Preparing for Coronavirus?

[Parasaurolophus]

Cats ran out of food, so I had to stock up today. It's a pretty empty world out there, except for quite a lot of elderly people. The mall looks like it's a zombie movie backdrop.

Since I was leaving my mountaintop island fastness, I took the opportunity to resupply. There's plenty of most things around, except for beans, which are in short supply, and zero toilet paper and paper towels. Which is strange, considering most of them are manufactured less than 40km away. Actually, that's not quite right--Walmart has TP if you want to buy 40 rolls at a time. Which just seems silly to me.

The general store on our island has plenty in reasonable quantities, however.

[pigou]

There's no shortage of N95 masks. See this report of a journalist who spent a day in the N95 mask trade world and saw 280 million US-manufactured masks get sold. They all got exported: https://www.forbes.com/sites/daviddisalvo/2020/03/30/i-spent-a-day-in-the-coronavirus-driven-feeding-frenzy-of-n95-mask-sellers-and-buyers-and-this-is-what-i-learned/

Okay, I just read this article.

The issue is that the market price is allowed to change. Those other countries probably have fixed government prices so they can easily extend their PO's without negotiating. That is causing the hangup.

But they're importing from the US at prices that are also changing based on market conditions. Market prices (by definition) change as a function of supply and demand.

ciao_yall: if it were as easy as just modifying the purchasing order, then there'd definitely not be a shortage at US hospitals. Yet, there is. Something is going wrong in the process.

Same with transportation costs suddenly shooting up.

A huge part of that is that cargo containers are being held up and that stuttering is causing massive delays in shipping. So wares are getting moved by cargo plane, which is much more expensive. And even those are running out -- some old planes currently positioned in desserts are getting activated again.

Came across an anecdote of an executive at Goldman Sachs getting two Gulfstreams to China to pick up masks for NYC. That's $5,000/hr operating cost per plane. (Apparently because the local airport didn't have space for a large cargo plane anymore.)

And that poor guy who was stocking up on hand sanitizer is stuck?

Guess profiteering is only allowed if you are a big wheel with a big lobbyist.

Regulation against price gauging and hoarding backfiring... not surprising. Also no law against exporting at the higher price, you just can't sell it locally at the price.

We really shouldn't underestimate the harm that bureaucracy can create (in addition to all the benefits). For example, a colleague of mine can't hire a programmer for a specialized service, because the university requires her to get three bids from vendors -- and there's exactly one company that does it. They aren't doing an exception, so we can't use her funding. Another co-author needs approval from accounting to pay participants for experiments, but their earnings depend on what they do in the task. Without co-authors, he couldn't do any of his research.

Also, hoarders serve the same purpose as ticket scalpers: they take a good that's inefficiently allocated and get it where it creates the most value. People hate both the same and so laws against it aren't informed by economic efficiency as much as by a sense of fairness. Doesn't really matter when it comes to concert tickets, but inefficiency in responding to a virus outbreak is not helpful.

[spork]

Virtual funerals have started in this area. No one in my immediate circle yet.

[apl68]

And that poor guy who was stocking up on hand sanitizer is stuck?

Guess profiteering is only allowed if you are a big wheel with a big lobbyist.

Regulation against price gauging and hoarding backfiring... not surprising. Also no law against exporting at the higher price, you just can't sell it locally at the price.

We really shouldn't underestimate the harm that bureaucracy can create (in addition to all the benefits). For example, a colleague of mine can't hire a programmer for a specialized service, because the university requires her to get three bids from vendors -- and there's exactly one company that does it. They aren't doing an exception, so we can't use her funding. Another co-author needs approval from accounting to pay participants for experiments, but their earnings depend on what they do in the task. Without co-authors, he couldn't do any of his research.

Also, hoarders serve the same purpose as ticket scalpers: they take a good that's inefficiently allocated and get it where it creates the most value. People hate both the same and so laws against it aren't informed by economic efficiency as much as by a sense of fairness. Doesn't really matter when it comes to concert tickets, but inefficiency in responding to a virus outbreak is not helpful.

The guy's weasel justification for his actions that he was "performing a public service" by helping to correct market inefficiencies was the thing about his actions that most stuck in my craw.  He effectively stripped dozens of rural communities of their local supplies of hand sanitizer, so that he could sell them at a markup to places where people were willing and able to pay much more for them.  So that's what maximizing market efficiency is all about?  Stripping one community of its resources--which it's going to need just as much as any other community in this emergency--in the interests of maximizing profits?  So insuring that it's possible for speculators to make the highest profits is the highest social good?

So the needs of less-affluent rural communities like the one I live in just don't count?  What's really important is where can the supplies we need be sold at the greatest markup?  By that metric we're always going to be the losers.

I suppose next you'll be telling us that if we don't like being a loser community we should all just move elsewhere.  Watch out with that, though--we have a major toilet paper factory here.  If we all leave, then the toilet paper situation is going to get worse!  Then again, I suppose increasing the scarcity will just create that much more scope for improving "market efficiency," by creating still more opportunities for those who are sufficiently clever, lucky, and ruthless to make a killing.

[dismalist]

We have a fundamental problem here in answering the question: Who owns what?

The lamentable rural communities do not own the needed stuff, not even the toilet paper. The speculator, and s/he is taking a risk, now owns the stuff because s/he was quick! That act of raising price is indeed a service for now we know we need more of the stuff and more will be produced if that price is allowed to rise!

I can quite understand the objection to this logic in an epidemic, a public bad in other jargon. But to have had any chance of handling allocation any differently we'd have to have had a nimble government which acted BEFORE our speculator friends. Comparing governments across the globe, only two were nimble enough to carry this out properly. The rest were caught asleep at the wheel, our government particularly deeply. I would not expect anything else from government.

[Governor Cuomo laments competition between the states and FEMA for supplies, rather hoping that FEMA should do it itself and then allocate to the places with most need. His, I guess. Nothing but self interest there, too. And arithmetically, FEMA acting as purchase agent would have to buy what the states + FEMA would have bought separately. Same affect on price!]

The best, absolute best thing one could do - earlier, but it's not too late now - is to allow price to rise, and watch output rise. The alternative is squabbling over who gets the TOO FEW masks and respirators, you, the others, or me. Let's squabble over more masks.

[Hegemony]

Or we could just nationalize the production and get the supplies at cost. I don't particularly relish a higher tax burden so that we can pay out higher profit margins for producers of masks and ventilators.

[pigou]

The guy's weasel justification for his actions that he was "performing a public service" by helping to correct market inefficiencies was the thing about his actions that most stuck in my craw.  He effectively stripped dozens of rural communities of their local supplies of hand sanitizer, so that he could sell them at a markup to places where people were willing and able to pay much more for them.  So that's what maximizing market efficiency is all about?  Stripping one community of its resources--which it's going to need just as much as any other community in this emergency--in the interests of maximizing profits?  So insuring that it's possible for speculators to make the highest profits is the highest social good?

The hoarders would sell most of their supplies to hospitals, including the ones in rural communities. When it comes to willingness and ability to pay, institutions always end up getting things over individual consumers. Supplies that would otherwise have been bought by people keeping it at home "just in case."

If every American household had just one box of masks at home (50 to a box), that'd be 7.5bn masks. For comparison, states are placing orders in the single-digit millions: this would meet New York's demand about 1,000 fold. But at $10 a box, people don't think there's any harm in buying some and they're not hoarding if they only get one. It's 1 x 150 million households that makes it an issue.

I suppose next you'll be telling us that if we don't like being a loser community we should all just move elsewhere.  Watch out with that, though--we have a major toilet paper factory here.  If we all leave, then the toilet paper situation is going to get worse! 

If the price of toilet paper had doubled, people wouldn't have bought 10 packs "just in case." And the people who ran out of toilet paper a week into this would surely have been happy to pay extra to not use paper towels, newspapers, or take showers instead.

Or we could just nationalize the production and get the supplies at cost. I don't particularly relish a higher tax burden so that we can pay out higher profit margins for producers of masks and ventilators.

Planet Money had a great episode on ventilator manufacturing. They talked to a company that makes a piston, which is one of 700 (I think it was) parts that go into a ventilator. They increased their production, but this involved reaching out to 80 suppliers of their own to get more of the parts they need -- spread out over multiple countries. And all those companies have to get to their suppliers to meet the increased demand. It's not as simple as changing an assembly line switch. There is just no way the government could nationalize suppliers around the world and the worst case outcome is that foreign suppliers might not want to deal with the government as a buyer. Especially if they aren't getting paid market prices or worse fear they'll be stiffed by the government in the future (hard to sue the US for non-payment if you're a foreign manufacturer).

We also see this with testing: as machines became available, shortages started popping up elsewhere. Including small things, like the little swabs that get stuck up people's noses.

[marshwiggle]

The guy's weasel justification for his actions that he was "performing a public service" by helping to correct market inefficiencies was the thing about his actions that most stuck in my craw.  He effectively stripped dozens of rural communities of their local supplies of hand sanitizer, so that he could sell them at a markup to places where people were willing and able to pay much more for them.  So that's what maximizing market efficiency is all about?  Stripping one community of its resources--which it's going to need just as much as any other community in this emergency--in the interests of maximizing profits?  So insuring that it's possible for speculators to make the highest profits is the highest social good?

Here's the way to stop hoarding or scalping at the local level.

Suppose the store is selling hand sanitizer. They put 10 bottles on the shelf each hour. When all 10 are sold, they adjust the price for the next hour:

• If all are sold in the first 30 minutes, the price goes up by 10%.
• If some remain after the hour,  the price goes down by 10%.
• If they sell out between 30 minutes and 1 hour, no change.

If Joe Hoarder wants to coner the market, he lines up to buy all 10 as soon as they appear. When he goes to pay, someone else can line up for the next hour. But even if they don't right away, Joe's next 10 in the next hour will cose 10% more. Each hour that he rushes to buy as soon as they appear he reduces his profit margin. At some point, in a matter of days or maybe even hours, it doesn't make sense for him to buy at the ridiculous price.  This means that over time the price will settle at what makes it sell at a reasonable rate. If the store chooses the right number to put out given their supply, there will always be more people can buy at the next hour.

Same thing works for concert tickets and so on.

[Hegemony]

The government could unquestionably become more involved than it has. See this interview with Max Brooks from NPR:

What is supposed to happen is the federal government has to activate the Defense Production Act immediately. Now, what Defense Production Act does is it allows the federal government to step in and aggressively force the private sector to produce what we need. And what is so critical in this is timing. Because you can't simply build factories from scratch; what you can do is identify a supply chain in order to make it work.

For example, if New York needs rubber gloves, New York cannot simply build rubber glove factories overnight. However, there might be a rubber glove factory in Ohio that could produce it, but they might not have the latex. So therefore, the Defense Production Act allows the federal government to go to the condom factory in Missouri and say, "Listen, you have barrels of latex we need. We are requisitioning those. We are giving them to the rubber glove factory in Ohio. And then we are transporting the finished rubber gloves to New York." That's how it is supposed to work.

President Trump is spinning some sort of tale about, I don't know, the federal government — black helicopters coming in and taking over factories. That's not how it works at all. What happens is the federal government has the network to identify where the production chain is and how to help the private sector work through this, because the private sector doesn't know.

And as an example, I have a World War II rifle made by the Smith Corona typewriter company. Smith Corona worked with the federal government to then partner up with the Winchester company, to then share resources and to share tools and talent to then produce the rifles that we needed. That's how it works. It's not some sort of KGB coming in and taking over everything. It is guidance and streamlining. And only the federal government has the experience to know how to do that.

I can tell you that the military has a vast transportation network here in the United States that is ready to go. We don't have to put truck drivers or private individuals at risk, because the military is already trained to do this. And I've watched them do this. The military spent years working out the legal framework of how to transport goods from one place to another around this country, because it's not like Afghanistan, where the army builds a road and then they own the road. The army has had to go through a tremendous amount of training and adaptation to work within state and local governments to make sure everything is done legally and safe without infringing on our rights. And they have done this. The Army's logistics corps can deliver anything that we need anywhere in this country within a matter of hours or days.

When it comes to sheer massive might, getting stuff done, getting stuff produced and getting stuff moved from Point A to Point B, there is no greater organ in the world than the United States military. We did it in World War II. We've done it all over the world. We can do this now. This is the thing the military is good at, and we need to let them do that.

https://www.npr.org/2020/03/24/820601571/all-of-this-panic-could-have-been-prevented-author-max-brooks-on-covid-19?fbclid=IwAR224J1dUaSYNI_Ah3sIE8l7E2mAkox_zRe6Ly3_vyNO0EjSFf8VahwB_ys

[dismalist]

The government could do all kinds 'o great things. Yet, the US government has brought us the CDC and the FDA which prevented testing.

The animal government is what is.

[pigou]

What is supposed to happen is the federal government has to activate the Defense Production Act immediately. Now, what Defense Production Act does is it allows the federal government to step in and aggressively force the private sector to produce what we need. And what is so critical in this is timing. Because you can't simply build factories from scratch; what you can do is identify a supply chain in order to make it work.

Testing centers are starting to run out of the components used to do COVID testing. Are you going to force Swiss companies to sell to the US? Or Chinese and Indian suppliers? The DPA can force US companies to manufacture or sell to the US government. But that's not going to help a whole lot when the bottleneck simply starts shifting to outside the US.

President Trump is spinning some sort of tale about, I don't know, the federal government — black helicopters coming in and taking over factories. That's not how it works at all. What happens is the federal government has the network to identify where the production chain is and how to help the private sector work through this, because the private sector doesn't know.

But the private sector does know this. When GM stepped in to help, they didn't start retooling their factories. They helped by doing what you're asking the government to do: they activated the contacts throughout their supply chains. That means people in over 100 countries. The US government wouldn't possibly have any of these relationships in place and couldn't encourage a factory in Mexico to do anything.

And as an example, I have a World War II rifle made by the Smith Corona typewriter company. Smith Corona worked with the federal government to then partner up with the Winchester company, to then share resources and to share tools and talent to then produce the rifles that we needed. That's how it works.

That's feasible on a timeline of multiple years. But the peak of COVID cases is expected to be in two weeks. It takes 30 days to get a cargo ship from China to the US. Companies are getting retired cargo planes out of the dessert to get them flight ready again. This is already a bottleneck and increasing capacity in the US won't do anything to fix that.

When it comes to sheer massive might, getting stuff done, getting stuff produced and getting stuff moved from Point A to Point B, there is no greater organ in the world than the United States military. We did it in World War II. We've done it all over the world. We can do this now. This is the thing the military is good at, and we need to let them do that.

The largest military cargo plane, a C-5M, can transport 36 pallets (15 foot long) and 128 tons of cargo. A single super freighter transports over 20,000 TEU (each one 20 feet long). And Costco alone just bought 11 of those ships, in addition to their existing fleet and in addition to the 10,000 or so other ships out there.

I think you're vastly underestimating the scale of global trade. And given that costs of shipping have gone up roughly 10-fold already, non-essential stuff is already not getting shipped anymore. That's the next shoe to drop if shipping doesn't start getting underway again soon.


Edit: I do admire your confidence in government though, particularly with the current administration. Especially since the same government (well, Treasury) wants Social Security recipients to file an income tax return to receive stimulus checks, because they don't have their mailing address on file and something is seemingly preventing them from getting these data from the Social Security Administration. But yeah, they'll totally figure out global supply chain logistics overnight. At least it's better than the states, whose unemployment insurance software couldn't handle an additional payment of "up to $600/month" (and up to the past wage), because it's a decade old at this point and might just break. In case you're curious why UI benefits are going up by a flat $600 and why some people might get a small raise if they get laid off. (Not actually a big deal, but tells you something about the software they use, no?)

[Hegemony]

I think it's clear that our current government is not going to do any of these things and indeed is not capable of any of these things. So you don't have to "admire my confidence in government." I have  no confidence that these things will happen. Many things like this were in the pandemic plan, and many people whose job it was to bring them to fruition have worked for the government at one time or another. But fewer of them have been retained, and it's evident that none of them have been ordered to do anything like this right now. So all the planning has been effectively useless. Or to quote Max Brooks from the same article:

"I can tell you that the federal government has multiple layers of disaster preparedness who are always training, always planning, always preparing, regardless of how much their budget gets cut. I have toured the CDC, and I've seen all their plans. I have witnessed what was called a "vibrant response." This is the homeland nuclear attack scenario, which was a coordination of FEMA, the Army, the National Guard, state and local officials, all working together in a massive war game to prepare us for a nuke. I have also witnessed what was called a "hurricane rehearsal of concept drill," where not only did the same players come in, but also bringing in our allies from Canada and Mexico. So I have seen that we have countless dedicated professionals who think about this constantly and they're ready to go. And they have not been activated."

But we're not talking about what is happening, are we?  We're talking about what we think should be happening.  So I've now described what I think should be happening.  For others to declare, "Well, that's not happening!" is beside the point — the fact that it's not happening is exactly the problem. I see no will to do much to solve the problem, in this or any other way, among those who have the power.

[dismalist]

It gets worse and worse:

FDA Prevents Import of Masks

https://marginalrevolution.com/marginalrevolution/2020/04/fda-prevents-import-of-masks.html

[dismalist]

But it gets better, too:

New York Considering Loosening Requirements for Funeral Directors as Bodies Pile Up

https://www.politico.com/states/new-york/albany/story/2020/04/03/new-york-considers-loosening-requirements-for-funeral-directors-as-bodies-pile-up-1271316

[hmaria1609]

DC's Metro rail and bus service will have new service hours until further notice:
https://wtop.com/coronavirus/2020/04/metro-to-now-close-at-9-p-m-until-further-notice/
I saw a photo of Metro Center Station in the print "Washington Post" Metro section today--it was lightest number of people I'd ever seen in the station.