Bob should get X, having more resources available, and Dan should not, if the item is that scarce. Scarcity is, always has been, and always will be a problem, and the wealthy do have a larger buffer to protect them from it. This is a fact of life. It's not really fair, but unless you can invent a Star Trek replicator and do away with scarcity of resources, that's how life works.ijuin wrote:Let us say that both Bob and Dan have an equally dire need for X, but there is only enough of X available to supply one of them. Bob possesses $500 and Dan possesses $200. Your reasoning would then imply that Bob should be the one to get X, to the exclusion of Dan, though the only difference between Bob and Dan is that Bob has more cash-on-hand. This is the very essence of the argument that "the wealthy take everything".collegestudent22 wrote:Price-gouging in emergencies is an effective way to redirect resources where they are most needed. Yes, it bites to pay that much for something that would normally be cheap, but that higher price provides the incentive for the provider to act.
On the other hand, since the price is higher, it increases the incentives to create the product, thereby increasing both competition and supply - driving prices down so that, while Dan may not be able to get it right now, it is possible that he might get it later.
Higher profit margins in the short-term increase long-term availability. Specifically, with more profit, more capital can be reinvested into the company to ramp up production and bring the price down - a beneficial thing, as selling millions of vaccines at a low price can make even more money than selling a few thousand at a higher price.For those goods, making them unavailable in the short term to those with less money contributes very little towards increasing their long-term availability--it merely shifts the distribution of those who get it towards those who have more funds.
It is extremely rare that a good that is necessary in the very short term for survival requires such a long lead time - distribution can be done in hours, and supply can be redirected if it cannot be produced (if vaccines are direly needed in New Orleans, for example, they can be redirected from an area of less need like, say, Colorado, provided the price system is allowed to incentivize such a transfer).but there are many goods and services whose supply can not be ramped up quickly due to long lead times in production and distribution--e.g. flu vaccines take several months to produce
More often, it is that one need is greater than the other, and therefore they are willing to pay a higher price for the necessary good. In this case, the higher price helps to relocated goods to where they are most needed, as the guy who doesn't need it right away might not pay the higher price, allowing there to be enough supply for those that have a more urgent need.
Keep in mind, also, that these long lead times are often the result of burdensome government regulation - the flu vaccine is a good example of this. When swine flu appeared to be a problem, government regulations on vaccine creation were relaxed or even ignored, and the lead time for developing and producing the flu vaccine was incredibly shortened.
And what is the solution, anyway? Have their wealth redistributed so that they both have $350 (assuming no bureaucrat takes his cut - so really, this is nonsense) and they then proceed to beat the shit out of each other to decide who gets the necessary good, because there is still only enough for one? Or they both get half of what they need, and both end up dead/hurt/whatever other consequence they were facing for not getting what they needed.Arres wrote:You say that like it's a bad thing. Really, it's only a bad thing if you happen to be the person who has less money.
Really, any attempt to prevent "price gouging" is an attempt to set prices and eliminate the law of supply and demand. That will not end well. Ever.