> 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.
Basically had the market to himself for a year.
> 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.
> 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.
It is a literally textbook example in why banning derivatives is unlikely to be the easy fix some imagine for market failures.
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!
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.
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"
However, capital itself is amoral and has no such limitations.
"His son, Jesse Livermore Jr., committed suicide in 1975. His grandson also killed himself."
Remember about this and don't leave your home, people!
“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. 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. 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:
"In 2001, Acthar sold for about $40 a vial. Today: more than $40,000. An increase of 100,000 percent."
'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.)
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.
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.)
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.
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.
Heard it on an NPR podcast fee days ago. So i guess that is the reason.
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.
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.
> 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.
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.
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 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.
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.
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...
And this doesn't even happen just for vital goods! Look at what people are doing with toilet paper.
If anything, normal penalties for operating without a business license should apply.
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.
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'.
> “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.
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.
> 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...
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.
I learned this (and a lot more) from "Goliath": https://www.simonandschuster.com/books/Goliath/Matt-Stoller/...
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).
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.
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.
> 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.
> 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.”
Cross docking is exactly this and is common in supply-chain logistics, most famously at WalMart.
Why isn’t that exactly how FEMA or similar agencies work?
So yeah, apology not accepted.
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.
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.
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.)
The word you want is distributing.
Distributing might be a decent choice of word, too, but it has extra connotations of shipping stuff around that I don't want here.
Also, in this system, things never sell out.
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'.
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!
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.
So his faux apology now is a total sham.
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.
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.
So much of economic innumeracy is explained by this comment.
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.
People's willingness to pay for the service suggests otherwise?
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.
$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 $10's of thousands of dollars in labor, i.e. there are massive surpluses to you. Similar for most commodity goods - consumers win big time, even if they don't get direct dollars to put in their bank account as a measure of that value capture.
Different consumers place different amounts of value on goods. Normally, market prices react to balance this out.
When prices don't move (or are not allowed to) this no longer works. Let's investigate the situation with an example: we have one bottle of sanitizer (produced for 1$) 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.)
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.
Lives are not at stake because of corn or potash speculation.
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.
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.
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.
I'm certainly not above public shaming especially when the guy has very publicly and unequivocally explained what he's doing.
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.
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.
The market isn't a separate entity, it's made of humans interacting.
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
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.
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.)
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.
And the AG too the supply and donated it, not him.
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.
I'd love a follow-up. "What, exactly, did you think talking to a reporter would result in?
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.
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.
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.)
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.
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.
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.
It just seems like there should be some middle ground between, "Price-gouging should be banned!", and "My kingdom for an N95 mask!".
Why add more special licences to exclude the person on the street?
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.
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.
Heh. Isn't that specifically the reason he did 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!
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.
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.
Though to put this particular crisis into perspective: neither water nor electricity nor online deliveries ever failed even in hard hit Wuhan.
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.
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.
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.
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.
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.
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.
Also, price controls make sense in some cases. This is one of them.
Can you give an explanation for the curious?
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.
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.
They should still throw the book at him for trying to profiteer off the misery of others.
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.
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...?