I bought toilet paper on Sunday. It wasn’t because I was panicky; we were out. Well, we weren’t exactly out, we were down to six rolls. But in a house of nine, including three fourteen-year-olds and a potty training toddler, six rolls is as low as I like to cut it. So we needed toilet paper. The only problem was, toilet paper is too cheap.
My wife and I once had a debate about “price gouging.” I’d always lived under the assumption that to raise the price of a product in a time of panic was a moral sin. But is it? She was reading a book by Thomas Sowell and went on to explain how the free market has a mechanism for correcting the kind of panic buying we are witnessing this week. It’s not price gouging — if that’s what you choose to call it — but rather, the fair market price based upon the supply versus the demand. In other words, capitalism.
We’re seeing this play out with products that on a normal week go largely unnoticed; toilet paper, soap, hand sanitizer, water (in America at least) — these are not commodities. The manufacturing plants of Kimberly-Clark, Scott, Georgia-Pacific, and a dozen others are still churning out toilet paper at a steady pace. The distribution centers for Costco Wholesale are massive, and stocked with hundreds of pallets that will find their way to your store just as soon as the trucks and barges can carry them there. You may have to wait a few days, that’s all.
In response to the panic that stripped their shelves, Kroger implemented a one-per-customer rule for a limited time. Electronics are similarly rationed at certain times of the year — like Black Friday — and it’s a practice which, from the stores perspective, equates to good customer service. In truth, it’s Socialism minus the guns, for now.
Why ration how many iPhones a person can buy? Because we want everyone to buy one whether they can afford it or not. Why ration how many rolls of toilet paper a person can buy? Because your shelves are empty, which is bad for business, because customers get angry and shop at your competitors online, which is how I ended up purchasing the toilet paper I needed on Sunday morning.
I have a friend who recently bought way more toilet paper than he will ever need. He’s not the panicky type; no, he bought it because it’s cheap, and even though it might take years, he will use it eventually. Most of the people stripping their grocers bare are probably of the same frame of mind. But imagine if you were to walk into your grocery store and instead of seeing people in a panic, racing their shopping carts in a sort of demolition derby, searching for today’s pallet of rationed products, you saw half-full shelves, but with an inflated price.
Imagine if the toilet paper you used to buy for $15 was now $25. Would you pause and do a mental calculation about your needs? Would you have a little sober reflection and perhaps only buy it if you actually needed it?
Because there is an age-old mechanism for ensuring the population doesn’t panic and revert to its animalistic nature, to ensure people don’t get into fist-fights with strangers over a pack of Charmin or a PS3. There is a way to make sure people consider whether or not they really do want to spend their hard-earned money on the latest whim: Raise the price.
There are a lot of pantries full of inordinate quantities of toilet paper this morning. There are also parents shepherding their kids out of bed to be one of the lucky hundred people in line when the local Costco raises the door, hoping they will manage to get a pack of toilet paper, because they need it more than ground beef, or milk.
They won’t, but maybe tomorrow they will. And that is a sad commentary on a nation as blessed as ours, a nation bursting with resources but hamstrung by antiquated economic policies that breed fear of nonexistent scarcity, instead of encouraging people to budget. Because the day may come when that hoarder down the road finds a few angry neighbors beating down the door, because they had the foresight to stock up on ammo instead of ridiculous amounts of toilet paper.