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> There is no such thing as "shortage" of anything. Just pay more, and you'll get it. There is. We didn't create the word to have no meaning. However, it is no

> There is no such thing as "shortage" of anything. Just pay more, and you'll get it. There is. We didn't create the word to have no meaning. However, it is not defined the way many people seem to think it is or the way you are suggesting. The formal definition of shortage is a situation where an external mechanism prevents price from rising. External mechanisms can include government intervention, which is not completely unheard of. Medical doctors, for example, have a government-mandated price ceiling in the jurisdiction in which I reside. You legally cannot pay more to take the services of a doctor away from someone else. However, such circumstances are indeed rare, especially when it comes to the price of labour-based activities. To put it another way: A shortage is a situation where you cannot pay more, even if you had all the money in the world to spend on what you seek.

deleted 8y ago
[deleted]
ams6110 8y ago
That's an economic definition. A more common understanding of shortage includes conditions where the price rises beyond what I can afford. If I can't afford beef at $10/lb but the supply of beef commands that price, I will perceive that as a "shortage"
- imglorp 8y ago
  > beyond what I can afford No, it's not usually "CAN afford", it's more like "beyond what I WANT to pay". Eg Apple has $245 billion in cash. Instead of offshoring the production AND the cash and then gaming the H-1B supply [1], they could be exploring education, infrastructure, and training, per credit_guy's observation above. We also need to discourage offshore tax havens. 1. https://www.networkworld.com/article/3196711/careers/us-law-allows-low-h-1b-wages-just-look-at-apple.html https://www.networkworld.com/article/3196711/careers/us-law-...
eldavido 8y ago
Slightly pedantic point: A shortage is a market failure where you have willing parties who want to transact (a guy wants to sell at $10 and someone wants to buy at that price) but for whatever reason they can't. For shortages in particular, there are more buyers than sellers (surplus is the reverse condition). The price might normally rise but it can't. The failure to transact is the first-order condition. That prices can't rise are sometimes a cause or effect, depending on the situation. But the main thing is that you have people who want to transact who can't. Shortages often happen due to price controls. Say I want to sell my house. I won't take $100K for it but I will take $200K. You are fine paying $200K. A rule is made that no houses can be sold for more than $150K. We both are fine with $200K but I can't sell my house because I won't accept $150K for it. So we don't transact. The sale doesn't happen, even though we both want it to. In the long run, producers don't bother producing because their upside is capped. That usually makes things worse: not only can the price not rise, but the market becomes systematically undersupplied. But that's a follow-on effect, not the "shortage" per se. You are completely correct that this (a shortage) is a highly technical condition that doesn't correspond to the common use of this term, something like "it costs more than I want to pay".
tensor 8y ago
This seems off. Isn't a shortage simply where demand exceeds supply? In that scenario there will always be some companies lacking no matter how much they pay. Salaries can rise indefinitely and it will still be true that the bottom portion won't have supply. Now, I don't think we are in that situation, but it absolutely can occur. Usually in artificially constructed scenarios these days, e.g. taxi medallions, but in the past you certainly could be limited by the number of people in your village as well.
- randomdata 8y ago
  > Isn't a shortage simply where demand exceeds supply? I suppose you could put it that way, but it is important to remember that as price rises, demand wanes. As long as price is able to rise, then the demand will keep offering higher and higher prices until the supply presents itself. In the meantime, as offers go higher and higher many will drop out of the market. A shortage occurs when that price is unable to rise, leaving a situation where nobody exits the market. This is the only time that demand exceeds supply. > In that scenario there will always be some companies lacking no matter how much they pay. Everyone has a limit. I know of a lot of businesses who cannot afford to pay more than $10,000 per year for a developer. Needless to say they are developer-less. This does not mean that the supply of developers is lacking, it simply means those businesses were never in the market for a developer in the first place. I don't have the money to pay the hundreds of thousands of dollars for a new Ferrari. That doesn't mean the supply of Ferraris is lacking – they are more than abundant for those who are truly in the market for one – it simply means I don't have enough money, and thus I'm not really in the market for one. We, for obvious reasons, don't count people who simply have dreams of buying something. Every 10 year old kid dreaming about owning a Ferrari is meaningless just every business dreaming about hiring an employee is equally meaningless. Demand is far more nuanced. > but in the past you certainly could be limited by the number of people in your village as well. If we take it to the logical extreme and assume there is only one person available for hire, the business which offers the best deal will hire that person, and if nobody can offer a better deal, they're just dreaming. Supply doesn't exceed demand in this scenario. The price rose to the point where all other demand vanished. A shortage occurs when price cannot rise. Suppose our village with one worker has a law that says the worker cannot be paid more than $30,000 per year. Every business in town is quite willing to pay $30,000 for this worker, and now there's no market solution to determine where the worker should go. This is when demand is able to exceed supply, and when you have a shortage, relying on some other method, like a lottery, to determine where the worker ends up. Such scenarios aren't completely unheard of, but rare. Especially when it comes to labour as most people aren't in favour of placing limits on one's earning potential. Medical doctors are an interesting exception as we don't feel (where I live, other parts of the world may be different) that the rich should be able to pay a doctor more money to incentivize looking at their stubbed toe while someone of lesser means is having a heart attack without a care provider. Instead, both people are obligated to pay the same amount, and the doctor will judge based on severity who gets the service and who has to wait or be left out.

deleted 8y ago

[deleted]

ams6110 8y ago

That's an economic definition. A more common understanding of shortage includes conditions where the price rises beyond what I can afford. If I can't afford beef at $10/lb but the supply of beef commands that price, I will perceive that as a "shortage"

imglorp 8y ago
> beyond what I can afford No, it's not usually "CAN afford", it's more like "beyond what I WANT to pay". Eg Apple has $245 billion in cash. Instead of offshoring the production AND the cash and then gaming the H-1B supply [1], they could be exploring education, infrastructure, and training, per credit_guy's observation above. We also need to discourage offshore tax havens. 1. https://www.networkworld.com/article/3196711/careers/us-law-allows-low-h-1b-wages-just-look-at-apple.html https://www.networkworld.com/article/3196711/careers/us-law-...

eldavido 8y ago

Slightly pedantic point: A shortage is a market failure where you have willing parties who want to transact (a guy wants to sell at $10 and someone wants to buy at that price) but for whatever reason they can't. For shortages in particular, there are more buyers than sellers (surplus is the reverse condition). The price might normally rise but it can't. The failure to transact is the first-order condition. That prices can't rise are sometimes a cause or effect, depending on the situation. But the main thing is that you have people who want to transact who can't. Shortages often happen due to price controls. Say I want to sell my house. I won't take $100K for it but I will take $200K. You are fine paying $200K. A rule is made that no houses can be sold for more than $150K. We both are fine with $200K but I can't sell my house because I won't accept $150K for it. So we don't transact. The sale doesn't happen, even though we both want it to. In the long run, producers don't bother producing because their upside is capped. That usually makes things worse: not only can the price not rise, but the market becomes systematically undersupplied. But that's a follow-on effect, not the "shortage" per se. You are completely correct that this (a shortage) is a highly technical condition that doesn't correspond to the common use of this term, something like "it costs more than I want to pay".

tensor 8y ago

This seems off. Isn't a shortage simply where demand exceeds supply? In that scenario there will always be some companies lacking no matter how much they pay. Salaries can rise indefinitely and it will still be true that the bottom portion won't have supply. Now, I don't think we are in that situation, but it absolutely can occur. Usually in artificially constructed scenarios these days, e.g. taxi medallions, but in the past you certainly could be limited by the number of people in your village as well.

randomdata 8y ago
> Isn't a shortage simply where demand exceeds supply? I suppose you could put it that way, but it is important to remember that as price rises, demand wanes. As long as price is able to rise, then the demand will keep offering higher and higher prices until the supply presents itself. In the meantime, as offers go higher and higher many will drop out of the market. A shortage occurs when that price is unable to rise, leaving a situation where nobody exits the market. This is the only time that demand exceeds supply. > In that scenario there will always be some companies lacking no matter how much they pay. Everyone has a limit. I know of a lot of businesses who cannot afford to pay more than $10,000 per year for a developer. Needless to say they are developer-less. This does not mean that the supply of developers is lacking, it simply means those businesses were never in the market for a developer in the first place. I don't have the money to pay the hundreds of thousands of dollars for a new Ferrari. That doesn't mean the supply of Ferraris is lacking – they are more than abundant for those who are truly in the market for one – it simply means I don't have enough money, and thus I'm not really in the market for one. We, for obvious reasons, don't count people who simply have dreams of buying something. Every 10 year old kid dreaming about owning a Ferrari is meaningless just every business dreaming about hiring an employee is equally meaningless. Demand is far more nuanced. > but in the past you certainly could be limited by the number of people in your village as well. If we take it to the logical extreme and assume there is only one person available for hire, the business which offers the best deal will hire that person, and if nobody can offer a better deal, they're just dreaming. Supply doesn't exceed demand in this scenario. The price rose to the point where all other demand vanished. A shortage occurs when price cannot rise. Suppose our village with one worker has a law that says the worker cannot be paid more than $30,000 per year. Every business in town is quite willing to pay $30,000 for this worker, and now there's no market solution to determine where the worker should go. This is when demand is able to exceed supply, and when you have a shortage, relying on some other method, like a lottery, to determine where the worker ends up. Such scenarios aren't completely unheard of, but rare. Especially when it comes to labour as most people aren't in favour of placing limits on one's earning potential. Medical doctors are an interesting exception as we don't feel (where I live, other parts of the world may be different) that the rich should be able to pay a doctor more money to incentivize looking at their stubbed toe while someone of lesser means is having a heart attack without a care provider. Instead, both people are obligated to pay the same amount, and the doctor will judge based on severity who gets the service and who has to wait or be left out.