I'm enjoying a HN thread from an article: "Chip shortage leads carmaker Opel to shut German plant until 2022". The claim is that chips are in short supply, and scalpers are buying them up to resell at 6x-100x the price.
The question I'm interested in is: are scalpers at fault? Is they being unethical?
There are already a ton of good points made in the thread, so here's me talking to myself.
("Scalping": resell at a large or quick profit)
Free markets work really well. They work by taking everyone's personal incentives (aka "greed") to solve coordination problems that happen in a big group of people. Here, the coordination problem is that many people need chips but there aren't enough to go round. We should distribute them by giving them to people who need them the most, and since there's no good way to pick, we go with the least bad way: who can pay the most.
Imagine a state-owned hospital, a phone manufacturer, and a toymaker. They all need chips, but the hospital needs them for lifesaving equipment and is willing to pay a huge premium to keep operating. The phone manufacturer has bigger margins than the toymaker (because people are willing to pay more for phones), so is able to pay a small premium for anything not sold to the hospital. This is far less wasteful (in lives lost, and toys made) than all three buying an equal number of chips.
Problem is, the chip maker is in the business of making chips, not handling the risk of pricing during shortages. Scalpers handle this risk and all the logistics, and if they make money, that's a fair trade for their help in getting the chips to the right place.
"Who can pay the most" is a terrible way to allocate resources in a shortage. That's why price gougers are hated: people are dying, but rich people can pay the most. The free market is useful as a tool to solve coordination problems. We don't literally mean that rich people have more right to live because they have more money.
The example is suspect because hospitals might not be able to offer the most money. It's cheating to make them them state-owned; in real life, our broken healthcare system might not cough up the money and we might end up making profitable phones instead of saving lives.
But business is business. What I care more about is scalping making a value judgment between people. In an emergency, which person gets aid should be random (all lives are equal). For a concert, which person gets tickets should be random (just because you pay more doesn't mean you like the music more). Allowing scalpers in either of those places gives us all the bad parts of capitalism (greed, inequality) with none of the economic benefit.
I think we should judge scalping based on whether it provides economic benefit vs. whether it makes people feel unequal.
Scalping in supply chains, business, finance: totally fine. It's part of our economic system for determining prices. Let capitalism do its thing.
Scalping in emergencies: wrong, and let's call it "price gouging." The best way to allocate resources is probably randomly (all human life is equal) or by an authority ("hospitals come first"). Using the market adds no value.