And they didn't do a damn thing about price gouging on N95 masks, hand sanitizer, and disinfectants during a pandemic.
I reported dozens of listings and they didn't do anything about them.
I reported dozens of listings and they didn't do anything about them.
But reporting items in general is a waste of time. I’ve reported obvious scams directly to their support people and they let them slide.
Lots of people overpaid, and it went into the hands of some eBay armchair hoarders.
The free market is not designed at all to do anything, let alone acts with a bolted-on moral load.
What the free market allows is that economic actors like the hospital are free to purchase their supplies from anyone at all from anywhere, and allows anyone who has any interest in producing said supplies to present their offering. That's it.
I live in a country where, when the demand for N95 masks started, had a few unrelated corporations quickly enter the market with their own product. I'm talking about companies ranging from office supplies to coffee makers. Hell, even beer producers quickly entered the hand sanitizer market. Consequently prices dropped drastically and not only is there no shortage of protective equipment but it's also affordable.
That's what happens in a free market.
How come you're talking about this sort of stuff not happening in your country, and still you talk about a free market?
Interesting, because IIRC there were global shortages of both hand sanitizer and N95 masks up to at least May. There were a lot of scammy products sold in between March and May, though. The problem with price gouging in large-scale emergencies is that companies just can't retool that quickly, especially when - as is the case with both hand sanitizer and N95 respirators - a complex supply chain is involved. That takes months, and through those months, you're dealing with extremely inefficient distribution of goods - from the humanitarian/life saving point of view.
Free market does what it does. For instance, price the poorest out. A well-known example of the free market at work was in the US, when some people drove a van around towns and villages in their state and bought out all hand sanitizer to resell it on-line (with significant markup), thus depriving less wealthy communities of access to hand sanitizer.
And that everyone has perfect infinite information, which is impossible.
And that externalities are irrelevant, which is false
And that all options are equally accessible, which doesn't exist.
And that people act in perfectly rational objective ways, which isn't how humans behave.
And that everyone instantaneously knows the utility maximization function of all potential transactions, which doesn't ever happen either.
And that firms will always prefer competition over cooperation, which is the exact opposite of reality.
And that any tricks such as cornering, price fixing, ramping, runs, pump and dumps, luring, spoofing, churning, pools, don't exist, which is also false.
The foundation it's built on is a fundamental fiction. Conclusions based on it occasionally resembling reality are exceedingly rare and merely coincidental - it's like a form of astrology with more equations and charts.
And the real clincher is the advocates are only interested in defending their ideological agenda like some kind of religious zealot.
When anyone walks in thinking they already have the answer before hearing any of the questions, watch out - especially if it's the same exact answer every time.
So, watch out for those religious zealots indeed.
The premise of your argument is incorrect because they are not real. The free market is an impossible theoretical intellectual exercise and nothing more.
Show me where all participants instantaneously knows the utility maximization function of all potential transactions and exercises individual maximization with friction free transfers based on perfect infinite information and we can more forward with your argument.
Otherwise you're simply attributing unspecific generalities to a fiction.
The task is still on you to demonstrate how the free market isn't a fiction.
I went into a small one this very morning, to buy some apples and eggs. Looked very real to me. And free: nobody told the sellers at which price to sell and nobody made me buy if I didn’t like it.
Free markets are a specific definition with specific conditions.
And they did that because they weren't 100% "free", but were regulated.
Imagine someone who said this: "Fire is good. It heats our homes, it cooks our food, it runs our cars and our industry and lets us travel quickly from one place to another. So let's get rid of all fire departments and all forest control services, and let fire be as efficient as it can be."
That's obviously a stupid position to take. Fire is neither good nor bad; it's a force that can be incredibly powerful when harnessed for good, and incredibly destructive when allowed to run rampant. And there are times when it's simply not the right tool for the job.
Markets are the same way. Talking about the "free market" is a bit silly: All markets have constraints, either natural or artificial, and they optimize based on those constraints. When appropriately channeled, they can be a powerful force for allocation of resources and experimentation. When not appropriately controlled, they can destroy environments and harm society. And sometimes it's simply not the right tool for the job.
During Soviet times, everybody could afford toilet paper but nobody could buy it...
Well, no. People manufacturing masks still have a choice as to whether to make masks at the price-controlled price or not. If it's not cost-effective, they won't make any. If it's adequately cost-effective, they'll make the normal amount. If the price controls are still fairly lucrative, they'll be encouraged to make more product.
On the other hand, the knowledge that there will be no limits on "surge pricing" might encourage people to build up stockpiles to smooth out shocks in supply or demand; whereas, the knowledge that there will be limits on "surge pricing" might discourage people from building up stockpiles, thus making shocks in supply or demand worse.
In both cases, "the market" is still doing what the market does: optimizing for the particular inputs it's given. The question is, which outcome do we prefer?
EDIT: And, is the market actually the right tool for this particular job?
For instance, in the case of vital medical equipment such as N95 masks, maybe it makes sense to have the government stockpile reserves, rather than relying on the market to do it.
No other subsequent oil crises had the same disastrous effect, because the market was allowed to solve the problem.
How much was the market, and how much was the government?
https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(U...
An abundance of commodities disrupts the conditions for the creation of profits. Nobody really disputes the overproduction phenomena and consequences. At the macro-scale this can have a contagion effect and cause what's called a "general glut" identified by both Smith and Ricardo.
We saw that in the shale oil bust just recently. Price controls and making the government the buyer of last resort (for instance, the Commodity Credit Corporation) are remedies for fixing this flaw. They are there because of a fundamental flaw in market economics.
I still remember entering a supermarket in the west after the fall of the Berlin Wall. The shock at all that choice... is indescribable.
Simply acknowledging an economic phenomena doesn't make someone a soviet communist.
Some really ardent neo-classicalists say they don't exist but I haven't read their evidence carefully enough to speak to it (here's an intro by Rothbard if you're interested: https://mises.org/library/says-law-markets)
I personally think some of the most notable Austrians had a bad habit of using arguments of convenience to defend the financial interests of the wealthy benefactors who funded their institutions and reversed their arguments when expedient but that's a separate conversation.
The majority of people are workers. You're telling me the "risk" an entrepreneur takes is being on equal footing with their (former) employees? Man, you're making a great argument against capitalism, if that's what you're saying.
Entrepreneurs also risk their time which employees usually prefer to sell at guaranteed return. But some choose middle ground by accepting a mixed (cash + stock) compensation.
I believe we, as a society, would gain more if more people would "risk" the entrepreneurial path.
The risk narrative is the current preferred reason to justify gross inequality caused by power imbalances.
It ignores that every participant is taking a risk. It's just some manufactured narrative designed so that we'd think "well alright" and not question the unjustifiable disproportionate gross inequity of all the reward going to those with the smallest risk because of how structural power works.
The lowest wage worker living paycheck to paycheck has wayyyy more risk exposure than someone like me who has skated by trivially without a paycheck for over a year. The idea that my investment portfolio entitles me to the profits because of some immense risk I'm taking is clearly totally manufactured bullshit that's used to shape public opinion.
I could lose every penny without affecting my quality of life at all. Literally zero effect. The risk is purely abstract. It's not material in the slightest
You believe this despite 1000's of years of history proving centrally planned economies fail every time?
Even with in the COVID crisis we have example after example of governments in the US, and out of the US, State level, and Federal level making the exactly wrong choices.
We also have many examples of the market opening up avenues of innovation and surplus in PPE and Testing
I am sure the obvious thing to you is "just elect better" but that is akin to your statement about "the real clincher is the advocates are only interested in defending their ideological agenda" or even "When anyone walks in thinking they already have the answer before hearing any of the questions, watch out -" where the answer to all questions is "more Government Regulations"
The Free Market is not perfect, but it is the best model we know of, replacing it with Centrally planned economy and high government regulations has proven time and time again to produce worse economic outputs and often times costs millions of lives
Systems that have tried to work toward it are extremely centrally planned and heavily regulated such as the NYSE.
Retail plans to have a free market exchange, say of healthcare providers, say, in the affordable care act, also have lots of central planning and government regulation.
The efforts to get to a free market have been some of the most complexly planned and regulated government systems ever created.
It's necessary to try to secure the required guarantees. How are you going to get everyone to agree on the same way of informing a price? How are you going to get equal access to all options? How are you going to get a friction free transfer? Make sure firms stay competing and not carteling, collaborating, or colluding etc ... the answer is government government government. These things don't happen on their own.
What??? How in any way in a Centrally planned market a "free market exchange"?
Nothing in ACA is a free market, NOTHING. and NOTHING in ACA had a goal or desire to create a free market exchange, it was expressly anti-free market with the goal to be one step closer to Single Payer
>How are you going to get everyone to agree on the same way of informing a price?
I am not sure you understand what a free market is, or would look like if your are asking this question.
It's based on models by the Hudson Institute and the Heritage Foundation, free-market think tanks and is partially based on the Republican Massachusetts plan from 2006.
The inability of republicans to replace the plan over the past decade is because the plan as it stands was more or less the Free Market proposed alternative to a European style system by their leading advocacy groups circa 2009.
The Republicans are disowning the plan now because of optics. The Heritage foundation pulled their original document for instance, but you can find it in places like here https://www.scribd.com/doc/86911670/1989-Assuring-Affordable...
Free markets at their finest. In my understanding only countries implementing price controls still have supply problems...
Back then I wrote my own auction house addon that would scan for glyphs below a certain price threshold, buy them, and re-list them in bulk for higher prices. It also scanned for raw materials and bought them too to help strangle the supply as much as possible. It was so easy that hitting the technical gold limit (something just over 200k IIRC) was a realistic problem to deal with.
The supply was limited enough that 2-3 people could monopolize an entire server. I recognized the other 1 or 2 people doing it on my server and it's something I would describe as tacit collusion. We never talked to each other, but we didn't compete with each other either.
The whole time _everyone_ complained about the price of glyphs, but there wasn't much they could do about it. If someone came in and tried to compete by undercutting you, you'd just buy out their supply and re-list it at your inflated prices.
It wasn't complex. You just needed to be willing to be a bit of a scumbag. The only thing that was moderately difficult was getting enough gold to start monopolizing that part of the market. IIRC it costed 5k gold to get a flying mount and most players had to save up for that, so being able to drop 5k at the auction house gave a lot of buying power.
Having a limited supply product that people _need_ means your profits are only limited by your ethics. Capitalism works really well for luxury products IMO, but less so for necessities.
In non-zero-sum real life, things are different. People didn't need antibiotics before they were invented just as people don't currently need to live to 200 years old since we don't have that technology either. I can't find a clear boundary between need and want. Need seems to be just "very want". Some people end up with less than others and the world keeps turning. We don't even need seemingly essential things like water because we can survive a few days without it. Just as seriously ill people can survive a few days without treatment (which may or may not have been invented yet), and normal healthy people can survive a few days when they're already 100 years old and we don't have anti-aging tech.
1) Retooling factories and setting up supply chains takes time. You can't just start pumping out PPEs out of a new plant in a week; it takes months to organize.
2) In an emergency, by the time the production is ramped up, the demand may be gone. Some mask manufacturers were reluctant to increase their capacity early this year, because they've been burned by this in the past: they've overproduced for SARS, only to see the demand evaporate as the pandemic subsided, and were left holding the bag.
The first definition (in Collins 2018) is "to be in want of", so in a sense you're right. However, one of the subsequent definitions is "distress or extremity", followed by "extreme poverty or destitution". "Need", then, is a want that's extreme enough to cause suffering if it's unfulfilled.
In that sense, people did need antibiotics. They might not have known it, but they did. In the same way, today we need treatments that we haven't discovered yet. "Being able to survive" isn't the bar. "Not suffering for the lack" is.
https://nypost.com/2020/03/30/brooklyn-man-arrested-for-hoar...
Those items were not controlled by the government, there were no quotas in place or anything like that, so what exactly did you report those listings for? What crime, or even what ethical problem do you see with it? Just don't buy it if you think it's too expensive. It would be one thing if it was a big company that was ordered by the government to give masks to hospitals, but the listings you talk about were likely from individuals who had small stocks that were free to do with those stocks as they pleased.
It sounds like you didn't want to pay the price that the seller wanted, but instead of simply refusing to buy you tried to go around and try to abuse the reporting system to force them to sell cheaper in a new listing.
Are you saying that all health products should be excluded from normal market forces and that someone (government?) should mandate fixed prices on all of them at all times? That just by virtue of being health-related they should not be in the normal market? We sure don't seem to do or particularly fancy this type of economic planning anywhere in the west...
In this situation it also makes sure that the rich can be a lot better protected from a virus than the poor, that is not ethical in my mind. Yes, the market will produce more, but that takes time, time during which people die.
It isn't the rich peoples' fault, or the poor peoples', that there was a sudden surge in demand for these goods, or that the market did its job in adjusting the goods to their new real price in order to keep them on shelves. That's exactly what you want. Otherwise, no amount of luck or hard work will allow you to get that good even if you really, really, want it, and are willing to sacrifice other goods in order to pay the elevated -- but worth it, due to the circumstances -- price, because that elevated price was banned by people crying about "price gouging."
I need to get off of this website.
Wrong why? I mean, in a time of scarcity how do you ensure that only those who need it the most are able to self-moderate their purchases?
I should point out the fact that artificially restricted selling prices lead to shortages really quick, as people tend to binge buy in those circumstances thus depleting supplies. It happens with bottled water in hurricanes, it happened with toilet paper in the first covid19 lockdowns, and it sure as hell happened with face masks as well.
Econ 101 doesn't talk much about the impact of wealth inequality on free-market mechanisms, for some reason.
As the covid19 pandemic showed, they surely are not the ones buying them all all at artificially restricted prices either, because the jackass with the shopping carts and the desperate need to hoard all types of basics decided to clean up the inventory.
> Econ 101 doesn't talk much about the impact of wealth inequality on free-market mechanisms, for some reason.
As much as it might pain you, basic economy principles are a kin to natural laws, in the sense that even if you try your hardest to pretend they don't exist... They are always there.
Additionally, one of the main errors you're making is conflating how economies work with your personal opinion on how you preferred things to happen without paying any attention to unintended consequences, let alone basic relationships between cause and effect.
killing, stealing and raping are "a kin to natural laws". They exist, but don't pretend that they're helping.
The free market would have helped if it got masks to those who need it. It didn't. It therefore, in this context, failed to help, natural laws or no. All else is philosophy.
On the other hand, how do you ensure that the poor have equal access to items that could save their life?
Here is an interesting podcast episode about this phenomenon in an area hit by a hurricane: https://www.econtalk.org/munger-on-price-gouging/
This is also what happened in a number of European countries due to the pandemic.
This gets trotted out again and again even though it doesn't apply to the kind of price gouging we saw at the beginning of the pandemic. It wasn't 3M raising prices, it was third parties buying up supply in bulk and then reselling at a higher price. This has no impact on supply, because the manufacturer is not seeing any increase in profit margin - it's all going to parasitic rent seekers in the middle.
Don't make the mistake of ignoring physical reality when talking about economy. A market isn't just a list of prices. Behind those numbers are real goods that exchange hands and have to be produced. If you just play around with some numbers you don't change anything about reality. Government price controls such as minimum wages or maximum prices for goods are just that: Playing with numbers. Since the government absolves itself of the consequences of its policies it can promise the moon and get away with causing pain and suffering.
If you really want a solution then you should start by enacting a policy that combines both the physical and economical world and sets the right incentives. Instead of a minimum wage have a job guarantee, instead of enforcing a maximum price on private sellers have a commodity guarantee that you will sell and produce masks at a fixed price. Once you fix the physical world the economical portion will fix itself.
Direct to consumer sales are a relatively new thing. Retailers and other middlemen are still the overwhelming majority of volume for stuff like masks, toilet paper, soap. Or do you buy toilet paper online straight from the manufacturer?
Btw, in a country without significant manufacturing capacity, everyone importing the needed goods is a "parasitic rent seeker".
On the other hand, if you are talking about hospitals and other institutional buyers, from what I've seen, it was mostly US based institutions and companies outbidding everyone else. Are you saying that you would have preferred those masks, respirators or ventilators remained in China or the EU?
Or perhaps they simply know Ebay's policy on the matter.
"We encourage our community to report any listings they suspect of price gouging to us."
https://www.ebay.com/help/policies/prohibited-restricted-ite...
When an emergency is endless with all hope for resolution being a complete lie due to not having a plan, needing to placate the population longer and not having data to create a plan all while the scope of the emergency is expanding, a market has to continue functioning as normal with its primary feature being to signal to people - yes, even middlemen - that their ability to source and/or create supply is worth their time and energy as opposed to doing literally anything else
Thats what happened
Some jurisdictions created novel more holistic solutions by shielding the consumers from price shocks by the government absorbing/subsidizing the price over a floor. It was foolish of representatives to try to use their existing tools of short term price controls as if a storm just hit a small area of their state, as this just caused confusion and made the market more opaque.
I'm still unconvinced that price gouging during an emergency is beneficial overall.
Regardless, it was already illegal in California.
The legal reality was more nuanced than the governor, legislature and DA ever imagined because prior emergencies were never larger than an isolated area. This market distortion covered the entire state indefinitely and crossed state lines, their power was much more limited than they imagined.
They thought the federal government was going to solve this for the states and were wrong and this cost the states months, especially California due to its size and population, which is still realigning and adjusting to self-autonomy and procurement while being ahead of many other states.
This is what free markets enable, in times of pandemic this is unacceptable.
That is what the free markets enable, and that is why they are even more important during pandemics and other crises.
Sure, but that does take time, during which hospital stuff and immunocompromised people don't have masks.
People couldn't sit on stock for very long because other people were flooding the market as fast as they could.
There was simply scarcity and that's it. State's had their procurement and price enforcement procedures all wrong while they sat idly for the Federal Government to procure for them, it never happened and that is what cost the most time.
The better version of events was that states assumed this level of autonomy at the very beginning and ramped up their own domestic production back in January. They created credits for this kind of production in the private sector, while also subsidizing a retail cost above a certain price, creating a ceiling for consumers. None of this happened and this affected the medical workers and immunocompromised greater than any entrepreneur hoarder could.
The "hoarders" were taking just as big of a risk as the people that took the risk to create and sell.
You are missing the point that the necessary stock did not exist. Pointing the finger at people hoarding supplies merely deflects the incompetence to a phantom boogeyman.
Ironically, this might make things less likely to get to the point where the market price was 5x normal.
[1] https://www.startribune.com/3m-s-complicated-road-to-enough-...
I have been unable to purchase them from Home Depot or Lowes.
The most recent price I have seen is $5 per mask in a twenty pack.
The highest I have seen so far this year, was $18 per mask.
If after all these months you're still seeing a shortage in face masks then I regret to inform you that your market is not free, nor is your economy operating accordig to basic capitalism principles.
For N95 respirators you need meltblown, a material that most countries do not produce, and the equipment to make it has lead time of a year in mormal times.
Masks that are now filling shelves are, for the most park, just BS. They are not actual respirators.
IDK about the US, but in Europe the supply of masks and respirators is now sufficient (and has been for months). From what I've seen, the countries that did limit the prices ended up having worse shortages than the ones who didn't, big surprise... /s
If you suspect that a retailer is selling masks or respirators that aren't compliant with the relevant regulation, perhaps you should report that somewhere.
You misunderstand - the medical staff must be supplied with proper equipment. The general public just has to wear a mask, there is no requirements that it performs to any particular standard, and the retailers are not claiming they do. The masks worn by the the public contain no meltblown, they are just random cloth fabric and they perform nothing like the proper respirator does.
The point I was making is that you can't point at the random masks that appeared on the shelves as evidence that supply of respirators has been fixed - there are still not enough respirators to supply every Tom, Dick and Harry.
There are actual respirators available through retail and online channels and they do contain meltblown, e.g. 3M 6200 with 3M 2135 filters. Most people won't need single use PPE, and most people won't need respirators, which is why they are available.
Regular masks are not BS, they are source control. Considering that significant number of transmissions occurs before symptom onset, everyone should wear one when interacting with strangers. It's one of the cheapest pandemic control measures available.
So the hospital staff should just do without PPE for weeks until production catches up?
High prices during the pandemic slows hoarding, and is a signal to producers that there is high demand. When production ramps up to meet demand, prices will lower. This is the situation now.
Price-gouging laws encourage hoarding: the first person in line gets to buy everything at artificially low prices. Now they have to make other laws to limit purchases. Now people who need to buy for a large family or community can't buy enough. Now the needs to be another law allowing exceptions....
Say by tying purchases to your ID, so each individual pays a fair price but only gets to purchase n items per t time.
If you aren't sufficiently incentivized to increase production by knowing you're now guaranteed that every piece you produce will sell at the everyday price, as quickly as you can ship it, then it doesn't seem like your everyday price was rational to begin with. In such circumstances, I don't think it's safe to assume that adding steep price gouging will produce any marginal increase in the likelihood of a producer increasing production, on top of whatever production increases are already going to happen just as a result of instantly selling out of all existing stock.
But all that is assuming the gouging happens at the production end of the supply chain. If the gouging is happening at the penultimate step of the supply chain and the profits mostly don't make it back to the manufacturer, then price gouging can't do much to incentivize higher production.
And that was, in fact, the problem with price gouging of PPEs in this pandemic. The manufacturers didn't raise prices, the stores didn't rise prices - it's the middle-men who swooped in, bought all the stock at retailers and wholesalers, and resold at inflated prices. None of the pricing signal made it back to manufacturers.
The price signal helps cover those costs and risks, not just telling you to make more, but by making it plainly economical to spend the money to do so. Otherwise, “screw it; I’ll keep making at the tuned level rather than doing all this extra effort to make less margin-% and maybe less free cash flow.”
That was very obviously not going to be a risk with this pandemic.
With prices going up, people are incentivized to buy diesel generators in Maine, load 'em up in their flat bed trucks, and just drive 'em down to texas to sell there. The extra price just needs to cover gas and some time.
In the case of PPE, the extra price might be enough to pay for totally disrupting base material pipelines away from other products and into the PPE pipeline.
There might be production limits that cannot respond quickly. But there are many limits that still can. Over-hours, material acquisition, moving stock around long distance. Normally, these things are un-economical and also bad ideas. In the case of an emergency, these things become good ideas. It makes sense to also make them economical then. Or at the very least, if people are willing to do these things, don't force them to make hugely un-economical decisions out of the goodness of their hearts.
This comparison is about as accurate.
Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.
Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something.
I do think that comparing emergency pandemic responce with Soviet Union as a whole is very poor taste and logically flawed.
I also wanted to point out that a lot of things happened in Soviet Union, including race mixing, so perhaps one should be careful when drawing conclusions.
* people who don't have ID?
* people who genuinely need more supplies?
* who decides "fair price"?
* who stops a producer from deciding the price isn't worth their time?
* prevent corruption, the ID administrator getting more for their friends & family for instance?
Otherwise they might have missed it, it's not like they have sales fogures and know about the gloval pandemic.
You do not even demonstrate that price gouging is superior to demand-limiting and price controls, which is the entire point of your last paragraph. On what basis or by what metric?
"You do not even demonstrate that price gouging is superior to demand-limiting and price controls"
I'm not even trying to demonstrate anything. I'm sharing information. If you have better information, make your case!