Coronavirus and Hoarding
In the classic movie "It's a Wonderful Life", George Bailey, son of the late savings & loan operator, has just married Mary, a childhood friend, and is on his way out of town for their honeymoon when there's a run on the bank--and also on the S&L. The S&L doesn't have cash on hand to handle the rush for withdrawals, and if it closes without cash, it'll never reopen. George leaves his car to intervene. In prior conversation, Tom, a customer, wants to withdraw his whole account. George pleads for Tom to honor a 60-day waiting period for withdrawal. Tom repeats his demand. In the meanwhile, Mary appears with their $2000 in honeymoon savings and offers its use in staving off the run. (This transcript excerpt is from this source.)Hey! I got two thousand dollars. Here's two thousand dollars. This'll tide us over until the bank reopens. All right, Tom, how much do you need?
Two hundred and forty-two dollars.
Aw, Tom, just enough to tide you over till the bank reopens.
I'll take two hundred and forty-two dollars.
There you are.
That'll close my account.
Your account's still here. That's a loan.
Subsequent customers are more accommodating and limit withdrawals to what they need over the coming week or so. And the S&L closes that evening, still in business, with $2 left from George's savings.
The analogy to bank runs has in common a public panic. Tom's demand is unreasonable. $1 in 1945 would translate to about $14.37 in today's dollars. So we are talking roughly $3500. In the context of the movie, George's nemesis, Old Man Potter, is trying to exploit the panic, offering panicked S&L shareholders 50 cents on the dollar for their deposits. So we know Tom's request is simply to get all of his money, not because he needs it in the short term, but he figures the S&L will fold and he's determined to get his money out while the S&L still has funds, damn all the other depositors.
The infamous story of Matt Colvin who basically accumulated 17,700 bottles of hand sanitizers and other in-demand items (e.g., respirator masks) by cleaning out stock at dollar stores and the like in mid-south states (e.g., KY, TN) and trying to profit via online retailers comes to mind. Amazon and eBay have cracked down on what they see as potential price gouging activities, which might expose them to legal risks in certain states with economically illiterate price gouging laws. (Familiar readers of my blogs and tweets know I take a dim view of victimless crimes. Price gouging is a voluntary exchange of willing buyers and sellers. High prices attract more suppliers, and competition quickly arbitrages prices and profits. The Gray Lady tells a sad story of a MA mother with a newborn baby who tried to buy a bottle of hand sanitizer, finding it cost at least $50 online. But the problem has more to do with local hoarding; Colvin, for instance, didn't buy his stock from stores in New England. And, in fact, suppliers of in-demand products have not gone out of business. A business should respond to high demand by charging higher prices; perhaps they worry about price laws as opening themselves to legal risk. In these cases, I would recommend limiting purchases of target items to better serve all their customers. I was not happy, for instance, that my local Walmart's huge aisle of toilet paper was completely wiped out. I was only looking to replenish a small multi-pack at home.)
Well, I haven't done much shopping recently, as coronavirus has panicked Wall Street and sports have ground to a halt; even pro wrestling is now being filmed in empty facilities. If you go to Drudge Report (I got introduced by a Unisys outsouce IT manager at a Chicago city department back around 2002), you'll see links to shopper conflicts at Costco and Sam's Club. A former colleague/friend I met in the Chicago SW suburbs, now living on the West Coast (Los Angeles area), mentioned on Facebook he couldn't find soup, meat or eggs at his local market.
Now to be honest, I've seen panic buying/hoarding in the past. In 1983 I had just picked up my MBA in the spring, which I had started on a part-time basis a few years earlier and basically had become just a checkoff since I had been admitted to the PhD program in MIS at UH the prior year, when Hurricane Alicia pummeled Houston in August. We were without power for days, and I remember the first time I tried to drive, I found a fallen tree blocking the road ahead. My folks lived in the San Antonio area, and I heard stories of grocery stores stripped bare of batteries, drinking water and various shelf-stable foods. I remember at the time it was rather amusing because San Antonio is a 3-hour drive west of Houston on I-10 and I remember thinking that even the hurricane reached San Antonio (I don't think it did), it would have significantly lost strength hundreds of miles inland. Make no mistake--high winds and flash flooding can still happen well inland, but FEMA advises an evacuation route from coastal areas that take you some 20-50 miles inland.
My Mom laughs that I have continued my Sam's Club membership; after all, as someone who is single, I really don't need gallon sized jars of mayonnaise. There are a variety of reasons I shop there--including certain food/other items I don't find stocked at Walmart, electronics, vitamins, etc. The reason I'm mentioning them is that about 2-3 years back I bought a huge pack of toilet paper from Sam's Club that seemed to last forever. It was only a few weeks back I had to replenish my supply with a much smaller multi-pack from Walmart. Now I had read some stories of toilet paper shortages, but I live in a smaller far-distant suburb of Baltimore and really didn't think it had reached out here. I was wrong.
Literally after I wrote the preceding paragraph, I decided to go to Sam's Club (just outside the Baltimore loop) for the first time in maybe 5 months; I think the coronavirus crisis is affecting recruiters and/or clients in contact with me over future opportunities (two phone interviews scheduled late last week fell through without notice). It was a surreal experience; when I got there, there was a line of a few dozen carts (with shoppers) stretched out from the entrance. It looked like they were pacing customer entry about a dozen carts at a time. One of the Sam's Club employees came around spraying/wiping down cart handlebars (of course, after we joined the line). Maybe I came too early (mid-morning); I noticed when I left, no line at the entrance.
Granted, even though I shop there only every few weeks, it annoys me because it seems they are always reorganizing things. There are a couple of obvious buys every time you go to Sam's Club: discount gasoline (now down below $2/gallon after the massive oil market correction) and $5 rotisserie chickens. I did notice they are rationing laundry and certain other cleaning products to 2 per customer. They seemed to have paper products, which used to be in a rear right aisle, along the left wall. I didn't see toilet paper in stock--certainly I didn't see any in other customer carts; I do think they had paper towels in stock. Their supplies on fresh milk and eggs seemed limited and mostly premium-priced items, like cage-free eggs. I was able to pick up a tri-pack of grass-fed ground beef bricks and some sirloin steaks on sale, but there were uncharacteristic gaps in many freezers, typically packed solid. I still bought a lot, but I think it was the lowest tab I've had over the last half dozen or so visits. There were some staple purchases I couldn't find, like 1-lb. tubs of grass-fed KerryGold butter (I know my local Walmart stocks 8-oz. packages)
Generally speaking, no customer drama, although longer than usual lines. A couple of customers were wearing masks, but that was also true in my shopping trip to Walmart over the weekend.
My trip to Walmart this past weekend was mostly motivated by the need to pick up a prescription. Like I've mentioned elsewhere, I didn't see a single roll of toilet paper for sale in the vast aisle. I was just looking for a spare 4-roll package. There was large gaps in the meat aisle and standalone freezer areas and certain other areas, like canned soup and pasta/sauces. Probably other areas; I mostly focused on my normal shopping list, and I've never bought hand sanitizer.
I've Now Officially Changed My GoTo Cable News
One prominent signature gimmick was former Fox News host Bill O'Reilly's "no spin zone". They also promised "fair and balanced" coverage. but in practice it was a handful of outnumbered house "liberals" and no real debate--just exchanges of trite soundbites. Maybe I expected too much from the years of the GOP exile from the White House and the rise of the Tea Party in conjunction with my emerging libertarian perspective. The Wall Street Journal was now part of the Murdoch media empire. John Stossel and George Will had joined Judge Napolitano in a strong libertarian-conservative stable. O'Reilly's populism irked me, not to mention the strident, whiny Sean Hannity.Something happened when Fox News embraced Trump's celebrity campaign. The fawning coverage, even covering Trump's plane arrivals in the campaign, was toxic. It grew with Trump's unlikely election in 2016, and new programming, like "The Next Revolution", celebrated Trump's fusion of right-wing nationalism and populism and completely nauseating me. The orientation was so Trumpkin that I've repeatedly referred to FNC and FBC as the "Trump Propaganda Network".
Why did I continue to watch Fox News on a limited basis: (1) Chris Wallace and (2) Bret Baier. I consider them top-notch and independent. And I will continue my podcast subscription to Fox News Sunday. But when Fox dropped Stossel and Will (or they left for whatever reason), it was just a matter of time. Not to mention that the Wall Street Journal really never made an impact beyond a program or two on Fox Business Network.
But I'm fed up and have switched to CNN for cable news. Oh, I do not agree with everything CNN does and say, and I realize it's part of the mainstream media I disdain. I'm not saying I'm married to CNN. Maybe if Trump goes down in flames this November, Fox News will reinvent themselves as the opposition media and rid itself of the stench of Trump.
