Some laws ban price gouging. In certain industries and during an emergency, firms basically can’t raise prices unless they can prove that their operating costs / input costs increased.FN: SRAS
Looking at the graph immediately following seem to over state the shortage or require the assumption that the set price ceiling in fact ignored the clearly demonstrated (S curve) increase in costs. If we move to the view that the administrative price is well informed then you just get market clearing. The argument there should be no gouging is occurring—that would just be the uninformed rhetoric.
I suspect the real problem with attempts at price gouging all relate to attempts to restrict supply (at least in some local, short term aspect). Early in the pandemic days when all the store shelves were empty of some items there was a story about some guy that had a garage full of some item (forget if it was disinfectant wipes, toilet papers or what—one of the high demand items). He had bought out the supplies early with the intent on selling at a high profit when supplies were even tighter. So the dynamics of price gouging and the profit motive can lead to some perverse outcomes that are not consistent with what you could call efficient or welfare positive market outcomes. Of course this is not some new behavior—used to be called front-running and was consider a violation of the terms of many of the old Merchant Guilds in European history.
Side note on prices as signals. While I’m generally very sympathetic with the prices are signals view, it’s not always obvious to infer just what is being signaled. Generally the claim is increasing prices should signal need for more supply while falling prices signal a need for less supply. However reality seems to allow for the reverse to be the case. Declining industries with fixed costs in production will likely see increasing prices as demand falls and suppliers exit—strange case of being on a negatively sloped portion of the supply curve. Similarly, increasing demand with fixed costs also allows for prices to fall as the increased output takes advantage of the economies of scale from fixed costs in production. Not looking into the details and taking the signal at “face value” would lead to a really bad investment in the first case. In the later case it might lead to missing a great investment.
I just scanned the post and comments so may well have missed it. I would think these studies are looking at early in the pandemic patients (perhaps wrong to think that) so just wonder if there is any control over the treatment of the patients in the early days that might have biased the results at all?
Does this suggest they don’t hold to loss aversion in any sense? I’m taking the claim, selective analysis/data presentation, at face value here. If true that seems like it would suggest a very significant loss to current and future status as well as position and potential future positions.
That misses the point about transaction costs driving the emergence of the firm in Coase’s argument. As I recall the key transaction cost was was not really search related but that for 100 people to work together with some form of legal agreement each person must contract with 99 other people. Once the firm exists then the majority of those contracts go away and the firm contracts with 100 people and the 100 workers have no contract with one another, just the firm.
I feel a bit like the title is a bit off. I might actually suggest a lot of what is said here is about Getting Grounded, rather than staying grounded. Staying Grounded implies one was grounded in the first place.
Great post though and I think it points to a number of examples one might consider and compare with their own life to see if perhaps one is as grounded as they think.
I’m not sure Coase, here, is a good understanding of specialization at the level you mention in a lot of cases, e.g., specialist programmer in, say, search functions and then one for, say, sort functions rather than the programmer that is a generalist in a particular language. I think Smith’s division of labor and extent of the market might be more appropriate here.
It also seems that the one could view the firm very much as a polygamous structure because it includes many people filling similar roles in their relationship to the central contracting party (the firm).
I suspect there is a good name for that situation. However, if there isn’t one I submit “Don’t bite the hand that fed you” fallacy.
But it also seems like there is an element of an assumption of no counter-factual possible underlying the claim.
This doesn’t mean those pandemics, with their millions of lives lost, were unimportant. It simply means that they did not suddenly and severely shake the world economy, the way COVID-19 is doing right now.
Not sure this comment changes things much but would point out that the world economies in 2020 were a lot more integrated than in just about all other periods of time one could consider pandemic impacts. In that sense I think the impact, and particularly to things like financial asset prices, may be reduced in a less integrated world.
What might be more relevant here, but I’m not sure how to apply any adjustment factors to your x/14 scale approach is how the observation of tight integration (think all supply chain roads lead to China) and the degree of decoupling that seems to be occurring would impact some of those points.
But I do like the approach in that it does kind of keep it simple in approach and could be applied by anyone that just wanted to think about things without have a good background in math or modeling.
The use of triangulation as an analogy here seems to suggest the choice of use-cases is critical to minimizing the number needed. In some cases I would think that selection might be rather obvious but not sure that would be generally true.
The obvious (I would think) goal then would be to seek use-cases that exhibit a high degree of “independence” from one another (much like a regression test should use) rather than “highly correlated” use-cases. But use-cases are not simple variables so may be difficult to assess from that perspective.
Do you have some thoughts on that selection process
Could this be something of statistical a mirage? (and hopefully this is not too poorly expressed or thought out as it’s very much an off the cuff type thought. It’s also really just a slightly different statement of the above explanation.)
I don’t know if this hypothesis comes close to fitting with the reality in the UK but what if one is looking at general, aggregate statistics but the cases are largely in some “unique” sub populations.
If there were pockets where previously few people were infected, were taking their time (or were anti-vaccers) and then delta hit those areas. Previously COVID was spreading slowly in such areas. Now it starts spreading quickly. The aggregate measures suddenly turn up but as soon as those sub-populations start to look like the general population you see a very rapid drop in transmission and in the aggregate numbers.
Putting it a bit differently, is it maybe one of those devils in the details, but not necessarily a factor that we can really do much with other than note it needs to be kept in mind at times?
Does an observation of a black herring or black apple reduce the claim of all ravens are black—or somehow be less forceful a failure to disprove the claim? What about a blackberry?
You might enjoy the story of how the Korean written language, Hangul, came about. It was developed by one of the Kings because he thought the average Korean should have a language they could read and write and leaning Chinese characters was difficult for many—probably for no other reason that most didn’t have the luxury of time that the nobles and scholars had.
These is an historical movie about the event—I suspect it’s romanticized but the main lines are probably pretty accurate. Called The King’s Letters.
This touches on something I think is an obvious follow up from the experiences we’ve had but have not really seem anything about it in general public discussion. That might be just that it’s not really “news worthy” from media’s perspective.
For these airborne diseases it should be obvious (and seems like it’s been demonstrated with some empirical findings from reported cases) that recirculating air internally is not the best idea. You do want to pull outside air in, probably do some filtering of it and perhaps even other sanitizing actions (UV light) and the expel the internal air. But I’ve not heard anything about updates to building code in that regard. Nor have I seen any obvious work on that being done for retail places or apartment/condo or office buildings.
Of course that only works for things like SARS-CoV-2 that doesn’t survive well outside a body so leaves open the possibility that the next pandemic would be the one we pump in from the outside air and don’t have the right filter/sanitizing tools in place.
Seems like you’re rejecting the idea that a “grossly unjust” law could be a scissors statement?
Just for disclosure purposes I an fully vaccinated (Moderna) and generally have started (never fully stopped) still sport a mask in places I would have before. For me that is really more about the unvaccinated that I suspect are taking advantage of the new no-mask if fully vaccinated but no one will ever check standard in place now.
I would think one might want to do a quick review of what we got right and what we got wrong in the first year+ of our response and policies related to social interaction with COVID present. If does seem that one of the earlier takeaways was that some policies were mandated too broadly. By the time some regions really needed to be following the policies they were completed burned out on the costs of the too early an adoption. That seems to have helped support a lot of the current resistance we currently see.
Not sure if there are more aspects to consider that are similar to that observation but I do get the sense that our experts are all too happy to follow the old script which was of questionable quality.
This largely captures my views about myself and choosing to follow a generally civil life—accepting that I am not the moral authority, judge and jury even when I find my own moral senses insulted by various actions from others.
I think for me though it’s about not even making the choice between blue or green explicitly—perhaps creating an internal ambiguity that I may well be a monster (when I decide to say eff it all for following civil conventions and laws) rather than the moral person I claim (make the appearance to be) by limiting my actions and let social rules govern various outcomes.
One thing I’ve noticed is that the really smart people actually don’t tend to act like they are. They don’t spend a lot of time trying to convince those slower than they are about things—they don’t really “argue down” as it were.
As I recall the accuracy measurement was something of an average over the whole molecule deviation which could then allow small portions (local) of the predicted shape to differ from the true shape a good bit more.
First, is that a correct recollection? If so, does anyone know of any work on exploring the importance of local deviations from the global averaged type metrics? I would think that would be very important in this type of modeling.
One additional “follow up” reading—maybe best thought of as a companion reading—would be Author Houge’s The Origins of the Common Law
I think it would fit well into the area where local, informal norms intersecting with more formal legal/dispute resolution institutions. As I recall Elllickson did not spend too much time, hardly a surprise given his focus, on that area.
I think it would be very interesting to see someone take his hypotheses and theory and apply it to some of the more recent events that have occurred. For example, some of the smaller communities in the Dakotas and Montana area which seem pretty “neighborly” internally but seem to clash with outsiders and even local and state formal structures.
I would be a bit concerned about the disincentive towards investing in that approach. I also think the pay back if loses in the following year just adds some complexity and opportunities for both confusion and gaming activities.
At the same time it does seem to fit with my view that one’s taxes should be proportional to the benefit derived by participating in the society and economy.
To the extent the concern is the (apparent?) imbalance between what the rich pay and what the bottom rungs pay I think I might try a different approach. What if:
W2 income were not taxed for revenue but each of us was still on the hook for FICA (all of it).
Income taxes were levied on business activity—net revenue
Dividend and Capital gains remain a bit as they are now.
I would keep capital gains taxes lower than income taxes for incentive reasons. Just where we put dividends, I suppose a case could be made they are very similar to business income so taxed at the same rate as the net business revenue.
I think two things fall out of that. First, taxing real people’s income is a bit like taxing their contribution to society and the economy and not the benefit they get by being part of society/the economy. Yes, I know it could be put in the same category as all other economic activity but really has a different feel to me—and I think others. So for those only collecting a paycheck their taxes are zero or near that. The perception that somehow the rich are getting over on the poor worker is now gone in terms of tax burdens and policies.
Second, I think that simplify both the over all cost of collecting and auditing taxes. Business no longer have to worry about employee related taxes (though that might be something they keep doing for a number of reasons), businesses already have tax experts where as individuals generally don’t. Even with fairly low cost tax services and software there are still a lot of things your average Joe/Jane misses keeping around or recording over the year. The IRS probably is smaller and I would guess that estimating government revenue would be easier as well.
There is also the whole shell type game with the funds going on. The employer pays the workers at a rate that allows the worker to pay the taxes that are collected on their income. Then the employee has to mess around with the income tax filing and account for some final adjustments. Seems like taking the employee out of the shell game eliminates pretty much all the questions about just how much tax is due so could be correctly paid on the defined quarterly schedules.