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.
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.