A phenomenon that has been noticed in connection with the
current goods shortages connected with the virus scare is resale of hoarded
items. People have gone to Costco, for example, and bought all hand sanitizer
and then resold on Amazon at huge mark-ups.
While such actions are viewed with disgust and greeted with
calls for interdiction, I disagree. The free market is too important to the welfare
of society to impede it because of such concerns. To have a free market, you
need property rights, voluntary transactions, a price system, and a profit
system. It helps to have division of labor too. Preservation of such rights and
functions aid overall prosperity.
The guy that hoards and later releases goods into the market
has performed a valuable function. In a free market, prices signal demand. The
higher the price, the more acute the need that the price reflects. The guy that
hoards by buying a product at a relatively low price and later sells at a
seemingly outrageous price has in effect saved goods from consumption until the
time they are most needed. He has performed a valuable service, and the profit
he makes is his reward and incentive for doing so.
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