Sunday, March 22, 2020

There is Plenty of Toilet Paper

By Robert Wenzel

There are plenty of empty shelves in San Francisco. You can't find any toilet paper or paper towels in any stores.

Some are blaming capitalism as if things would be different if Venezuelan president Nicol├ís Maduro were in charge.

The real problem is that the San Francisco government along with many other US governments is acting too much in the anti-free market authoritarian manner of Maduro.

Here's a recent message from the socialist San Francisco district attorney Chesa Boudin:

What a confused little man.

Maduro has price controls in effect and we all know how that is working out.

The current problem is one of distribution and incentives, both short-term and long-term.

In the recent past, most stores and consumers operated on pretty much "just in time" inventory when it came to toilet paper and paper towels.

This changed when the government started a panic over COVID-19. Some fearing a lockdown went to stores and grabbed as much toilet paper and paper towels as they could handle.

That left many more, well, shit out of luck, when it comes to toilet paper.

But the big problem is the anti-free market, anti-gouging rules.

People who have been selling toilet paper and paper towels for decades on a "just in time" inventory basis are not exactly, cutting edge, figure every angle entrepreneurs. They like steadiness and consistency.

I mean, they even understand this. The famous"don't squeeze the Charmin" ads were built on the theme that grocers want steadiness and consistency---and certainly no one squeezing the Charmin.

If you want steadiness and consistency, you can have a nice life by being Mr. Whipple, but rarely are you going to become super-rich. That's for the shrewd and aggressive.

When you have a supply line break, the Mr. Whipple's of the world have no clue how to get aggressive about supply chains and pricing. They don't want to, it is not in their blood.

What is needed is for the super aggressive to get working on the matter but they need to be motivated by money. A lot more money than the margin made by Mr. Whipple. You need the free market A Team working on this.

Government authoritarians like Boudin don't get this. They consider free market, incentivized prices as "price gouging." But when there has been a severe supply distortion for a commodity you want to buy, you really need sharp entrepreneurs to figure the angles and they are not going to do it for Mr. Whipple wages.

Consider my own situation. My just-in-time supply of toilet paper was running low. There is none, here in San Francisco, in supply at grocery stores or at any Walgreens or CVS stores.

So I had to think for a minute, then the solution came to me.

There are some restaurants that remain open in San Francisco but are operating on a "grab and go" basis. So my thought was, they must be packed with toilet paper that they aren't using that they had in stock for in-restaurant dining. I will approach them and offer to buy some toilet paper.

The first two places I approached gave me a song and dance about why they couldn't do it. There are just a lot of people who can't think outside of routines.

Then I scored on my third try. I explained I wanted to buy some toilet paper. I told the owner, "I will pay good money."

So the proprietor brought out a two-roll pack. The closet was close enough when he got the pack that I could see he had a full carton of toilet paper, 12 sets of 2 packs.

With the two roll pack in front of him, he said, "I am going to have to charge you $3.00."

I replied, "I will buy the full carton for $60." That's $5.00 a pack, he was ecstatic.

As I walked home, I thought to myself, San Francisco is filled with toilet paper in gyms to skyscrapers that are not being used. I thought of the angles I could use to gain access to that toilet paper for around $5.00 a roll.

The city is filled with toilet paper.

I am pretty confident I could put a kid at a table on the sidewalk and sell them for $10.00 a roll, when you consider the alternative for prospective buyers. I think I could bank six figures every few days and take care of the asses of the masses.

But Boudin makes that impossible.

I have no incentive.

The masses will be wiping their asses with newspapers, at best, because Boudin thinks I would be gouging by hustling and figuring out the angles to free up the toilet paper that is out there that people want desperately.

Those of us that are good at figuring out angles will keep our lifestyles but for those of you who aren't aggressive entrepreneurs, the socialists are going to make your lives miserable.

Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.comand Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bankand most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.



    It is unreal how stupid and incredibly power hungry our politicians are; there is literally as almost no risk of catching the disease by casual contact:

    "The World Health Organization (“WHO”) released a study on how China responded to COVID-19. Currently, this study is one of the most exhaustive pieces published on how the virus spreads.

    The results of their research show that COVID-19 doesn’t spread as easily as we first thought or the media had us believe (remember people abandoned their dogs out of fear of getting infected). According to their report if you come in contact with someone who tests positive for COVID-19 you have a 1–5% chance of catching it as well. The variability is large because the infection is based on the type of contact and how long.

    The majority of viral infections come from prolonged exposures in confined spaces with other infected individuals. Person-to-person and surface contact is by far the most common cause. From the WHO report, “When a cluster of several infected people occurred in China, it was most often (78–85%) caused by an infection within the family by droplets and other carriers of infection in close contact with an infected person."

  2. Here in NYS, a gas station/convenience store owner tried to find hand sanitizer for his customers who were demanding it. Looking out for his customers like any good business person would, he called dozens of contacts before finally being able to procure that product. It cost him considerably more than usual but he was able to make it available for his customers. As a gesture of goodwill he decided to charge his customers essentially his cost, marking it up by only 2 cents. Because he sold the product at much more than the normal price pre coronavirus, he has been charged with price gouging and fined despite showing the authorities the invoice of his cost.

  3. I imagine that some entrepreneurial type could create a substitute supply chain by employing lots of young kids who don't care about COVID-19 in a shutdown factory, but he'd first have to pay them minimum wage, give them health insurance, family leave, run a week of diversity training, etc. Hard to see why the economy is not as nimble as it once was.

  4. Once the government figures out that the hole in their law is that it does not stop a willing buyer from making a high offer for items not for sale it will make that illegal too.

  5. RW - great story. Love your solution to the toilet paper scarcity.

  6. Bob,
    You're a brave man for walking the streets of S.F. (hey, that's a good name for a TV show...) with a CASE of TP! I hope the packaging was discreet.

    Employee: "But boss, you said I was a very valuable employee on my last review!"
    Boss: " No, actually I said you were an asswipe"

    I just made that up.