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Man who stockpiled hand sanitizer donates it all ahead of investigation (thehill.com)
195 points by anigbrowl 14 days ago | hide | past | web | favorite | 204 comments



Totally different scale, but this reminds me of Jesse Livermore, possibly the best speculator of all times.

> Following the end of World War I, Livermore secretly cornered the market in cotton. It was only interception by President Woodrow Wilson, prompted by a call from the United States Secretary of Agriculture, who asked him to the White House for a discussion that stopped his move. He agreed to sell back the cotton at break-even, thus preventing a troublesome rise in the price of cotton. When asked why he had cornered the cotton market, Livermore replied, "To see if I could, Mr. President."

A true hacker of the markets.

https://en.wikipedia.org/wiki/Jesse_Lauriston_Livermore


The classic one often talked about in business schools is Robert Taylor buying up all liquid soap pump capacity in the US when he launched, "Softsoap" to head off other companies muscling him off the shelves through superior marketing and contracts with retailers.

http://www.todayifoundout.com/index.php/2019/06/time-guy-cor...

Basically had the market to himself for a year.


Apple did this with tiny rotating hard drives before they announced the first iPod. The essentially bought the next 1.5 years worth. This helped the iPod from having serious competition while they ramped marketing.


In the same vein, Vince Kosuga cornering the onion market in 1955.

https://www.npr.org/2015/10/22/450769853/the-great-onion-cor...


Yep, that's a great story too. It's so ridiculous that this is still in force:

> The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".

> In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. As of January 2020, it remains in effect.

https://en.wikipedia.org/wiki/Onion_Futures_Act

> The president of the Chicago Mercantile Exchange, E.B. Harris, lobbied hard against the bill. Harris described it as "Burning down the barn to find a suspected rat". The measure was passed, however, and President Dwight D. Eisenhower signed the bill in August 1958. Thus, onions were excluded from the definition of "commodity" in the Commodity Exchange Act.


This is touched on in the Wikipedia article, but it's interesting that the onion market is well known for being significantly more volatile (and thus, bad for farmers) than other normal markets for vegetables.

It is a literally textbook example in why banning derivatives is unlikely to be the easy fix some imagine for market failures.


And gives you a hint for why banning 'price gouging' doesn't help either. (Despite the overall strong sentiment in favour of such silly laws in the discussion on this article. Economics can be a bit counter-intuitive for humans.)


Agreed 100%.

Also, here's an interesting story: https://www.ft.com/content/6a09e4a6-655a-11ea-b3f3-fe4680ea6...

> French industrials group Air Liquide is selling its Schülke unit, whose products range from the alcohol-based hand rubs that have become a hot commodity since the outbreak started, to hospital disinfectants and industrial cleaning products. > > It is asking would-be buyers to offer a higher sum than it first envisaged when the sale process began last year, according to people familiar with the situation, reflecting what one person called the “coronavirus effect”.

Of course, the reason the business might be worth more is because it's going to make higher profits. In theory Air Liquide could cut prices to ensure its profits stayed the same. In fact, not doing so means they're profiting off Covid-19, right?

Which I guess suggests the real problem with what this guy did is scale; he only had a few thousand bottles. If he'd only realised he should have been buying a factory!


Or building one!

I am curious, why were onions specifically banned? I imagine they had some reason to believe onions were uniquely susceptible to this kind of marker manipulation in a way that potatoes, garlic, cucumber, etc. aren't. But I cannot think of how onions are unique in this respect.


Mass outrage. Kind of what happens to the guy from OP (I'm not saying he's a good guy, he clearly isn't). Never underestimate the madness of the crowds.


Because the guy specifically tried to corner the onion market and the response was a re-action, not a pro-active one.


Weren't they afraid he or a copycat would corner potato market the next year, green pepper the next, cotton the next, etc.?


I am fairly confident in the simple interpretation of a mob of angry farmers demanding that something be done right now.


And some calmer heads might have prevented the outrage spreading too much?


Because it happened to onions.


While we're on the topic of weird agricultural laws, from 1949-2015 we had a strategic raisin reserve https://en.wikipedia.org/wiki/National_Raisin_Reserve


If by "true hacker" you mean utter disregard for anybody else's livelihood, sure. He doesn't so much look like somebody worthy of admiration, and more so of pity.


The system doesn't come with your morality and doesn't operate to provide livelihood to the greatest number of people.

Pity the man who was able to show the unequalness the market may bring if you must. But many of the changes in laws can be attributed to holes in the system that were exposed.


"The system" is what we choose to build. It isn't some unchangeable fundamental part of nature. We choose if it does, or doesn't have morality. It's depressing so few choose morality, and then hide behind "it's the system". It's a choice. I wish people would own that choice, if they chose a system without morality, without consideration for their fellow humans.

And yes, I do pity him. His life is sad, and empty, and his final note is heartbreaking.

"My dear Nina: Can't help it. Things have been bad with me. I am tired of fighting. Can't carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie"


Not necessarily. Systems can become amoral even if actors in the system are moral. Consider corporations. Their fitness function so to speak is to amass capital, as much as possible in fact. Even if everyone inside were moral, they are tended towards actions that increase capital, while not necessarily having all the responsibility of the decision, and so their morality does not come into play, because they don't know the true extent of their decisions. Responsibility throughout the organization therefore diffuses. It is like an ant colony, where each individual performs actions whose combined effects give the entire system some sense of individuality separate from its components.

Capitalism is the system, which can and does have moral constraints, the set of which defines and distinguishes one implementation of capitalism from another.

However, capital itself is amoral and has no such limitations.


The “system” may be amoral. But as humans we can choose not to admire people who use the system to immoral ends; and not to suggest that they are examples worthy of being followed.

Well that was an interesting little rabbit hole with a grim end, thanks for sharing.

"His son, Jesse Livermore Jr., committed suicide in 1975. His grandson also killed himself."


Survival > happiness > money. You can argue about the order of the first two.

Remember about this and don't leave your home, people!


It isn't all grim! His granddaughter is successful porn star Brandi Love.


Also,

“In 1955, Onion Futures accounted for 20% of trades in the futures market. In the fall of 1955, Siegel and Kosuga bought enough onions and onion futures so that they controlled 98 percent of the available onions in Chicago.[4] Millions of pounds (thousands of tonnes) of onions were shipped to Chicago to cover their purchases. By late 1955, they had stored 30,000,000 pounds (14,000 t) of onions in Chicago.[5] They soon changed course and convinced onion growers to begin purchasing their inventory by threatening to flood the market with onions if they did not.”

~Onion Futures Act on Wikipedia: https://en.m.wikipedia.org/wiki/Onion_Futures_Act


What about price gouging by drug manufacturers? When will the government investigate that? Why is one type of price gouging accepted as capitalism and another type not?

"In 2001, Acthar sold for about $40 a vial. Today: more than $40,000. An increase of 100,000 percent." https://www.cbsnews.com/news/the-problem-with-prescription-d...


Nah, that’s only thousands of children a year, pretty much different situation, and also you have one small guy to punch instead of a faceless pharma lobby. /s


To this date it blows my mind that people don't realize that drug prices are a result of market intervention, not the other way around. Finding holes in FDA regulations for drug monopolies is a clear cut case of too many regulations that just don't work well together, not the other way around.

> Why is one type of price gouging accepted as capitalism and another type not?

'Price gouging' is not an accepted part of capitalism. Those laws (and customs..) that call out some prices as 'gouging' are bad economics and not 'proper capitalism' either way.

But you are right, that the drug prices are an even more egregious example. And, of course, we get those weird prices because of heavy and incompetent government interference in the drug markets. So we should probably look into scaling back that interference, instead of adding even more.

(And I specifically mention incompetent interference. To give a counter-example, for the most part I am quite happy with the economic policies of my local government. But then, I live in Singapore, where our Prime Minister was the top math graduate of his year in Cambridge, writes C++ sudoku solvers for fun and is looking forward to learning Haskell when he retires.)


> we get those weird prices because of heavy and incompetent government interference in the drug markets. So we should probably look into scaling back that interference

No, we get it because of the wrong kind of interference (due to regulatory capture and government corruption). I think in Singapore the government interferes heavily too - at the very least posing as a bundling buyer for hospitals to put drug purchases out for tender. Every developed country does this.


Hence my addition of the important qualifier of 'incompetent'.

In any case, the medical system itself provides a lot of examples of regulation driving prices in most cases.

Less regulated subsectors like Lasik eye surgery, or elective dental work, or cosmetic surgery, generally improved in quality and dropped in price in the last few decades.

(Another thing to investigate for me would be vet care. The technologies involved are similar enough; but the legal environments are radically different in most jurisdictions. If memory serves right, the evidence was mixed.)


> 'proper capitalism'

Price-gouging is absolutely acceptable capitalism, we only call it 'gouging' because being a greedy asshole doesn't align too well with the moral compasses of most of society. Which is why government 'interference' is a thing in the first place, because otherwise capitalism doesn't give a shit about morals or correctness or acceptableness or anything that isn't capital.

It there's any interference it's so much more likely that it's corporate money interfering with the government.


Oh, raising prices is absolutely 'proper capitalism'.

I was objecting to complaining about raising prices as not being proper capitalism.

> It there's any interference it's so much more likely that it's corporate money interfering with the government.

If only! I'd rather have Warren Buffett or Bill Gates or Jeff Bezos etc have more say over what the government is doing than the status quo.


For every one Congressman, there are 5 pharma industry lobbyists.

Heard it on an NPR podcast fee days ago. So i guess that is the reason.


It isn't really. The issue though is one of effected population. Many people were and are pissed at this type of gouging by pharma companies (see what happened to Shkreli). The pendulum does seem to be swinging back from unrestrained capitalism a bit, but that's also required there to be more data gathered with regard to where and how exactly legal/political/social pressure can be applied to change the behavior. Mind, for about the last 40 years, there has been a pretty consistent trend of deregulation and companies flaunting their regulators.

Hopefully the winds are shifting as a new demographic is entering the political arena having been the butt-end of this status-quo for a while.


> Why is one type of price gouging accepted as capitalism and another type not?

It's not. No one is on the other side of this except those profiting. We all want medicine to affordable to everyone, not just the wealthiest of us.


Whataboutism doesn't really help. Yes, there are systemic issues with our healthcare system. What this guy did was also wrong. We can choose to address both. We can choose to be upset with both.


Cute. Apparently he caused a bit of upset. He's is justifying himself with a mix of contrition and claims of innocence.

> Colvin apologized for purchasing all of the products Sunday, saying that he did not realize the spread of the coronavirus outbreak or the shortage of sanitary products across the country.

> ... I had no idea that these stores wouldn’t be able to get replenished.

Right.

I was wondering what law the Tennessee AG could possibly use to stop these guys. The answer is in the AG's press release (sort of):

> On Thursday, Tennessee Governor Bill Lee declared a state of emergency prompted by the spread of COVID-19, or coronavirus. The declaration triggers the state’s anti-price gouging law which prohibits vendors from charging too much during a crisis tied to a state of emergency.

> Under the law, the Attorney General’s Office can put a stop to price gouging and seek refunds for consumers. The courts may also impose civil penalties against price gougers for every violation. The law applies to all levels of the supply chain from the manufacturer to the distributor to the retailer.

https://www.tn.gov/attorneygeneral/news/2020/3/15/pr20-10.ht...


Do Americans really like long queues and black markets?

That's what you get from these kinds of laws.

There was a striking example during the 1970s oil shock:

The US had price caps on petrol. Which nominally kept the stuff cheap, but that was an illusion, since you couldn't buy it at that price: you had to add the extra hassle of queuing and rationing and even risking the occasional outbreaks of violence.

Meanwhile, Canada had no price caps on petrol. And while the nominal price for petrol was higher, you could actually buy at that price. As much as you wanted.


The point is to maintain availability and accessibility. In our current economic environment, it's not out of the realm of possibility that there are people who couldn't afford the price things would stabilize on. The proper response is not unconstrained prices, but rationing and responsible consumption. The rationing/purchasing limits prevents the type of arbitrage schemes this gentleman was attempting, and keeps life moving forward at a reasonable pace while the supply chain marshals itself to meet the higher demand.

The logistics work, and will scale as long as you keep the economy from doing anything terminally stupid in the meantime. Unfortunately, that can be like herding cats in the land of the free.


Just give poor people money, if you want to help them. That's more useful to them, and less disruptive to others.

They already have long queues and black markets without these laws, what are you even talking about?

I can't literally hear anymore this delusion that the unrestricted market will fix everything. It is not true, for a simple reason: limited supply and logistic limitations. You just can't let people hoard goods with limited supply. This is true especially when we talk about vital goods. Every single case shows us that intervention is necessary to prevent hoarding.


Your claim is perhaps a bit too strong?

Petrol is certainly a vital good. Yet, my example shows that Canadian laissez faire prevented queues seen in America.

Same applies for eg post WWII rationing of food in Britain, France and Germany. As countries the rationing and price controls, they solved the very food shortages that these measures were trying to alleviate. See eg https://www.econlib.org/library/Enc/GermanEconomicMiracle.ht...


Ok but think about medical masks or hands sanitizer these days. Those are in high demand all over the world. Would the market be able to "do its magic" and have no regulation on vital medical goods? Obviously no. Few people started to hoard the most goods then charging crazy prices and leaving many others at risk of not being able to afford vital goods that should instead be distributed to everyone who needs it.

And this doesn't even happen just for vital goods! Look at what people are doing with toilet paper.


I don't think a random guy hoarding bootleg hand sanitizer qualifies as a "retailer" under the law.

If anything, normal penalties for operating without a business license should apply.


He's selling things retail, he's a retailer, the fact he doesn't have a license for the retail business adds to the charges.


A) It wasn't bootleg hand sanitizer. It was hand sanitizer purchased from retail outlets.

B) He wasn't hoarding it. He was explicitly reselling it.

"Colvin sold 300 bottles of the hand sanitizer at a markup on Amazon, The Times reported."

So the law 100% applies to this situation.


someone who stockpiles 17000 bottles is not just a “random guy hoarding”


Sure there are some important details missed in the story, but I really don't like how fuzzy the line is. It's not like you usually buy the stuff from the manufacturer, the whole world of trading is built on the ability to buy cheap and to sell under the conditions where the price can be (always somewhat artificially) made higher. It's what the resellers do, it's the "free market". Yet when a man manages to predict that the demand (and hence the price) of hand sanitizer will rise during the time of pandemic and to "stockpile" some measly 17 700 bottles of it — he can be prosecuted for that. And I mean, seriously, 17 700 bottles is peanuts, it's not like he was short selling US$10 billion worth of pounds sterling during the time of financial collapse (which he majorly contributed to).


> [...] the whole world of trading is built on the ability to buy cheap and to sell under the conditions where the price can be (always somewhat artificially) made higher.

Not sure what you mean by 'always somewhat artificially'? Eg retail trading of the kind that Amazon or Walmart do doesn't strike me as particularly artificial: of course, there's going to be a price difference between what the factory gets and what customers pay?

Same for commodities trading. Or even stocks: if Warren Buffett puts in lots of smarts to find undervalued companies and buys them, the rest of the world catching up some time later seems perfectly sensible.

Of course, there might be _some_ instances where the price goes up 'somewhat artificially' perhaps? But I am not sure what that would even mean? My contention here is with the 'always'.


Whole areas were without necessary products directly because of his actions. No, he didn’t mess up an entire industry, but for the areas he hit, we were without sanitizing products much sooner.


That's great for elective consumption, but when there's a public health crisis it puts lives at risk. Cornering the market on candy bars or novelty items, make a million bucks, that's great and has my blessing. Trying to do it during a disease outbreak makes someone a PoS.

> “When we did this trip, I had no idea that these stores wouldn’t be able to get replenished.”

> “It was never my intention to keep necessary medical supplies out of the hands of people who needed them,” he continued. “That’s not who I am as a person"

This doesn't follow a modicum of scrutiny. If he's buying to sell them at a markup, it MUST be because it's not getting replenished. Otherwise, people would just go to the store and buy it at retail price. It's a BS apology and shouldn't be accepted by anyone.


I beg to disagree, and here's why: (Not saying the guy isn't scum, but I think his statement is plausible...)

He didn't just start doing this last week. This so-called "retail arbitrage" is a normal thing throughout online marketplaces, and has been for years.

Sometimes, someone (like me, as a consumer) won't feel like going to the store, and will happily pay ten bucks for what's usually a three-dollar item, because it's shipped to my door. FedEx is the real winner, but guys like this are making a living enabling my laziness.

In other situations, a product will be weirdly short in one part of the country, but available elsewhere. For instance, in a hurricane, a bunch of unprepared people suddenly decide they want some product, but the local stores are sold out. There's lots of that product _already sitting on shelves_ elsewhere in the country. Those retailers aren't going to pull it themselves and shove it backwards up the distribution chain to be redistributed to storm country -- that's just not how distribution works.

So, folks like this will go buy it, off the shelf, and offer it online. Where again, someone decides it's a better option than going to the store. And the guy doing the shipping is doing real work, I don't see anything wrong with him putting food on his table with it.

In all these cases, the retail-arbitrage folks aren't depriving anyone of anything. They're not clearing out the last of anything, and the stores they shop usually do restock the next day, because their local distributor has plenty of product.

This time was different, and that's obvious to everyone now.

But I do find it at least half-plausible that this guy might not have been thinking of it as different. It looked, from his view, just like every other opportunity where he's been making money the last several years, and which hurt nobody.


This is the answer. NPR Planet Money did an episode on this a while ago, long before there were any real or perceived shortages of any goods. Even in good times, this strategy tends to work:

> Sam Cohen's business works like this: He walks into a big retail store and buys a bunch of stuff. Then he sells it on Amazon for more. It's straightforward and surprisingly lucrative.

> This is a multimillion-dollar business for Sam — and for lots of other people who do the same thing. It's called retail arbitrage...

https://www.npr.org/sections/money/2017/07/26/539552579/epis...


Why not buy it directly from the supplier? Why pay tax and a mark-up when it can be obtained for a similar price the department store got it for??


I am not sure if manufacturers will be open to selling directly to someone who is not buying a large enough quantities. But even if they are, they probably won't sell them to retail arbitragers.

I cannot remember if it was from the same episode or another Planet Money episode, but I remember them talking to manufacturers who were unhappy with their products being sold online for prices much different than they intended to.

The gist of it is that, if you are for example Coca Cola, you want people to think of your products as an everyday item they can drink anytime, not a luxury to be saved for special occasions. And if you are Apple, you won't want your product to end up in the bargain bin. Pricing is part of a brand's marketing strategy and identity. People who price products way out of the range the manufacturer envisioned are detrimental to their brand image and long-term market share.


It wasn't until the 1970s (in the USA) that retailers could determine the price of goods in their store. Before then manufacturers could dictate the price of their goods (laws protected that). So retailers competed on other dimensions (service, location) rather than price.

I learned this (and a lot more) from "Goliath": https://www.simonandschuster.com/books/Goliath/Matt-Stoller/...


Small-time individuals don’t get the same sorts of deals as major retailers.


Exactly. And many manufacturers will have minimum purchases, i.e. you need to buy a pallet of these, we won't sell them individually.


For some products it can be cheaper to buy retail. The retailers use their buying power to get a lower price than anyone else gets. There have been incidents where all the mechanics go buy their oil from Costco, or all the bakers go buy their butter from Walmart. The savings were enough to justify it.

You can generally skip the sales tax if you have a business license, or there's some way of registering purchases as being for resale (seems to vary by state here in the US).


It could be because conditions change too rapidly. Whatever you are buying and selling this week, it might be different next week.

I know someone who sells a lot of stuff on amazon. It's mostly books, but they do a little retail arbitrage type stuff too. Sometimes it can be as simple as a store in their area having bought too much of something, so they put it on sale, whereas a store in someone else's area didn't, so there's the price difference. Or it can be a discontinued product that is still in demand but stores in one city have extra whereas stores in another city are out.

The whole point of arbitrage is that you identify and exploit price imbalances. But imbalances tend to balance themselves out eventually, so it's often a temporary situation.


He didn't just start doing this last week. '

Yes, he did. Previously he had been reselling non-essential things that weren't in particularly high demand. Selling something that people are panicked about is new.

Hell, in one breath he talks about the insane prices he was getting for hand sanitizer and in the next he talks about how his markup is justified. He knew exactly what he was doing.


> > He didn't just start doing this last week. '

> Yes, he did. Previously he had been reselling non-essential things that weren't in particularly high demand. Selling something that people are panicked about is new.

That was a neat switch you did there. I started to write an elaborate analogy about someone running through an in-use batting cage, but you get the idea.


I suggest reading the original article:

> But what about the morality of hoarding products that can prevent the spread of the virus, just to turn a profit?

> Mr. Colvin said he was simply fixing “inefficiencies in the marketplace.” Some areas of the country need these products more than others, and he’s helping send the supply toward the demand.

> “There’s a crushing overwhelming demand in certain cities right now,” he said. “The Dollar General in the middle of nowhere outside of Lexington, Ky., doesn’t have that.”

> He thought about it more. “I honestly feel like it’s a public service,” he added. “I’m being paid for my public service.”


Your quoted information supports that comment not refutes it.


> Those retailers aren't going to pull it themselves and shove it backwards up the distribution chain to be redistributed to storm country -- that's just not how distribution works.

Cross docking is exactly this and is common in supply-chain logistics, most famously at WalMart.

https://en.wikipedia.org/wiki/Cross-docking


> Those retailers aren't going to pull it themselves and shove it backwards up the distribution chain to be redistributed to storm country -- that's just not how distribution works.

Why isn’t that exactly how FEMA or similar agencies work?


See how much Excedrin Migraine is going for on eBay now?


The practice has existed forever. But the quantity and the product rule out "this is just what he does" as an explanation. He bought tens of thousands of sanitation items from states across the midwest in one road trip! He knew what he was doing, and why.


From the first article about this he was selling it on Amazon for $8 to $70 per bottle.

So yeah, apology not accepted.

https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...

Matt Colvin stayed home near Chattanooga, preparing for pallets of even more wipes and sanitizer he had ordered, and starting to list them on Amazon. Mr. Colvin said he had posted 300 bottles of hand sanitizer and immediately sold them all for between $8 and $70 each, multiples higher than what he had bought them for. To him, “it was crazy money.” To many others, it was profiteering from a pandemic.


> If he's buying to sell them at a markup, it MUST be because it's not getting replenished.

This is just false. People routinely pay more for the exact same item for so many reasons, from saving precious time looking for a better price, to laziness, to not even realizing there's a better price, to added convenience in some form, to so many other things. It's entirely believable he thought it would get restocked.


There's thinking and then there's thinking. Did these words come out of his mouth when he needed an excuse? Sure. Do any of those hypothesized reasons justify enormous markups and rushing to hoover up giant quantities of product? No. At very best, he let himself be blinded by greed, and so just didn't think too hard. So at best, he was negligent with safety-critical supplies during a crisis.


You might be right, but there's no need to apologize.

Rationing by price is still better than rationing by luck or queuing or, even worse, connections; and that guy is just converting from a luck/queue based rationing to a price based one and earning some money for that service.

(Of course, some jurisdictions have misguided laws against this practice, and normal people don't like it.)


You are really butchering the definition of rationing there.

The word you want is distributing.


It's a butchering of the term with a long and proud tradition.

Distributing might be a decent choice of word, too, but it has extra connotations of shipping stuff around that I don't want here.


Wait, what? Rationing by price means that wealthy people get more. How is that better than a random distribution or a queue?


It prevents hoarding, for one thing.

Also, in this system, things never sell out.


I mean, clearly it does not, as this guy was sitting on 17,000 bottles of the stuff.

Also, random lotteries also prevent hoarding. Same with queues with a reasonable limit on the number you can take per trip through the queue.

> Also, in this system, things never sell out.

Sure they do. If you can't afford $70 for a bottle of hand sanitizer, the product is sold out. Sold out is always a function of 'the cost of getting it to me is too high'.


> I mean, clearly it does not, as this guy was sitting on 17,000 bottles of the stuff.

Because he wasn't allowed to resell. He had no intention of sitting on it.

> Sold out is always a function of 'the cost of getting it to me is too high

Arguing by trying to redefine words is the lowest form of discourse. You know what the term means, and what I meant by it!


It was sold out at the places he purchased the entire supply from. You're kinda playing semantic games yourself.

> Sold out is always a function of 'the cost of getting it to me is too high'.

No, that only applies when the price can adjust. The problem with 'price gouging' laws is that you are not allowed to spend more for stuff you really, really want.


No it isn't. That's just something people with money tell themselves to avoid thinking about poor people.

He might've done wrong, but he made a public apology, and gave it for free. It's tempting to make this mistake. Give him another chance. Certain leaders should take example from this guy.


Here is an interview with WRCB Chattanooga where he is literally asked whether he is sorry, and he waits for about 15 seconds before replying "No". https://www.youtube.com/watch?v=18wybjhCqg8#t=1m35s

So his faux apology now is a total sham.


He only made a public apology because he was in the spotlight. Also he donnated his stock before the investigation begun.


They really shouldn’t. The example he’s setting is to buy up essentials before those in need can, maximize profits, then give puppy dog eyes once people rightfully call you out on taking advantage of people and getting praise for showing false remorse.

I doubt he really wanted to give it away. Knowing the internet, he probably got some death threats or he just realized he was facing actual penalties and decided it was time to finally throw in the towel. If he didn’t make the news, he’d still be finding ways to hustle.


No, he still fleeced a great many people already, and we catch a fraction of them. The penalty must be sufficient enough to discourage this or its a lost battle from the beginning.


His "public apology" was really a full-page ad on the front page of NYT. I believe he was hoping that this would let him move all his stockpile. Fortunately, AG intervened first.

not necessarily, more like arbitrage. people in the city cannot get it because the population bought it up, but they can Amazon it. in the rural areas a case of it may be a normal month's supply. so if you didn't buy everything on the shelf in the rural store then the store could potentially be fine. of course there is still profiteering issue but again a decent markup, not an exorbitant one would be fine.


> it MUST be because it's not getting replenished.

I don't think that follows.

All that needs to happen in order for the him to sell at a markup is that demand continues to outpace supply, it's not necessary that supply stops.

So, from that perspective, his argument holds.


It is ironic that Americans are not okay with common folks hoarding and price gauging medical supplies but are okay when drug companies do the same.


> This doesn't follow a modicum of scrutiny. If he's buying to sell them at a markup, it MUST be because it's not getting replenished. Otherwise, people would just go to the store and buy it at retail price. It's a BS apology and shouldn't be accepted by anyone.

So much of economic innumeracy is explained by this comment.


He thought the stores could easily restock, and he would profit from online sale. Possible?


yes, possible. it’s still called price gouging.


He's speculating on a commodity, it's just not corn or potash.

Nobody expects that there's going to be an acute, worldwide shortage of wheat and that it will be unavailable anywhere.

Demand goes up, prices go up, same as anything.

Now - this kind of arbitrage has very, very limited value for society (there's an economic argument for price clearing), so we can think of it as 'gouging', but sometimes this is not the case.

I think at this scale, price arbitraging for normal household goods provides zero net value (in fact negative value because it involves work and effort without net value creation). Amazon, Wallmart etc. should probably clamp down on this because it's their customers who pay by having middlemen in between.


Why would there be no net value creation?

People's willingness to pay for the service suggests otherwise?


"Why would there be no net value creation?

People's willingness to pay for the service suggests otherwise?"

No - 'willingness to pay' is not 'value creation'.

The net surpluses to society are the same with a middleman, it's just they've been distributed differently.

Assume: $1 cost to make good $5 average consume 'highest price point'

This means, a bottle sold for $2 to a consumer, means a $3 surplus for the consumer.

If there is a middleman who buys for $2 and then sells for $3 to the consumer, the consumer surpluses are reduced. Consumers only get $2 instead of $3 in surplus, because $1 went to the middle man.

The 'economic pie' is not increased by basic arbitrage.

Now, the caveats:

1) In large liquid markets, price clearing and discovery actually ads some financial value. Even providing liquidity has material value. So in some cases, there is some systematic benefit from arbitrage. There is some 'growing of the pie' and 'more surpluses' for everyone at this point.

2) If it's 'more than arbitrage'. If the 'middleman' was doing shipping, buying in bulk and selling in units, special shipping/packaging or anything else, then there's possibly value creation. Even buying ahead of time, sitting on inventory and smoothing out the supply during demand peaks - this is not so much arbitrage/middleman - this is actually wholesaling. Again, they are creating value.

3) The demand curve has shifted quite a lot over the last little while, but I don't think this changes the arbitrage, it's really just arbitrage. It has a 'caveat' in that this middleman guy may very well have not known the real extent of a supply shock.

4) Even when there can be 'value creation' it doesn't mean 'everyone wins' necessarily, for example, the wholesaler could increase the real value of a product by $X but then sell it for exactly that much more, so the 'net economic pie' is increasing, but they were able to 'grab all of the increase' meaning consumers don't win anything.

Most capitalism involves quite a bit of economic surplus for consumers, this is why capitalism works really well and makes almost everyone rich. That you are able to buy a 'dishwasher' for $500, saves you probably $10's of thousands of dollars in labor, i.e. there are massive surpluses to you. Similar for most commodity goods - consumers win big time, even if they don't get direct dollars to put in their bank account as a measure of that value capture.


Your analysis is too simple.

Different consumers place different amounts of value on goods. Normally, market prices react to balance this out.

When prices don't move (or are not allowed to) this no longer works. Let's investigate the situation with an example: we have one bottle of sanitizer (produced for 1$) and two people willing to buy. Alice values the product at 5$ and Bob does so at 50$. The retail price is 2$.

Without an adjustment in the price, randomly Alice might snatch up the sanitizer. For a consumer surplus of 3$. If Bob had managed to snatch it, there would be a surplus of 48$.

If a 'price gouging' middle man came in and raised the price, the likelihood of the product going to the consumer who values it more goes up by a lot. 45$ (= 50$ - 5$) of value for the economy are created.

In addition, a common way people deal with these situations is by queuing. What queuing does is to add a time cost to the monetary costs of the purchase. Queues increase until the total cost of the marginal person who could join the queue is at something like a market clearing price.

Unfortunately, that price will mostly be made up of wasteful queuing effort that no-one benefits from.

(PS: I didn't downvote you. I actually upvoted you after I saw your comment was in the negatives. The HN crowd can be pretty knee-jerk with their votes. Any topic around economics (or politics?) is especially fraud with that.)


"Your analysis is too simple. Different consumers place different amounts of value on goods. "

My analysis is not 'too simple' because the 'averaging assumptions' I made are valid in the context of illustrating my point.

Obviously, there are 'supply and demand curves' and that everyone is going to gain different surpluses - but it doesn't matter, and just confuses the issue.

.. which is why I used an 'average consumer' with some arbitrary, made-up price points.

Your example is flawed:

"the likelihood of the product going to the consumer who values it more goes up by a lot."

This is not true, in fact, just the opposite (given the same supply/demand curves), when a middleman 'buys low and sells higher' there is definitely a lower chance that consumers will yield greater surplus on any given transaction, all things being equal.

Now - in any given random transaction, sure there will be greater/less surplus, but that's beside the point.

In fact, when the market clears fully there's a 100% chance that fewer surpluses are going to consumers with a middleman.

There is a special assumption in your example that's not overt which is 'when prices don't move' - I suppose you're hinting at a change in the demand curve, given the 'new calamity' of coronavirus. Whereas people valued Purell 'less before' and 'more now' there's the possibility that a 'middleman' has created 'value for society' by buying up Purell when the did not need it a lot, and selling it when they really did need it a lot more.

The problem with this argument is 'inventory'. There was already quite some inventory of Purell 3 weeks ago. The 'middleman buying it all' would have only decreased usage of Purell during 'nonessential' times very marginally, the overall supply really wouldn't change.

So even with a shifting demand curve, it's still no material value creation by a middleman.

If you were to expand this activity across time - for example, the US stockpiling of Oil reserves etc. - I would say this isn't really arbitrage, and the US is not acting as a 'middleman' - there are very real working capital costs involved in doing this, with measurable strategic advantages.

Finally - your note about 'queuing' is flawed as well:

"that price will mostly be made up of wasteful queuing"

No - it's not 'wasteful queuing' - they are queuing because they get better prices! They are 'playing with time' instead of 'paying with money' which is absolutely a choice many people might take, depending on how they value their time.

Again - pure arbitrage doesn't 'create value' for society, small caveats aside as illustrated in my previous note.


> "He's speculating on a commodity, it's just not corn or potash."

Lives are not at stake because of corn or potash speculation.


If there are acute shortages, yes lives can be at stake because of major disruptions in the food supply.

Several weeks ago, nobody assumed that 'Purell' or 'toilet paper' was going to fully sell out everywhere, rather, simply that there would be increased demand for it.

All retailers who sell Purell have their buyers clamoring to buy as much as possible because they know their customers want it, and there's no reason to think that the price won't be increased somewhat.

In fact, given the excessive demand and challenges in production, Purell will probably be increasing its wholesale price ... and then some.

So are retailers - buying up as much Purell as possible and probably selling for a little bit of a markup considered 'hoarders'? So long as they have the intention of selling it for not-some-crazy-price, then it's just normal business.

There's no reason individuals can't do the same.

As long as this guy was not price gauging, and he was in fact selling, then what are they going to charge him with exactly?

It's reasonable that the government put restrictions on certain goods during a crisis, such as margin limits, the requirement to not hold inventory etc. but the same would have to apply to this guy.

If he bought his inventory before any emergency crisis or calamity ... then again, what's the legal crime? Buying Purell 2 months ago was normal, but 'having Purell inventory' now is illegal?

I have no lost love for this guy, but that he gave his inventory away is punishment enough.


He stopped being "supply and demand" when the state of Tennessee declared a state emergency.

Upon the declaration of a state emergency, charging "grossly excessive" prices for food, construction services, emergency supplies, or other vital goods or services. Subject to civil penalty of between $1,000 and $3,000 per violation.

The definition of "excessive" or "unconscionable" pricing is generally determined by looking at average prices in the affected area over a given look-back period prior to the emergency, typically six months or so. If prices are 10 or 15 percent higher (some states have different thresholds), then it may be determined that price gouging has occurred.

*He was making good money while the going was good.. --BUT-- he should've known the laws the surround his entrepreneurial endeavor. He should've known that he needed to stop selling over 10% ~ 15% when the state declared an emergency.

--- The system worked.


Because people wouldn't want to go out, yeah. Possible.


Because there was clearly no sort of distribution infrastructure to get hand sanitizer to people without having to go into the stores. Right.

NPR's talked about retail arbitrage before and sure there are all sorts of crazy reasons people buy stuff at inflated prices through Amazon and eBay. What's missing though is that typically the sellers are capitalizing on things that are difficult-to-impossible to find elsewhere (e.g. Trader Joe's products, none of which are otherwise available from other vendors or online from TJs) or to capitalize on sale pricing.

Neither of those things are true here with the guy hoarding hand sanitizer. Whether or not he donated his stockpile to charity under duress or not he still deserves to be punished.


That’s for a judge or jury to decide, not an internet mob.


Sure, and ostensibly the United States has some sort of don't legislate morality doctrine. Just because I think he deserves to be punished doesn't mean our legal system will punish him.

I'm certainly not above public shaming especially when the guy has very publicly and unequivocally explained what he's doing.


Judges and juries decide criminal penalties. Fellow citizens decide social penalties. Nobody should be banging on his door, but I'm fine with both his neighbors and the world at large telling him what they think.


Glad this is getting widespread attention. Buying up all of the Monopoly: Millennial Edition board games in the state to flip on eBay for profit is one thing but buying up goods that you know will cause a panic is something else altogether. Hopefully this dissuades others going forward.


How about buying up housing stock in popular inner city areas only to "provide" housing for people?

Housing is an essential good. Profiting off an essential isn't so great suddenly. Yes people need to rent, but many would buy if prices weren't pushed up.

Are they or the hand sanitizer guy assisting the market in any way here? Or are they parasitic?

People are going to be asking a lot about unfettered capitalism after this.

We are going to see many ugly examples in America before this is done.


I've been looking for people to make the connection of how this is a great example of the emotional behavioral reality of actually exercising classical economic models and how people aren't just completely atomized rational agents devoid of collective cultural expectation, but you're the first to make the connection.

It's a clear narrative for people who are looking for it who are deeply suspicious of how real world humans interact in alignment with the hypothesis of the traditional mathematical models, but to those who don't share the suspicion, you'd have to spell it out.

I've had to, it's been painful. People have been penalized for thinking in sociological terms about economic culture all throughout school, because such considerations lead to dramatically conflicting answers.

For instance, the more extreme example is private property markets require buy-in from the participants. If a group decides the rules are simply unfair, the game is called off. As a producer of physical assets I've always been keenly aware of theft and sabotage possibilities and prices are kept fair to keep people from doing such things.


There also seem to be differences in underlying assumptions: whether humans exist to serve markets or whether markets exist only because they happen benefit humanity. And a similar question for property itself.


Nice strawman you got there. You'll have a hard time finding anyone who thinks that humans are meant to 'serve the market'. Especially any economist.

The market isn't a separate entity, it's made of humans interacting.


True, I put the point bluntly.

If the market produces bad outcomes for years on end, which it in some narrow cases it does, do we 1) keep with it regardless or 2) do something else.

I think you will find there are quite a few people who will choose #1


The wisdom of this course of action depends on whether that something else produces better outcomes.

part of neoliberalism is a theory that everything is a market, in some "natural state" and it's only our human meddling that keeps it from being "free" ... there's been a century of Economic Anthropology (https://en.wikipedia.org/wiki/Economic_anthropology) that shows this simply does not exist, there is no "natural state" and the definition of "free market" is constantly re-framed.

It's a contemporary human social construct and a set of rather arbitrarily defined cultural rules. Market fundamentalism is a form of political convenience, not based on any empirical study of reality.


You know that housing or hand sanitizers can be produced? The supply is not fixed.

So let people buy up what they want, and let producers make nice profits.

(Alas for housing, lots of American cities do have decided to fix their supply. But that's their choice.)


Housing, food, water, Internet access, cell phones... all more or less essential goods in the modern world. How dare anyone expect to be paid for them?


Food, water distribution, internet, building construction are all things people produce and must be paid for to exist and out of fairness. Land ownership is and always has been an arbitrary claim inevitably traceable to a murdered Indian or the equivalent on other continents.


This article is very low on information. The man is accused of price gouging, and was threatened by the Tennessee AG, but the article says he purchased all his stock before a state of emergency was declared and hasn't sold any since the state of emergency was declared.

He's an Amazon seller, but it doesn't say at what price he was selling. Selling hand sanitizer during a crisis doesn't seem like gouging unless the price was exorbitant.

It may have been exorbitant as his account was suspended. But the article doesn't mention the actual asking price.


There's a previous story which got quite famous which you're missing that went into great detail on this: https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...


Here's the original article that started it all, which has more information. It quotes the prices as ranging from $8 to $70 per bottle.

https://www.nytimes.com/2020/03/14/technology/coronavirus-pu...


He was selling it for different prices, but the highest was $70 for a single bottle from the NYT article.


Some of the bottles were going for $70. It wasn't a marginal mark up. He also probably bought the entire supply in a store, so he wasn't correcting inefficiency.

And the AG too the supply and donated it, not him.


The original article in the Post ended hysterically with him not wanting to be known for this.

It's a pretty shitty thing to do and I'm glad the state's Attorney General started investigating him. I was not aware they were price gouging laws in some states for medical supplies during an emergency.


> “But I’m not looking to be in a situation where I make the front page of the news for being that guy who hoarded 20,000 bottles of sanitizer that I’m selling for 20 times what they cost me.”

Oops.

I'd love a follow-up. "What, exactly, did you think talking to a reporter would result in?


One man's gouging is another man's market at work. Would your opinion of this man change if he had stockpiled hand sanitizer a year ago?


If he'd stockpiled a year ago, it wouldn't have been in a state of emergency for one. If he still gouged after the declaration of a state of emergency though, he'd still be liable for breaking the law.

It is not that hard to be a responsible member of society and to not jeopardize the well being of widespread geographical areas in the hopes of profiting off a crisis.


It's not the same thing as stockpiling a year ago wouldn't have caused a shortage.


So why is the crime the same for both people? Also, if he didn't plan on selling the sanitizer then we wouldn't have any (legal) problem with his actions. You can buy all you want with no consequence.


Well the (in my opinion flawed) idea is to remove the incentive for buying that much in the first place.

Say what you want, but someone receiving this enormous an amount of social shaming on top of a painful economic loss, sure is going to disincentivise people from pulling similar stunts in the future.


I have been considering the following business thought-experiment:

Price Gougers: a company whose goal is explicit in its name. What you need will always be in stock, but it will always be expensive. It is the kind of company that could ensure that, in situations like this, there might be more N95 masks and hand sanitizer in global inventory.

Could such a company get enough social buy-in to survive in the face of anti-price-gouging laws that appear with every crisis?

If a person/company had stockpiled N95s a year ago, with intent to sell them at a markup in the event of a pandemic, could that entity ever hope to be repaid for its beneficial risk-taking?

(I'll also point out that I'm considering donating most of our few household N95s to our nearby medical center, and am angling to get our research laboratory to do the same. This thought-experiment arises from the fact that investors won't deploy capital to do this kind of thing at scale unless they expect to see a return.)


People (and some laws) don't seem to like this sensible idea.

But you might be able to achieve something close enough via price differentiation.

So you might sell two kinds of hand sanitizer. One is the normal kind that sells for a normal price. The other one is the gold plated one that sells for a ridiculous price.

Normally, you only sell significant quantities of the normal one. In an emergency, the normal one will sell out, and people will start buying the gold plated one.

The gold plating can be anything. Even just different branding for same ingredients.

You never officially fiddle with your prices, but the average price you charge per bottle will naturally go up.


Price gouging laws in some states cover an increase in prices in response to an emergency. If your prices were always high, that might work in a few places, but many are "average price" or poorly defined. Some states are also "an exorbitant or excessive price for a necessity", and you're always a target for "because we say so" enforcement, so it would be a pretty dangerous business.


The issue you'll run into is that in an emergency where survival of the Marketplace is in question, the rules of the Market slip in deference to getting the job done to restore normality.

It's the same reason people were livid in California during the fires they had when Verizon (I think?) Was being stingy in regards to provisioning firefighters with enough bandwidth for their C-n-C.

It's a fairly American ideal, even if it hasn't had the spotlight shone on it in a while. You're either helping to clean up the mess, or you're part of the problem, and had best be prepared to get out of the way. It's nice to see we haven't totally lost our grip on it.


I sort of love this idea. It'd be the perfect test of some free-market ideals.

Similarly, sometimes the government buys product above the lowest market price, because it's produced domestically and it's strategic to prop up the production in case of an event like this. They failed in this case, sadly.


Perhaps pre-designated "price-gouging" companies could be allowed to price-gouge (and might be forbidden to buy up remaining traditional supply once an impending disaster is apparent?), but the person on the street could not?

It just seems like there should be some middle ground between, "Price-gouging should be banned!", and "My kingdom for an N95 mask!".


What's the point? Just allow people to pay the prices they want to pay and sell at.

Why add more special licences to exclude the person on the street?


Unfortunately, such a company would be a lightning rod for the mob's ire as the downvotes to this comment so clearly illustrates.


This guy is an idiot for drawing attention to himself.


Not necessarily for drawing attention to himself.

But you never try a stunt like that with anything the government might reasonably claim to be medical equipment or supplies. You just don't do it.

The best outcome you can hope for in a situation like this is the government comes and confiscates all your supply for redistribution.

The worst outcome? Ask Shkreli.

You're just begging for them to come down on you when you do stuff like this. When you're wanting to price gouge, do it with something the government will never need. Like Monopoly board games.


And, if memory serves right, they officially got Shkreli for something completely unrelated to his medical 'price gouging'.

The same might happen to you, even if you carefully try to stay within the laws: they'll find something else to pin on you.


> Colvin apologized for purchasing all of the products Sunday, saying that he did not realize the spread of the coronavirus outbreak or the shortage of sanitary products across the country.

Heh. Isn't that specifically the reason he did it?


Like any crime or bad ethical activity, let's think about who was hurt and who benefited by his action of buying sanitizer from an area with it and selling it to an area without it.

1. Consumers of sanitizer in his area were harmed (and those people were willing to spend at least $2 per bottle)

2. Consumers of sanitizer in other areas who purchased online benefited (and those people were willing to spend $20+ per bottle)

3. He also benefited financially

Why is it a bad thing to take away the option to purchase sanitizer from someone in his area (presumably from people who don't want it as much - as they had the option to purchase but hadn't yet) and sell it to people who want it (and don't have the option to purchase it)?

I don't understand why the people in his area deserve the sanitizer more than people in another area - or certainly why that should be a crime.

He wasn't dumping the sanitizer into a fire- he was providing the sanitizer to people who really wanted it!


The goal of the supply chain right now is to get supplies staged in geographical regions so that anyone can have access cheaply.

These acts of arbitrage aren't solving market inefficiencies. They're cutting holes in the preventative fabric so to speak. While clearly there are different levels of risk tolerance within the audience of HN and amongst people at large, this was clearly something that struck very few as behavior to be encouraged in any form.


It wasn’t immoral. It just makes people feel bad. I have a huge problem with government controlling prices at any level. Yes, even healthcare.

People speak like this is a vital drug that cures people. What is wrong with hand soap and warm water?


You can't stick it in your pocket, purse or car for use in situations where a sink isn't available.


May I ask what exactly that sanitizer is and how is it different from soap and/or alcohol, which is abundant in any house? Everyone here comments about it as if it was a bottled water or an irreplaceable first aid medicine.


AFAIK, normal hand sanitizer is 70% alcohol (concentrations much higher or lower than that are not as effective), plus a few extra ingredients to avoid drying the skin of the hands. Washing the hands with soap is better (there are some microorganisms which are not killed by the alcohol), but needs water for rinsing, so there are many situations where alcohol-based hand sanitizer is more convenient.


Apropos: bottled water is also easy to make and replace. Just take a bottle and a water tap. You can refill empty bottles, too.


No, people stockpile bottled water in emergencies with the assumption that it will NOT be easy to replace, i.e., the tap might stop releasing water.

I've seen way too many comments like "Why would you need bottled water in a pandemic?" with the assumption that municipal water systems won't fail.

My (US) small town's municipal water system fails a couple of times a year in the best of circumstances, usually just resulting in a "boil order" for a few hours until repairs are made.

But imagine half of our six water filtration workers are home sick or caretaking family, or the trucks that bring the spare parts are sitting idle at a depot four states away. Now our town needs 4000 gallons a day just for human survival.

To finish the thought experiment, note that there are over 150,000 water distribution systems in the United States.


True.

Though to put this particular crisis into perspective: neither water nor electricity nor online deliveries ever failed even in hard hit Wuhan.


To the commenters here: It's price gouging and not price gauging. The article made a spelling error.


The little guy that scalps hand sanitizer on eBay needs to be investigated while the corporation that scalps cancer drugs is praised.


The little guy scalping on amazon doesn't have a cabal of lawyers to keep the prosecutor at bay. Frankly, I'd prefer hitting pharma companies hard as well, but you have to make sure the case is bulletproof, or an ineffectual token settlement is the likely result.


They say “his address was posted online” like it wasn’t displayed on his own website. Pointing that out hardly counts as doxxing.

Wonder what value he can attribute to it. Possible that the tax write off exceeds his cost


Hand sanitizer is not essential, and nobody was forced to buy from him or pay his prices.

I think it’s a real shame that Amazon and eBay shut him down and halted the distribution of his stock to where it was most needed, simply on PR grounds.

I don’t think he did a single thing wrong, but the mob sure does seem white-hot angry at him.


Hand sanitiser is not essential, however it's an important tool which helps reduce the chance of infection in the general population. If someone is carrying a sanitiser they will most likely use it and that benefits everyone.


Let's say you're desperate for sanitizer because you're caring for an elderly relative. And let's say that sanitizer is available on Amazon for $100/bottle. Would you buy or rather go without?


I'd prefer to live in a world where we don't have to face such moral dilemmas.

A lot of people caring for babies are financially stressed as is. Simply having children in the US helps push a lot of people into poverty. We do a lot of things very badly in this country and one of those is we do not have family-friendly policies.

For some people, a hundred dollars is quite a lot of money. It can mean not eating and similar hardships.


I hope he kept one bottle for his own use.


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eh .. there is an intent element. I think they should face fines, but prisons should be reserved if they repeat offend.


I hope you hold zero stocks and zero bonds.


You don't put a share of stock on your face to go treat a patient. You don't clean up from touching packages or other things with a share of stock.

They're not the same thing. I don't even know what point you're trying to make or what you're trying to get out of it. I know we're all bored and stir crazy but maybe now isn't the time.


The use of the word "profiteers". It either assumes wrongdoing, in which case we can talk about ethics or law separate from the profit, or just making profit in general, in which case see my comment on stocks and bonds. Being successful in securities markets largely depends on exploiting other people's mistakes (which create mispricings).


There's a difference between making a reasonable profit, and an unconscionable one. The latter is what the poster seems to be referring to.


Making a profit is not the same as profiteering. The relevant statutes define what the latter is.


What about something like charging $500 per month for insulin?


What about it?


Well, I mean it seems like profiteering to me.


Is there any good analysis of that? I'm not saying it's not "profiteering", I just find it puzzling that nobody had undercut them on prices yet. There must be a reason, and health care is very complicated, so I'm not even trying to generate hypotheses on my own (I'm definitely not qualified for that). I have little hope that those "hearings" will actually find the root cause of the problem.

Related: see the old Martin Shkreli videos where he ruthlessly goes over the list of all drugs to find something where his company/companies can undercut the pricing of the status quo, looking for the highest margin profit potential / assumed fixed cost ratios. He is (well, was) obviously not the only one.


What “seems like” profiteering isn’t necessarily aligned with what the law is. Did you read any of the statues? Here’s an example for California: https://oag.ca.gov/consumers/pricegougingduringdisasters


I understand what "the law" says. I also know who writes the laws. I mean from a moral/logical standpoint it seems like profiteering. I guess I don't understand the difference between people taking advantage of others by price gouging during a disaster, and corporations taking advantage of people by price gouging due to a life threatening medical condition.


Sadly, the difference seems to be in the level of "clear and present danger" your life threatening medical condition represents to the life of others around you.

If you have a condition effecting a relatively small population incapable of mustering enough leverage to get policy makers to move against corporate interests, you have a very uphill battle to fight.


It creates liquidity in markets where it might not otherwise exist. Better to sell your stockpile than pointlessly build it.


No, profiteering disrupts liquidity in markets where it would otherwise have existed, if not for the profiteers hoarding activities.


No, it doesn't. The difference is whether or not someone who intends to sell the product hoards it. In this case, people buying toilet paper are net harming the market. Sooner or later (manufacturer > retailer, or retailer > consumer) you have to raise prices to maintain liquidity.


How do you think profiteers operate?

They buy large quantities of product, hoarding it until they can sell it for artificially inflated costs.

People buying toilet paper to use it are not harming the market. They are the market. Yes, if they collectively buy more of it prices will eventually go up. But it happens a lot slower and equilibrium is reached at a much lower price than when profiteers are involved.


It is, probably, pointless to argue the economics in this case, too much emotion involved.

Also, price controls make sense in some cases. This is one of them.


> This is one of them.

Can you give an explanation for the curious?


Of price controls? The government says what (some) things have to cost, period. Typically accompanied with some quota mechanism (something like 10 pieces/head/week).

Typical use cases: epidemics, wars, inflationary crises (arguable; I prefer the Paul Volker approach), other types of special situations when supply is scarce and the demand needs to be controlled.

You could say most countries operate under constant price control of the most important price of them all: the price of money, or the price of time. I am talking about interest rates.


I mean why is an epidemic a good time to use price controls? In other words, why isn't it just another "market prices allocate goods to the most effective users" situation? People who are more vulnerable are willing to pay higher prices, and high prices incentivize rapid production increases, etc.


Depends on what you want from life, but I think that at the end of the day you want people to achieve some sort of "well being". Shocks can be alleviated by centralized action, after which we should quickly return to market pricing. The trouble is usually with the "return" part of the idea - just look at the endless QE that kept distorting the price of risk.


Willingness/capacity to pay a higher price != more effective user; merely a more financially advantaged one.

Money, however, is not the be all, end all in life. Something it seems adherents of economics need to be reminded of from time to time.


All it took to curb his inner price gouging criminal and bring out the philanthropist was a teeny weeny criminal investigation. What a model citizen!


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This doesn't follow. Just because something isn't legislated doesn't mean someone didn't do the thing.


He kind of did, they just took advantage of the governments late response.


Mens rea

They should still throw the book at him for trying to profiteer off the misery of others.


Akin dropping bags of cocaine in ocean when customs ship approaches the drug trafficer's boat.

Won't help!


Out of pure curiosity, why won't it ?


because they'll prosecute him anyway since he was price gouging?


I thought the OP was saying that the cocaine example won't help the trafickers


Yeah, and it doesn't, except now they have two crimes, trafficking and destruction of evidence.


Well if they do drop them before the custom ship arrives, what's the evidence for the destruction of evidence, and the trafficking for that matter ?


Some really weird behaving fishes.

I'm shocked at how this forum has changed its mind on COVID-19 in the past week. This makes me happy that y'all are taking this more seriously.


And also, that the bottom in stocks may be near.


Stop the lynching, it's boring and pretty evil. That is what Reddit is for.

Why not ask the real question, sanitizer is vial, it's soap and a tap you can carry around in your pocket.

It's just alcohol and a jell AND a plastic bottle.

How can we as a society not be able to produce this, People will even pay for it, they will even pay extra for it.

We have failed. Stop blaming individuals. Nothing about C19 was unpredictable.


Isopropyl is one of the simplest chemicals in the universe and a big bottle is 1.88 at Walmart. They will never, ever run out of this stuff, even if people start hosing off their cars with it.

The whole thing is a joke. This guy was exploiting idiots and the irredeemably lazy. Big deal.

But what a fool for him to talk to the media. Maybe he thought he'd get sympathy for losing money because Amazon shut him down...?


We, as a society, are entirely able to produce this stuff. It's just not instantaneous to do so, nor to ship it.




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