$00.70

On Milwaukie Nextdoor.com there is a chat stream regarding some local merchants who are accused of price gouging.  According to the Nextdoor conversation, some merchants purchased paper towels and toilet paper from Costco prior to Costco running out. They are now selling those same paper products at an incredible markup. Are these simply shrewd business operators, like our President? Or, are these the folks the Christian New Testament identified as those to be driven out of the temple?

On February 3rd the average price for an approved surgical mask was $.70 cents per mask if purchased in bulk. Some of these masks were produced by 3M in South Dakota. At this price: Workers were paid, suppliers were paid and 3M was profitable. Truckers got paid, and retailers and their employees were paid. CEO’s were paid, and stockholders were given their dividends.  

This was capitalism at its finest. No surplus capacity; just enough masks were made to compete with Chinese factories (some of which are of course owned by 3M, so perhaps a more accurate phraseology would be: The masks were made cheap enough for workers at the 3M plant in the US to compete against the Chinese workers at the 3M plant in China).

 By April 3rd the price of these same masks was $7.00 per mask if purchased in bulk. Given the supply chain, this means that some of the masks were produced and shipped when the price was still $.70 cents, although by the time they reached the end use, the price had increased tenfold. A simplistic look at this would focus on price gouging by bad-acting middlemen. But such an analysis misses a much larger and more important point.

The point missed is: Markets are amoral.  Our President knows this since he made whatever money he has by manipulating and violating norms.  He discovered how to make money by going bankrupt. This means that he made money by taking it from others without providing either goods or services.

The folks charging $7.00 per mask for a mask worth 70-cents will tell you they are just following supply-and-demand. The result of the imbalance is a higher price. The problem is that human lives are at stake. Using price to allocate resources for life-saving masks means that well- off buyers who can afford to purchase $7.00 masks will get them, and less well-off buyers, or states or public-health agencies will not. Focusing on price gougers ignores the larger framework that permits and, in fact, rewards these actions.   

The Federal government is now dispersing critically needed life-saving supplies from the national stockpile. By all indications their criteria range from protecting existing supply chains, which is code for having private contractors sell the masks to those in need, to doling them out to those who support the President.

The fact that the US government is enabling private contractors to force those in need into a bidding war for PPE and other survival gear is amoral, and some might make the argument that such an approach is immoral. Clearly, using basic math and any one of a number of proven computer models makes it possible to know where the equipment will be needed tomorrow, and next week. Why is “price” being used to allocate critical resources, when those in need are not those who can afford to pay?

Shaming the local merchants as suggested on Nextdoor is not a bad strategy. But it ignores the norms that have been in place in this society for now going on more than 40 years and perhaps longer. Norms that run counter to everything the Democratic Party stood for under FDR, JFK, LBJ and Jimmy Carter.

The Democratic response would be rationing. Remember when in Oregon gas would be sold only to those with even-numbered license plates on even-numbered days of the week?

Government at all levels plays an incredibly important role in all aspects of our daily lives. It is only during a pandemic that for many it is literally about life or death. We need our leaders to step up and promote and defend social justice now more than ever.   

The conversation on Nextdoor must become one about social justice not simply about a merchant who is price gouging. Otherwise, we will fail to create a collective vision of what we want the future to look like.

1 thought on “$00.70

  1. Gail Cordell

    Nicely explained. And those excess profits will somehow avoid even being taxed. This is a double sting. Capitalism is, indeed, amoral, but not its practitioners. The values that this country was supposedly ‘founded’ on included “Do onto others…,” not ‘go forth and gouge them.’ Those values transcended any particular religion. The latter philosophy is a mockery of almost all of them.

    Reply

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