobs are there and they’re not being fired/laid off).
IMHO, most N95s on retail shelves probably wouldn't have gone to construction workers anyway; they'd have been snatched up by consumers with no real need. I do think it would have been reasonable allocate a quota to to go to construction supply companies that weren't open to the general public, though, for precisely the reasons you outlined.
This story is pretty interesting, construction workers/companies are having to make similar kinds of adaptations to the shortage as healthcare workers are:
https://www.inquirer.com/real-estate/coronavirus-constructio...
> To combat supply shortages, the federal Occupational Safety and Health Administration has temporarily adjusted some of its requirements for both health-care and construction workers, including allowing them to wear N95 respirator masks for longer than their intended use — normally a day or two for construction workers — and to use other types of respirators, such as KN95s shipped from China....
> OSHA is advising employers to reduce the need for N95 masks at jobsites any way they can, a Department of Labor spokesperson said. The National Association of Home Builders advises those who can’t find masks to minimize dust by vacuuming and wet cutting.
The article even talked about construction companies and unions donating their existing mask stockpiles.
We certainly do. At least six gallons at a time, because my time is money (and mostly because grocery shopping is a chore) and I don’t want to make repeated trips to the grocery store when I don’t have to. I calculate the consumption rate for adults, babies, and toddlers in the house and based off the expiration date and my own experimental findings (based largely off of fridge temperature and brand of milk as a proxy for homogenization method/temperature/duration) I get the maximum I can without it spoiling, which happened just once due to a bad batch that must have been stored wrong in shipping because it spoiled before even the sell by date.
Capitalism isn't effective at distributing by need, only by ability to pay.
Nailed it. Yep. Building a massive production line with complex equipment and training only to be bankrupt in 6 months is a fools errand. The is why we have a government - when we need something that capitalism cannot supply. But they wont, so we don't.
Not if they can make all of their money back in 6 months via extreme prices. However we are past the "extreme prices" phase of the pandemic.
> Not if they can make all of their money back in 6 months via extreme prices. However we are past the "extreme prices" phase of the pandemic.
But to do that, you'd have to bring the new production capacity online on day 1, which is unrealistic. The timelines just don't make sense. New factories don't just pop into existence; it take time to build them and bring them online.
The main thing that would actually happen if price gouging was allowed is that parasitic middlemen would drive up the prices of existing stock by flipping it (making only a personal profit and doing no social good). Existing manufacturers might do that too, if they're not concerned with losing goodwill by pissing off their current customers.
In this case, government is actually preventing capitalism from being tried. But you see that as capitalism has failed and only government can save us.
Friend owns a textile factory in India. They immediately began production of masks, which they sold at something like a 10,000% premium. (Re-tooling is expensive, so their profits weren’t exorbitant. Though they were larger than normal, which incentivises the work.) Once the premium diminished, they went back to making clothes.
India has anti-gouging laws. But they are loosely enforced to the point of non-existence. In America, we not only have such laws, we also have a media circus and cancel subculture that strongly discourages such responses.
teachers and many essential workers who need masks the most are also most vulnerable to unexpected expenses like PPE costs. and the organizations they work for typically have strict budges and can usually only provide limited supplies.
that statement feels wildly out of touch.
My district had to double its busing budget this year due to restrictions on the number of students that could be on each bus. This led to even further cuts into the classroom budgets.
So, I guess your experience may be different.
Except, they aren’t spending that much now because they aren’t bringing the kids to school. Why would the teachers need masks?
My district is bringing half the students to school each day, with a different half on different days. But they still drive the buses the same distance, and still need the same number of drivers.
We have made other mandated changes which have been vastly more expensive.
[EDIT] To be more specific here. Price gouging laws apply to retailers, not manufacturers. Price gouging basically covers retailers hording supply to artificially inflate the price during an emergency. That's not what's going on here. Manufacturers don't have capacity to meet demand. They are free to adjust the price in response.
Let’s say it takes 5 years to recoup that initial investment to procure materials and manufacture masks at current pricing. Most experts agree the pandemic will have run its course within a year or two. So common sense says getting into the mask business where it will take 5 years to recoup your losses is a bad bet.
But if pricing was allowed to follow demand, there is more incentive for aspiring mask manufacturers to take those risks. Maybe the cost to ramp up production can be covered in a couple of years or maybe even a couple of months. That mitigates risk and given opportunity like that, existing mask manufacturers will be better incentivized to scale their production more rapidly. And then more masks get produced quickly, scarcity decreases, and pricing eventually finds equilibrium again.
But because we don’t allow “gouging” (whether for legal or social reasons), the mask shortage will continue until existing manufacturers can produce enough to meet demand. And some people that need PPE won’t have it easily available until then, but we will feel awfully good about making sure nobody got gouged. After all, nobody gets gouged if there is nothing to buy.
Yes, obviously - what did you think deficit spending was? But the point is the cost of fiscal expenditure is lower than it has been in the past, and it seems like we have a really useful thing we could be spending it on.
To me, it seems like normal "propensity to consume + ability to pay" style distribution of masks won't help that much in a pandemic that disproportionately spreads among the poor and where the more people wearing the mask, the better.
As Friedman famously asked - who are the angels that are supposed to make these wise, unbiased decisions on our behalf?
Ah yes, as opposed to the rational private market of large capital investments to create new industries, which is apolitical and has no cronyism /s (never mind no price incentive to massively invest in large-scale manufacturing for a temporary pandemic)
I do not think it even remotely holds in the illiquid limit of massive-scale private capital investment markets. I would rather that power be wielded by actors exercising public power shaped by institutional constraints than by private actors who can wield it in an arbitrary manner, particularly in the context of a pandemic where there is a huge societal difference between 10 $10 masks and 100 $1 ones.
Governments that are democratically accountable to the people are far more likely to create outcomes that support collective social needs than are business owners who are accountable to no one.
The fact that the United States does such a poor job of this is an indictment of poor governance, and lack of democratic accountability, than a weakness of the principle of government in general. Other countries do far better at this--note the universal availability of rated masks in places like Korea and Japan from day one of the pandemic--and there is a reason the US is ranked 22nd, and falling, for public corruption.[0]
Artificially cheap prices also encourage hoarding and opportunistic buying by those willing to sell on the black market. And that just compounds the problem.
So while your desire to prevent gouging is admirable, it is also counterproductive.
Are you citing any data for this or are you just assuming this will happen? In my experience when production equals demand everyone continues selling at the ridiculously high prices for months. In a pandemic like this one that's months of watching the death toll climb.
There is a very real cost of sticking to a free market ideology when people are dying.
And to address your alarmism: if people are dying, it's safe to assume that a lack of PPE contributes to that. And people don't have PPE because the free market isn't being allowed to produce it. That's the point.
I'm not the one "sticking" to an ideology.
While theoretically price gauging is an incentive to increase production, if that's all you're thinking about, you're dealing with a toy model that has little connection to the real world. Toy models can be super compelling and elegant, but that doesn't make them reality. You have to deal with other factors, like
* The influence of parasitic middlemen only looking to flip goods and drive up the price for quick personal profit. In most of these cases, the period of increased demand is so short this is the only effect you'll see, since there's no time to bring new capacity online, but you have all the downsides of increased prices.
* Does price gouging actually direct the scarce resource to where it's needed? Markets often are very irrational, so this can't reasonably be assumed (e.g. during a famine, the market would direct food to the rich and well-fed even if they just were going to waste it on opulent banquets, because they have the money to pay the price).
* People are actually motivated by things other than greed, even though models of behavior are simplified by assuming greed is their only (or main) motivation.
* New production will come online to meet demand, even without price gouging. How much more production would price gouging motivate? Is that production worth the social cost?
* You can't build a sustainable greed-motivated business on building factories to price-gouge. A brand new market entrant is likely to have a pretty poor product compared to established players, and will likely go bankrupt once demand returns to normal. They might not even get their product out the door in time to take advantage of the high prices. It could be a predictable case of "buy high, sell low."
* New techniques will be developed to more efficiently use current production, which may pull the rug out from under anyone who made a heavy capital investment based on the surge demand.
* Etc.
> Without those laws, the price going from $1 per mask to $10 per mask would still be very much affordable for everyone who really needs a mask, and factories who can successfully get decent production underway will earn lots, making it worthwhile to take on the risk of chasing a (possibly short lived) demand.
IIRC, the price gougers drive up the price even higher than $10.
Despite a lack of DPA measures and the existence of anti-price gouging laws, masks remain readily available. For example, asimpleshop.com (made by a fellow HN user) has masks ready for a reasonable price. The fact that everyone does not have access to good KN95 masks comes from a national lack of will, not a lack of national resources.
Case in point: there was a great piece a while back about a domestic mask manufacturer who ramped up production for the H1N1 outbreak only to see demand collapse when the pandemic turned out to be far less severe than expected [1]. They almost went out of business because there was no where to sell their masks at a profit and had to unwind most of their operations.
The solution here is for the federal government to backstop the orders. If no buyer can be found at price $x / mask, then the government will buy them and put them into the national stockpiles for the future.
[1] https://www.wired.com/story/surreal-frenzy-inside-us-biggest...
What i've just said obviously over-simplifies and in some large respects does a dis-service to capitalism BUT i still can't help but feel we need an improvement. It's not good enough yet.
In practice, I don't think $10/mast is unnaceptable. That is about 15 minutes worth of an ICU nurse's time[0]. In terms of costs that this pandemic is causing, even "expensive" masks are a cheep.
[0] https://www.ziprecruiter.com/Salaries/What-Is-the-Average-IC...
Even the ones we get from 3M South Korea at about $20 each winds up costing just pennies per hour.
Re-use Guidelines: https://www.cdc.gov/coronavirus/2019-ncov/hcp/ppe-strategy/d...
How have you found reuse to effect fit and performance?
From the CDC page you linked:
"Decontamination of an N95 FFR inactivates viruses and bacteria on the device, but does not restore the N95 FFR to “new” performance. Decontamination studies have evaluated the effect of the decontamination process on the fit and filtration performance of N95 FFRs; however, these studies did not consider the likelihood that N95 FFRs worn by healthcare personnel are likely donned and doffed multiple times before undergoing decontamination. N95 FFR performance will decrease as the number of hours and number of donnings and doffings increase. Repeated decontamination and handling of FFRs can damage the fit and filtration performance of N95 FFRs. Fit performance during limited reuse, including decontaminated FFRs, should be monitored by the respiratory protection program manager or appropriate safety personnel. Information about how to assess N95 FFR fit during limited reuse can be found below...."
We store them in paper bags to let them dry out.
Given we rarely actually have to go out of our home offices, it works well. 20 resperatore lasts about three months per person.
If you need more - you can get 3M N95 from South Korea - about $200 for twenty.