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I don't think that how much someone is willing to pay is a good way to measure what something's most productive use is. For one thing, it fails to account for
by harimau777 7y ago
I don't think that how much someone is willing to pay is a good way to measure what something's most productive use is. For one thing, it fails to account for the degree to which people have differences in what they are able to pay.
- quotemstr 7y agoWe use prices to ration access to scarce resources. What's the alternative? A command economy. Tons of historical experiments show that it doesn't work. And why shouldn't ability to pay affect the ability to access resources? What would be the point of money otherwise? How do you know that the most productive user a resource is something other than the highest bidder? On what basis can you make that determination? Prices are universal.
- harimau777 7y agoI don't think that we can perfectly know what the best use of a resource is. However, I think that we can often perform better than price does. For example, it would generally be better to allocate a unit of food to people who are starving than to people who already have excess food. Note that in some cases that won't be the optimal way to distribute the food. For example perhaps the starving person is actively hurting society while the person with excess food wanted to use the food to perform research that promotes greater food production in the future. However, taken as a whole, allocating at least some food based on need is going to perform better than allocating all food based on price.