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If they could do it, we would have let them. But due to market failures throughout the course of history, we have learned to apply hysteresis to markets by stoc
by otterley 5y ago
If they could do it, we would have let them. But due to market failures throughout the course of history, we have learned to apply hysteresis to markets by stockpiling reserves and offering price supports in times of oversupply. The alternative is boom and bust cycles, which is fine for some markets like cryptocurrency and tulips, but bad for food and other necessities.
- eru 5y agoWhat kind of market failures are you talking about? Robust futures markets are perfectly capable of protecting producers and consumers from price fluctuations (and help stabilize prices as they do so). Similarly for long term contracts between consumers and suppliers.
- otterley 5y agoFutures markets and long term contracts don’t help people eat. You can’t eat food that doesn’t exist due to droughts, floods, freezes, fires, or pestilence.
- eru 5y agoNeither can the government produce food out of a vacuum. So?
- piva00 5y agoThat's why... They stockpile.
- eru 5y agoStockpiling is a rather straightforward operation. In addition, the benefits of stockpiling are both rivalrous and excludable. Ie stockpiles are not a 'public good'. So the private sector is perfectly capable of stockpiling, too.
- marmarama 5y agoBut the private sector generally doesn't stockpile, because the cost of maintaining a stockpile exceeds any immediate economic benefit of doing so. It is economically inefficient almost all of the time. Very occasionally it becomes useful, but current accounting practice, corporation law and shareholder demands do not have mechanisms for incentivising it. One of the key roles of government is to provide services that are economically inefficient but are a public good.