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>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. Bu

• 0x1DEADCA0 6y ago
  Once the evil rich pigs have lots of bread, more than even they can eat, do they then not start using it to purchase labor from the starving poor?
  • tyree731 6y ago
    Not necessarily and, historically, not true at sufficient scale.
    • 0x1DEADCA0 6y ago
      So all of the software engineers out there being paid for their labor by companies flush with cash are... not, being paid? in your mind?
      • weakfish 6y ago
        And what of the Amazon warehouse workers?
      • tyree731 6y ago
        Software Engineers are being paid for labor, as are the "starving poor" from the original analogy. However, the wealthiest citizens of the world have been amassing wealth at a comical rate for the past few decades, while the poorest citizens have not, suggesting that "Once the evil rich pigs have lots of bread, more than even they can eat", they in the aggregate do not start using it to purchase labor from the starving poor, they tend to hoard it.
  • cambalache 6y ago
    No, they use it to buy lands, resources, mercenaries to get more land and to keep the status quo. I suppose if you are a mercenary you will be fine (as long as your head is not split in 2)
    • codeflo 6y ago
      I guess that's an accurate analysis of the economic situation in Europe AD 1100, a time period famous for its laissez-faire capitalism.
      • deleted 6y ago
        [deleted]
      • cambalache 6y ago
        It is exactly the same right now, with the difference that the crumbles of the pie are enough to feed the people. (Housing, health and education is another story)
• creddit 6y ago
  Unclear on how claimed price controls would ensure equitable distribution of bread. Why is the price of bread being capped making it so that more people get bread? If I’m rich and the price of bread is artificially low, maybe I’ll just buy up even more bread and now fewer people get bread.
  • mc32 6y ago
    If it’s capped too low then bakers and baxters go out of the baking business and into something more economically sustainable.
  • kuschku 6y ago
    Because you can define the cap so e.g. it only applies for one apartment per person, so you can't use it to get multiple ones cheap.
    • varjag 6y ago
      One apartment per person or per family? If per family, is it still per person if the couple is not legally married? If they are married, but divorce, get an apartment each and then re-marry, are they supposed to give up the properties? What if my nephew from another town moves in to live, it becomes tight… are they eligible too? There are plenty of places in the world where real estate was/is rationed or distributed, and they all end up having very similar social distortions.
      • bluGill 6y ago
        >If they are married, but divorce, get an apartment each and then re-marry Or more likely divorce to get the apartment, but continue to live as if married except for purposes of that extra apartment. It isn't unheard of for couples to not legally marry today because of the tax difference even though for all social purposes they act as married. That is despite some social pressure to marry.
    • creddit 6y ago
      Oh so you mean you would want rationing too. How is that related to rent control then?
• xvedejas 6y ago
  In the short term, I'm in agreement without caveat, but in the long term letting the prices rise supports industrial growth. The wealthy buying all the bread they want funds the expansion of the farming industry, allows them to invest in more intensive farming practices, and even better encourages price discrimination, whereby the wealthy actually get the same amount of bread as everyone else but pay extra for the "artisan" varieties. Getting the rich to pay more for essentially the same thing is itself an equalizer. It's not hard to draw the comparison with housing. Let the rich buy the "luxury" apartments on the top floor (just an example), helping fund the building of large buildings which don't get built without cost-benefit and risk analyses squarely in the black.
  • kuschku 6y ago
    The issue is, there's only a limited supply (Berlin can't grow forever), and as result there's already many apartments left empty today to artificially increase the prices of apartments, as they're treated as investments in a bubble, with the intention to profit from increasing value, not from rent. Not regulating the price was tried for 30 years, and led to many families unable to afford housing, or spending 80%+ of post-tax income on housing.
    • codeflo 6y ago
      > Berlin can't grow forever That's not self-evident to me. Why not?
      • ben_w 6y ago
        Germany is a federal system, Berlin is one of the (city-)states within it. https://en.m.wikipedia.org/wiki/States_of_Germany https://en.m.wikipedia.org/wiki/States_of_Germany
        • germanier 6y ago
          It's not like this is a hard border. It's completely feasible to live outside its limits. Sure, that's not technically Berlin but for all purposes regarding the housing market it is.
• sokoloff 6y ago
  Rationing bread would increase the number of people who have some bread. Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market (and probably increase hoarding/decrease the breadth of distribution). Think back to toilet paper shortages last spring. Rationing was arguably the best move (and was what local markets around me did).
  • Mediterraneo10 6y ago
    > Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market. In some countries like Egypt, bread (or another basic staple) is heavily subsidized below the free market price, but that doesn’t seem to meaningfully impact the market’s supply: any consumer able to pay that artificially low price can still eat all the bread he or she wants.
    • HDMI_Cable 6y ago
      Well it seems more that the supply is sufficiently high to prevent a shortage from the demand (I guess we can thank modern farming techniques).
    • sokoloff 6y ago
      I agree that subsidies perturb the free market, but in this case to the side of increasing supply. (You can model it as the supply curve being shifted downward by the amount of the government subsidy.)
    • nickff 6y ago
      Subsidies are different from price ceilings; subsidies often spur over-production along with over-consumption (think HFCS), whereas price ceilings discourage production and encourage hoarding (arguably a form of over-consumption). Price ceilings also foster a domestic black market, whereas subsidies foster an export black market.
    • deleted 6y ago
      [deleted]
• codeflo 6y ago
  If anything, the article is too optimistic, because supply isn't constant. We're rehashing Eco 101 here, price controls decrease supply, in housing just with a longer delay. Tragically, that delay may be longer than an election cycle, which explains the political motivation to implement such policies.
• Shivetya 6y ago
  The bread example is apt if considered in the context of the apartment issue. What was driving up the price of housing was that they were not creating new housing at a pace to keep up with demand. So using the focus you had on bread, so you lower the price of bread so more people can afford it. However you don't increase the bakers ability to create bread and they still only have the same amount of bread as before. Well for the most part you have only swapped who has the bread and the number without is basically the same as before. You have done nothing but reduce the profit of the bread maker, at most. The right answer is to increase availability to where those who have the desire to have bread are satisfied and bread remains around that needs someone to buy it. Almost all housing shortages are government created if not 100%. Either through direct changes to laws and regulation or through providing the means for other groups to contest the construction of new properties in the courts because enough loop holes exist to stop any new housing.
• Kalium 6y ago
  > You can either increase total happiness, or concentrate it to the powerful. The nasty, invisible catch with price caps is that this outcome you've described is an idealized one. It's possible to get neither as you make whatever you're trying to regulate functionally unavailable to anyone. How much bread do you think bakers will produce if a loaf costs $1.20 to make, but politics dictates they cannot sell for above $1 each? In such a scenario nobody gets any bread except what the bakers make for themselves. It's also possible to try to increase total happiness and actually just wind up concentrating it to the powerful. This is what rent control has done in San Francisco. It's dangerously easy to confuse goal and outcome in policy-making.
  • fragmede 6y ago
    This is related to Goodhart's Law, which is "When a measure becomes a target, it ceases to be a good measure." It's a large area of study to figure out how to get the outcome you actually want, while measuring something close, because good metrics can be hard to come by.
• rsj_hn 6y ago
  Yes, this cogent analysis describes why communist nations are known for food security whereas those capitalist nations are known for starvation.
  • lornemalvo 6y ago
    When I look at the list of famines in the last centuries, it does not look like capitalism provides any kind of food security.
    • rsj_hn 6y ago
      Then you should read the list of famines rather than just looking at the page, because after the invention of fertilizer which brought an end to mass starvation (and was another product of capitalism), the biggest famines in the history of the world have been from communist nations, whereas the main problem in capitalist nations is obesity. Even the homeless here suffer more from obesity than from hunger.
• roenxi 6y ago
  But at what point does someone try to solve the shortage by baking more bread? If the price rises, more people will open bakeries. Economics answers 2 questions: 1) Who gets what today? 2) What should people prepare for tomorrow? Regulating an excessive focus on (1) will get bad results on (2) because it makes it less sensible to be come a baker. I'm not writing software because I believe there is a philosophical shortage of software. I do it because there are decent odds that I'll be overpaid relative to the work I put need to put in. Those odds are resulting in a lot of software being written.
• jkingsbery 6y ago
  In practice, this almost never happens. There isn't a fixed supply of bread. When the price of bread goes up, the following all happen: - Bakers will bake more bread - People from an area with cheaper bread will travel farther to sell bread where it's more expensive - Individuals will decide to bake bread for themselves - Companies that don't bake bread but that have the capability of baking bread (either directly, or with minor changes) will start baking bread. All these activities happen in proportion to the price increase, increasing volume and putting pressure on prices to go back down. And this article describes the data showing that this happens.
  • AdrianB1 6y ago
    Except when you have a bad crop season on an entire continent. No grain - no bread, so bakers will NOT bake more bread.
    • chii 6y ago
      which is why world trade is so important - you can import bread from other places that didn't have a bad crop season. Prices are signals; it's information that's embedded in the price that directs all actors, causing the flow of resources to be correctly placed.
• WalterBright 6y ago
  Regulating the price leads inevitably to either gluts or shortages.