4 ms·
> So I still don't see a big difference here between 90 meals and 90 houses for 100 people.
The difference is that once the meals are consumed, that's it. 91s
> So I still don't see a big difference here between 90 meals and 90 houses for 100 people.
The difference is that once the meals are consumed, that's it. 91st in line can't buy food no matter what. No amount of money is going to produce the 91st meal. As such, when food stocks are tight, you cannot rely on price to determine the buyer. You have to resort to some other mechanism. Given the limited information you provided, it would appear that you chose a first-come, first-served mechanism.
On the other hand, 91st in line for a house, if he has enough money, will buy a house from someone in the first 90 who got there first. There is always a house for sale. They don't disappear (freak disasters excepted). They are not consumable items. Even during the tightest inventory periods we've ever witnessed, there were still many houses available for sale.
Price can continue to determine the buyer here. Those who cannot afford them leave the market. Economically, this is not a 90 houses for 100 people situation. If there are 90 houses, then only 90 people will remain in the market. The other 10 are priced out. Those 10 are not market participants, they are simply dreamers. Dreamers don't count.
Socially, there can be a 90 houses for 100 people situation. I get you are wishing you could use shortage here, but what are you communicating? Everything with a price attached has more people dreaming of ownership than there are units available. That's why there is a price attached. That's literally what price is for – to reduce the number of potential buyers until the number of buyers matches the number of units available for sale, with price increasing until that is satisfied. Basic supply and demand.
When using shortage to include dreamers, everything is in shortage, always. What is the point in drawing particular attention to something that is always the case? It's pointless. You are not saying anything. Nothing has been communicated.
> consumed
90 meals per day.
> if he has enough money, will buy a house from someone in the first 90 who got there first
Which takes longer than waiting for the next day. You're making a distinction that doesn't really exist.
> The other 10 are priced out. Those 10 are not market participants, they are simply dreamers.
I can only laugh at this. If people give up, then it's not a shortage?
You claim my definition makes everything a shortage, because you ignore the other rules I would apply because you think they're too subjective. But your definition makes nothing a shortage.
> If people give up, then it's not a shortage?
No...? That doesn't make any sense. People also have to give up when there is a shortage. Some people giving up is a constant here. I am sorry to report that the world does not have infinite resources. Economics is a thing only because we have to manage allocation of the limited resources.
If you want to take that angle, the mechanism by which they give up is what is significant. If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage.
> You claim my definition makes everything a shortage
Frankly, I have no idea what your definition is. I stated that if you want to consider dreamers participants in the market then everything that comes with a cost is in shortage. Obviously. That's why there is a price. If we had the resources to allow everyone to have everything they could ever dream up, everything would be free. Any time you see a price of more than free – even just 1¢ - you know there are people wanting more of something than there are of those somethings available.
If it is that this does align with your definition – which I'm guessing is why you called it your definition – what are you communicating by exclaiming 'shortage', exactly? It doesn't say anything.
> If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage.
In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage? Assume I haven't changed production or consumption at all.
For example, if there's a lottery then simply allow resale after the lottery runs.
> Frankly, I have no idea what your definition is. I stated that if you want to consider dreamers participants in the market then everything that comes with a cost is in shortage.
We can establish a ballpark for what a sensible price is for most things. Don't worry about the exact number right now. If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.
> In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage?
If there was a situation where price was unable to rise, and you found some way to enable price to start rising again thereby seeing a reversion to a price-based mechanism, yes, you 'solved' the shortage.
> For example, if there's a lottery then simply allow resale after the lottery runs.
Or just allow price to rise in the first place, not requiring a lottery to fall back on at all. If you can wave your magic wand like that so easily, I'm not sure what you've gained in the indirection?
Of course, in reality, if price is unable to rise before the lottery, for whatever reason, it's probably still not able to rise after the lottery. Sure, if it is policy driven you might be able to change the policy, but, again, why not change it right from the get go? You don't need to wait.
> We can establish a ballpark for what a sensible price is for most things.
Okay, let's put that to the test. OpenAI releases true AGI tomorrow. What's the sensible price for it? I've picked my number. Now you pick yours and let's see if we're in the same ballpark. What happens if you aren't in the same ballpark as me? Does that not invalidate your claim?
My intuition is that the only way we can come to agree on a ballpark is if we actually stop and talk about the numbers. Which is all well and good, but just saying "there's a shortage" does not get us there. "Shortage" does not communicate anything here.
> If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.
But what have you communicated with the use of shortage? Let's remove shortage and just say "Every house costs $1-10" and "Every house costs $1B-10B". What information was lost in the removal of "there is/there is not a shortage"?
Are you trying to use shortage as an indication of your emotions? As in, "Every house costs $1B-10B, there is a shortage." being roughly analogous to "Every house costs $1B-10B, I feel that is too expensive."? If that's the case, how can others agree? What grounds would you disagree on? You can't logically dispute how someone else is feeling. That like you saying "My romantic partner is great, I love them." with the retort "I disagree, you actually hate them!". It is nonsensical.
I have no more detail to give to my argument, so I'll keep this very brief.
> It is nonsensical.
You can have that opinion, but I find the idea that price-based distribution makes shortages stop being shortages, with no change in supply, significantly more nonsensical.
> What information was lost in the removal of "there is/there is not a shortage"?
Shortage is less information but it's also easier to say. For more realistic numbers the word shortage is more than an order of magnitude easier to communicate than raw statistics.
> with no change in supply
This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.
A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
> Shortage is less information
Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
> This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.
> A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
Raising the price so high that demand disappears is not a way to alleviate a shortage. If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage, even if it's a perfect free market where anyone with X amount of money can still get a house.
You can always find a point on the demand curve that fits any supply situation. That doesn't stop there from being shortages. "Shortage" is not a niche word that only applies when supply and demand has been prevented.
> Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
This is like saying "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
The advantage of the summary is that you can use it in lieu of the full explanation and it's a lot quicker.
> Raising the price so high that demand disappears is not a way to alleviate a shortage.
Then this must mean that there is a shortage of jets? I most definitely am not paying that high price – you presumably aren't paying that high price – the price of jets is so high that demand has disappeared from almost all people. I'd certainly buy one if they were significantly cheaper. Who wouldn't? But at the prevailing price, no way.
Does that differ from a $1 plastic trinket? I'd take a plastic trinket if it were free, but for $1 my demand is lost. I'd rather spend $1 on something else. I guess that means the plastic trinket is also in shortage since I have decided not to buy due to the price tag being too high? And not just me. The average run for a plastic trinket is around 25,000 units, so we know demand disappears by the vast majority of people at the high price of $1.
What's not in shortage? Even literal garbage will see an increase in demand if the price goes low (negative) enough.
> If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage
Agreed. The nature of lag would ensure that price could not react in a timely manner to such an extreme event. Eventually correction could take place, but a shortage would ensue for a period of time.
> "Shortage" is not a niche word that only applies when supply and demand has been prevented.
What on earth does "supply and demand being prevented" mean? You cannot prevent supply and demand. It's not a thing that can be manipulated, it's just the observation of humans (and sometimes animals!) interacting with each other in the face of scarcity.
> "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
Well, then, let's reverse it: "Housing, there is a shortage" and "Housing, there is not a shortage". What did I learn from those statements? We will assume I didn't learn that price is able to rise in one case and not in the other. But there is nothing else I can possibly learn from that. It doesn't say anything.
If I read you correctly, I am of the understanding you intend it to mean that housing costs more/less than some "reasonable" number range you've randomly come up with, but as you have not communicated the range held in your mind, it leaves me with nothing. The only way that can work is for you tell me the range, but once you've done that, "shortage" doesn't add anything. Why would you include it?
I'm not trying to use personal emotions, I'm trying to invoke broad consensus for words like "sufficient", and reference both history and cost (as independent from price) to help detect shortages.
Needs are a part of economics even when they're socially defined/refined.
> supply and demand
It feels like you're not attempting to understand what I'm saying, though.
The concept you were talking about with "a situation prevents price from rising, thereby warding off a change in demand". That is the type of situation I am trying to refer to.