Posted on 04/01/2020 4:35:17 AM PDT by Kaslin
I'm not sure whether COVID-19, first identified in Wuhan, China, in the U.S. qualifies as a true disaster. Putting the disease in perspective, we might look at current influenza illnesses. According to Centers for Disease Control estimates, between Oct. 1, 2019, and March 14, 2020, there have been 390,000 to 710,000 hospitalizations as a result of the flu, 38,000,000 to 54,000,000 flu illnesses and 23,000 to 59,000 flu deaths. That's compared with, as of March 27, a total of 85,356 cases of COVID-19 resulting in the deaths of 1,246 people.
But let's agree that COVID-19 is a disaster and ask what the appropriate steps are to deal with it. One of the first observations about any disaster is that the quantity demanded of many goods greatly exceeds the supply. There is a shortage. The natural market response when there is a shortage is for prices to rise. Rising prices produce several beneficial effects. They reduce the incentive for people to hoard while suppliers, motivated by the prospect of higher profits, are incentivized to produce more of the good in short supply.
Thirty-four states and the District of Columbia have anti-price gouging laws that prohibit "excessive and unjustified" increases in prices of essential consumer goods and services during a federal, state or local declared emergency. Price gouging is legally defined as charging 10 to 25% more for something than you charged for it during the month before an emergency. Sellers convicted of price gouging face stiff fines and perhaps prison terms
But what about hoarding? Often hoarding creates the shortage. In uncertain times, people may purchase three dozen eggs instead of one dozen. They may want to maintain stockpiles of canned goods and buy up large quantities of cleaners, paper towels and toilet paper. This kind of behavior has left some with overflowing freezers, shelves of sanitizers and garages full of toilet paper while their neighbors are left either wanting for the same items or paying what some call "excessive and unjustified" prices.
While it's difficult to get beyond emotions, the fact is that consumers are not forced to buy products for the higher (gouged) price. If they pay, it is likely because they see themselves as being better off acquiring the good than the alternative - keeping their money in their pocket. Higher prices charged have a couple of unappreciated benefits. First, they get people to economize on the use of the good whose price has risen. That is higher prices reduce demand and encourage conservation. That helps with the disaster.
With higher prices, profit-seeking suppliers know that they can make more money by bringing additional quantities of the goods to the market. This increases the supply of goods, which helps to drive prices back down. Anti-price gouging laws disrupt these two very important functions of the marketplace and enhance and prolong a disaster. In other words, in a disaster, we want people to economize their use of goods and services and we want suppliers of these goods and services to produce more. Rising prices encourage these actions. Anti-price gouging laws stymy those incentives and create the pretense that a disaster does not exist.
Some people might reluctantly agree that allowing prices to rise during a disaster helps allocate resources. But they'll complain that's not the intention of greedy sellers who are out to profit. I say, so what? It's not sellers' intentions that count but what their actions accomplish that's important -- namely, getting people to conserve more and suppliers to produce more.
Many of the problems associated with a disaster would be eliminated if people's buying behavior were the same as it was before the disaster. To get people to behave nicely and consider their neighbors is the ultimate challenge. I think rising prices are the best and most dependable way to get people to be considerate of their fellow man.
I’m glad we have a President who is a businessman and not a lawyer.
8300+ Italian health care workers CV test positive
61 now dead
Advance buying for three weeks is sensible.
Economizing of masks in hospital will compromise the policies of Universal Precautions putting hospitals at risk of liability.
States have absolute power tempered only by their constitutions and the federal Constitution.
“masks”
We elected a president to MAGA.
I as a lay person had the belief that universal precautions fell officially out of favor because a politically generous group was having its feelings “hurt”.
It’s not the states that have absolute power, it’s the governors of those states. Pennsylvania has a Republican majority in both the House and Senate but they have not lifted a finger to slow down or halt the unconstitutional power grab of our liberal Democrat governor.
No, just the opposite.
Hospitals should have bought the masks up in December or January.
My neighbors’ daughter is a physician assistant and her office’s masks were requisitioned by NM for hospital use. She does telemedicine only now.
In Florida the legal standard is grossly in excess of typical pricing I believe.
I feel “off-topic”, looking at the thread, but with reference to the article, it does not seem to be price “gouging” to charge and pay for increased transportation costs, either.
TP is a bulky, low-value shipping product, I would imagine.
The fundamental supply limits are in China, not at the retail level.
MAGA
Macron wants France to be 100% self-sufficient in PPE by 2021. France isn’t governed by idiots.
” According to Centers for Disease Control estimates, between Oct. 1, 2019, and March 14, 2020, there have been 390,000 to 710,000 hospitalizations as a result of the flu, 38,000,000 to 54,000,000 flu illnesses and 23,000 to 59,000 flu deaths. That’s compared with, as of March 27, a total of 85,356 cases of COVID-19 resulting in the deaths of 1,246 people.”
WHAT I WANT TO SEE....is a DAILY CHART comparing flu cases, flu hospitalizations and flu DEATHs with Covid-19 stats on the same items.
NO ONE is showing this. Thanks Walter for the intro, but I want to see this info every day........
You are right on about shipping! I ordered paper bags from a company in my own state (MA) and the shipping was going to be $125 for two bales of bags, when it was about $20 a few months ago. Jeepers. Obviously I did not follow through with that one. I realize FedEx is busy, but are they paying their employees more? Gouging.
That’s really what has me confused.
At the state level, at least in some states, the legislative branch seems to have surrendered it’s role. They aren’t passing laws about the virus. Instead, some of the governors are ruling by decree. The governor gets an idea, deems it a law, and tells the citizens how things are going to be.
And everyone shrugs and says, “OK.” Because virus.
I understand people are panicking and (I guess) this is a really serious situation, but the country has really transitioned into a wild new phase. Things are very different now.
NOTE: in the 2017 influenza season we lost 62,000 people. The Wuhan Flu death toll is unknown but may be between 50-100,000 or more. It’s not THAT much worse than a standard flu. And yet we threw our country away.
“Thanks Walter for the intro, but I want to see this info every day......”
Walter Williams writes an article on April 1 but uses Covid statistics from March 27th. Why would he do that? He says deaths from Covid19 in the US are 1,246, but the actual death toll is 4,059, more than 3 times higher than what Mr. Williams just told you. And you want to make sure you get the information from him “every day”. But he is obviously trying to hide something - the severity of the disease. Or else he could publish current statistics instead of numbers from 5 days ago. I suggest you get you information from the link below and ignore this embarrassing cretin.
https://www.worldometers.info/coronavirus/
This article leaves out one important basic business principle that a huge part of our population does not understand.
When you are an ongoing business you must price the inventory you have on your shelves based on the amount it will take to purchase more inventory. This is the reason a gas station immediately raises prices when the price of oil goes up. The station must bring in enough money from the gas in their tanks to purchase the next refil of those tanks. So they immediately raise the price as they know their costs are going up. So many people think a business should sell their inventory based on what it costs the business to purchase and that is entirely wrong. Since you are going to continue in the gas business if you are a gas station you must sell the gas in your tanks based on what it costs to REPLACE your current inventory.
If toilet paper is scarce the store will almost certainly see an increase in their cost so they must raise the price. Pricing is also based on the availability of resupply. If you are a gun store and ammo is very scarce at the wholesale level they will raise the price significantly to both maximize revenue in order to cover the increased price of resupply and to encourage buyers to conserve and thus keeping the stores stocked with at least some product until the wholesale market returns to normal. After all how does a gun store stay in business selling guns if they have no ammo to sell with those guns? Consumers are so ignorant of this fact they often shoot themselves in the foot (pun intended) by boycotting stores that raise prices on goods like ammo when that is exactly what they should want them to do. Then when you actually NEED ammo you can get it from "cheaper than dirt" because they raised their prices very high and they actually have ammo, whereas everyone else who did not raise prices are SOLD OUT.
In a nutshell there is no such thing as price gouging. In times of scarcity you often have high prices. That's just the way the free market works.
One last example. In times of crisis small stores will often raise the price of bottled water to $25 or so per case and people scream PRICE GOUGING. But guess what, the store will actually HAVE water to sell if you truly need it. Lastly, what do people pay every day when they buy bottled water out of a vending machine or at a sporting event or theme park? 2-3 dollar PER bottle or about $30-$50 dollars per case.
Sorry for the rant but "price gouging" is one of my pet peeves. To the point I really hope the next bottled water crisis some place where price gouging laws exist some store just puts a sign on a pallet of bottle water. "Not for sale"
How much does Fedex have to pay to get people to risk their lives? I’d say Walter was right because the higher price got you to not ship. Which freed up capacity for something more important than bags. How do we know the bags were not important? Because you wouldn’t pay the extra shipping. At least you could get the bags if you had to have them.
Right now Amazon is slow shipping some noncritical items. A bike may take 3 weeks instead of 2 days. If wish to pay a lot more for shipping to get the bike sooner I cannot since Amazon doesn’t want to “gouge”. But I am getting gouged by the super slow shipping.
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