5 ms·

Please explain how superuser2's argument is undermined by that.

pdonis 12y ago
Because even the wealthiest person in the world only needs a finite, limited quantity of water (or any other necessary substance, like food) to stay alive. So wealthy people simply have no incentive to bid up the prices of necessities so high that nobody else can afford them. If they did, Bill Gates and the other top ten wealthiest people would own all the groceries and water in the world. If one is really worried about certain people simply not being able to afford necessities during times of scarcity, like natural disasters, forcing prices to remain fixed won't solve that, because if prices remain fixed, people have no incentive not to buy things they don't really need (for example, water that they won't need to drink until after the natural disaster is over). So forcing prices to remain fixed just means goods get allocated by who can get to the store first, rather than who is willing to pay the most. What one would need to do is allow prices to increase, but subsidize purchases of necessities for people who truly can't afford them in a crisis. (Or one could set up a charity that bought the goods, paying the higher price if needed using donations for funding, to ensure they would be available to the indigent.)
- nhaehnle 12y ago
  What if the total amount of water available in a region is just slightly above the minimum required in that region? In this case, rich people will not stop buying water at the absolute minimum necessary - after all, people (a) like to be more comfortable than just the absolute minimum necessary, and (b) are not very good at estimating what the absolute minimum necessary is. So your argument is wrong: rich people will bid up prices significantly to be able to go through the crisis with less discomfort. [0] As a consequence, it is quite likely that poor people will have to suffer a loss of almost all of their (already few) assets just to survive. That's not a very moral outcome. Besides, you seem to be operating under a false dichotomy. The choice isn't between (a) letting market forces run wild and (b) fixing prices while otherwise pretending as if nothing bad has happened. The choice is between (a) letting market forces run wild and (b) fixing prices while in the meantime implementing explicit rationing and making sure the underlying infrastructure problems are resolved as quickly as possible. Option (b) is what most down-to-earth, clear-thinking humans will come up with in a matter of minutes. It is also the better course of action. [0] In addition to this, consider that an argument that you made yourself can be used against you: Given the uncertainty of the crisis situation, it is quite plausible that rich people will make panic hoarding purchases of more than they need until the crisis is over, thereby bidding prices up even further.
  - pdonis 12y ago
    > What if the total amount of water available in a region is just slightly above the minimum required in that region? Then, as you imply later on, you have an underlying infrastructure problem. This is a different scenario from a natural disaster, which was the original scenario under discussion. A natural disaster is temporary; a shortage of water such as you are describing is not. > fixing prices while in the meantime implementing explicit rationing and making sure the underlying infrastructure problems are resolved as quickly as possible. You can't both fix prices and implement explicit rationing, because explicit rationing replaces the price mechanism; it doesn't supplement it. Explicit rationing and the price mechanism are both resource allocation methods; you can't have the same resources being allocated by two different methods. As for resolving the underlying infrastructure problem, I'm all for that, but it's subject to the same issues: just look at the history of water rights in the southwest U.S. Government intervention hasn't fixed that. > Given the uncertainty of the crisis situation, it is quite plausible that rich people will make panic hoarding purchases of more than they need until the crisis is over Now you're back to the original temporary situation again. Which one do you want to discuss? They're different. Also, you have now added uncertainty to the mix, which makes things more realistic, but also undermines your argument, in both the temporary and the permanent cases. If there is uncertainty about what the resource availability actually is, then a central allocation mechanism, like explicit rationing, can go wrong just as the price mechanism can; no method can guarantee success if the true facts are unknown. So just saying that the price mechanism might not work is pointless; you have to show that the price mechanism must necessarily be worse than explicit rationing.
    - nhaehnle 12y ago
      It is very common for natural disasters to temporarily obstruct infrastructure that had previously been working just fine, and which can be restored to working order in a short period of time (under a month, say). Or perhaps you just failed to understand the obvious ellipsis? (total amount of drinkable water available in the region in the aftermath of natural disaster) > You can't both fix prices and implement explicit rationing, because explicit rationing replaces the price mechanism; Step 1: Fix the price of a bottle of water to whatever it was pre-disaster. Step 2: Institute a system whereby each household may buy at most X bottles. It's not exactly rocket science.

Because even the wealthiest person in the world only needs a finite, limited quantity of water (or any other necessary substance, like food) to stay alive. So wealthy people simply have no incentive to bid up the prices of necessities so high that nobody else can afford them. If they did, Bill Gates and the other top ten wealthiest people would own all the groceries and water in the world. If one is really worried about certain people simply not being able to afford necessities during times of scarcity, like natural disasters, forcing prices to remain fixed won't solve that, because if prices remain fixed, people have no incentive not to buy things they don't really need (for example, water that they won't need to drink until after the natural disaster is over). So forcing prices to remain fixed just means goods get allocated by who can get to the store first, rather than who is willing to pay the most. What one would need to do is allow prices to increase, but subsidize purchases of necessities for people who truly can't afford them in a crisis. (Or one could set up a charity that bought the goods, paying the higher price if needed using donations for funding, to ensure they would be available to the indigent.)

nhaehnle 12y ago
What if the total amount of water available in a region is just slightly above the minimum required in that region? In this case, rich people will not stop buying water at the absolute minimum necessary - after all, people (a) like to be more comfortable than just the absolute minimum necessary, and (b) are not very good at estimating what the absolute minimum necessary is. So your argument is wrong: rich people will bid up prices significantly to be able to go through the crisis with less discomfort. [0] As a consequence, it is quite likely that poor people will have to suffer a loss of almost all of their (already few) assets just to survive. That's not a very moral outcome. Besides, you seem to be operating under a false dichotomy. The choice isn't between (a) letting market forces run wild and (b) fixing prices while otherwise pretending as if nothing bad has happened. The choice is between (a) letting market forces run wild and (b) fixing prices while in the meantime implementing explicit rationing and making sure the underlying infrastructure problems are resolved as quickly as possible. Option (b) is what most down-to-earth, clear-thinking humans will come up with in a matter of minutes. It is also the better course of action. [0] In addition to this, consider that an argument that you made yourself can be used against you: Given the uncertainty of the crisis situation, it is quite plausible that rich people will make panic hoarding purchases of more than they need until the crisis is over, thereby bidding prices up even further.
- pdonis 12y ago
  > What if the total amount of water available in a region is just slightly above the minimum required in that region? Then, as you imply later on, you have an underlying infrastructure problem. This is a different scenario from a natural disaster, which was the original scenario under discussion. A natural disaster is temporary; a shortage of water such as you are describing is not. > fixing prices while in the meantime implementing explicit rationing and making sure the underlying infrastructure problems are resolved as quickly as possible. You can't both fix prices and implement explicit rationing, because explicit rationing replaces the price mechanism; it doesn't supplement it. Explicit rationing and the price mechanism are both resource allocation methods; you can't have the same resources being allocated by two different methods. As for resolving the underlying infrastructure problem, I'm all for that, but it's subject to the same issues: just look at the history of water rights in the southwest U.S. Government intervention hasn't fixed that. > Given the uncertainty of the crisis situation, it is quite plausible that rich people will make panic hoarding purchases of more than they need until the crisis is over Now you're back to the original temporary situation again. Which one do you want to discuss? They're different. Also, you have now added uncertainty to the mix, which makes things more realistic, but also undermines your argument, in both the temporary and the permanent cases. If there is uncertainty about what the resource availability actually is, then a central allocation mechanism, like explicit rationing, can go wrong just as the price mechanism can; no method can guarantee success if the true facts are unknown. So just saying that the price mechanism might not work is pointless; you have to show that the price mechanism must necessarily be worse than explicit rationing.
  - nhaehnle 12y ago
    It is very common for natural disasters to temporarily obstruct infrastructure that had previously been working just fine, and which can be restored to working order in a short period of time (under a month, say). Or perhaps you just failed to understand the obvious ellipsis? (total amount of drinkable water available in the region in the aftermath of natural disaster) > You can't both fix prices and implement explicit rationing, because explicit rationing replaces the price mechanism; Step 1: Fix the price of a bottle of water to whatever it was pre-disaster. Step 2: Institute a system whereby each household may buy at most X bottles. It's not exactly rocket science.