5 ms·

This is a very simple, basic argument that I've never seen addressed by people who want to bring in more foreign tech workers (for hiring purposes and not entre

by defen 12y ago

This is a very simple, basic argument that I've never seen addressed by people who want to bring in more foreign tech workers (for hiring purposes and not entrepreneurial ones) - the concept of a "shortage" of something in a free market is not a coherent one - it can only be addressed by supra-economic arguments. But no one ever wants to clarify what those are.

jshen 12y ago
"the concept of a "shortage" of something in a free market is not a coherent one" This is obviously wrong.
- defen 12y ago
  Can you give me an example of a legitimate shortage then, as defined in purely economic terms?
  - analog31 12y ago
    The typical Econ 101 view of supply and demand is a static model. It neglects time. Surpluses and shortages should be possible in any but the most trivial of dynamic systems. I'm not an economist, but I imagine an analogy to models of feedback systems that exhibit unstable behavior. Only the most simplistic systems can be made unconditionally stable.
    - defen 12y ago
      Sure, but in the US economy you can always get more "worker utils" by just paying more money. If you can't do that or you don't want to, then it's tautologically not worth it to you, so why do you want to hire them in the first place?
      - analog31 12y ago
        True, but it might be worthwhile to engage in lobbying that gives you quicker access to cheaper supply.
      - philwelch 12y ago
        Think of a world in which there are only 500 computer programmers and how much poorer that world would be compared to our own. I think the US economy would be healthier with many more computer programmers, so in that respect I'd say there's a shortage.
  - jshen 12y ago
    A shortage occurs whenever quantity demanded is greater than quantity supply at the market price. More people are willing and able to buy the good at the current price than what is currently available. When a shortage exists, the market is in disequilibrium. Over time, the good will be replenished and the shortage condition resolved.
    - defen 12y ago
      > More people are willing and able to buy the good at the current price than what is currently available. When a shortage exists, the market is in disequilibrium. My argument was that in this situation the price should rise, reducing demand.
      - jshen 12y ago
        Sure, but that doesn't happen instantaneously, which is what allows for a shortage. I've seen no good data on this issue either way, but from my anecdotal experience, salaries have been rising for a while now.
  - millstone 12y ago
    I'll try. A shortage is when supply is sufficiently low and inelastic that consumers cannot satisfy an (appropriately defined) base level of consumption. For example, in 2008, the supply of food dropped in Haiti. Prices rose to clear the market, but there was literally not enough food for survival. Many people ate dirt instead, what might callously be called a "substitute good" in purely economic terms. Of course this was a very serious and tragic food shortage. What would a labor shortage look like? Specialized labor has an inelastic supply: you can only train workers so fast. In 2011, Georgia passed an anti-immigration law, and saw a huge drop in skilled agricultural workers that they could not hire enough. When $140 million worth of crops are left to rot in the fields, you've got a labor shortage. I'd call it a serious shortage if, say, there were not enough IT workers to maintain the Internet. We're nowhere near that point.
sliverstorm 12y ago
A shortage is when people can't obtain something they need. If there is suddenly only enough water to hydrate 3.5 billion people, and prices quickly rise and water is distributed to the people who can afford it, do we not have a water shortage because 3.5 billion people cannot afford to drink? Or do we say, "The market is working efficiently, the concept of shortage makes no sense". There's also the imperfect nature of the market. I believe during the recent hops shortage, there were brewers unable to get hops at any price because of distance, communication, time, etc. Which reminds me, I don't know where this falls but suppose you want hops and all the hops have not just been sold but used. You have to wait until next harvest. Is that not a shortage?
- jordanb 12y ago
  > A shortage is when people can't obtain something they need. I need a private jet. I can not obtain one. Does that mean there is a shortage of private jets? Maybe I can insist that there's a shortage of private jets "at a reasonable price?"
  - sliverstorm 12y ago
    It should be obvious that "need" is subjective. Additionally, "shortage" implies atypical conditions. Private jets have always been expensive.
  - dagw 12y ago
    I can not obtain one. Of course you can. Maybe not buy one outright, but you can probably charter one for $8000-10000 for a short round trip. Sure it's not cheap, but $10000 is definitely within the realm of what anybody with a decent job can save up for/borrow for something the really need. Most people who feel they really need a car for example manage to spend that sort of money and often much more. Or perhaps you actually didn't need to private jet.
- nradov 12y ago
  Your example is wrong. Outside of short-term supply disruptions caused by natural disasters or violence, commodity shortages only ever occur when corrupt and incompetent governments fix prices below the market rate. We're running out of water in California because the state and local governments practically give it away to farmers who do silly things like growing water intensive crops in the desert.

by defen 12y ago

jshen 12y ago

"the concept of a "shortage" of something in a free market is not a coherent one" This is obviously wrong.

defen 12y ago
Can you give me an example of a legitimate shortage then, as defined in purely economic terms?
- analog31 12y ago
  The typical Econ 101 view of supply and demand is a static model. It neglects time. Surpluses and shortages should be possible in any but the most trivial of dynamic systems. I'm not an economist, but I imagine an analogy to models of feedback systems that exhibit unstable behavior. Only the most simplistic systems can be made unconditionally stable.
  - defen 12y ago
    Sure, but in the US economy you can always get more "worker utils" by just paying more money. If you can't do that or you don't want to, then it's tautologically not worth it to you, so why do you want to hire them in the first place?
    - analog31 12y ago
      True, but it might be worthwhile to engage in lobbying that gives you quicker access to cheaper supply.
    - philwelch 12y ago
      Think of a world in which there are only 500 computer programmers and how much poorer that world would be compared to our own. I think the US economy would be healthier with many more computer programmers, so in that respect I'd say there's a shortage.
- jshen 12y ago
  A shortage occurs whenever quantity demanded is greater than quantity supply at the market price. More people are willing and able to buy the good at the current price than what is currently available. When a shortage exists, the market is in disequilibrium. Over time, the good will be replenished and the shortage condition resolved.
  - defen 12y ago
    > More people are willing and able to buy the good at the current price than what is currently available. When a shortage exists, the market is in disequilibrium. My argument was that in this situation the price should rise, reducing demand.
    - jshen 12y ago
      Sure, but that doesn't happen instantaneously, which is what allows for a shortage. I've seen no good data on this issue either way, but from my anecdotal experience, salaries have been rising for a while now.
- millstone 12y ago
  I'll try. A shortage is when supply is sufficiently low and inelastic that consumers cannot satisfy an (appropriately defined) base level of consumption. For example, in 2008, the supply of food dropped in Haiti. Prices rose to clear the market, but there was literally not enough food for survival. Many people ate dirt instead, what might callously be called a "substitute good" in purely economic terms. Of course this was a very serious and tragic food shortage. What would a labor shortage look like? Specialized labor has an inelastic supply: you can only train workers so fast. In 2011, Georgia passed an anti-immigration law, and saw a huge drop in skilled agricultural workers that they could not hire enough. When $140 million worth of crops are left to rot in the fields, you've got a labor shortage. I'd call it a serious shortage if, say, there were not enough IT workers to maintain the Internet. We're nowhere near that point.

sliverstorm 12y ago

A shortage is when people can't obtain something they need. If there is suddenly only enough water to hydrate 3.5 billion people, and prices quickly rise and water is distributed to the people who can afford it, do we not have a water shortage because 3.5 billion people cannot afford to drink? Or do we say, "The market is working efficiently, the concept of shortage makes no sense". There's also the imperfect nature of the market. I believe during the recent hops shortage, there were brewers unable to get hops at any price because of distance, communication, time, etc. Which reminds me, I don't know where this falls but suppose you want hops and all the hops have not just been sold but used. You have to wait until next harvest. Is that not a shortage?

jordanb 12y ago
> A shortage is when people can't obtain something they need. I need a private jet. I can not obtain one. Does that mean there is a shortage of private jets? Maybe I can insist that there's a shortage of private jets "at a reasonable price?"
- sliverstorm 12y ago
  It should be obvious that "need" is subjective. Additionally, "shortage" implies atypical conditions. Private jets have always been expensive.
- dagw 12y ago
  I can not obtain one. Of course you can. Maybe not buy one outright, but you can probably charter one for $8000-10000 for a short round trip. Sure it's not cheap, but $10000 is definitely within the realm of what anybody with a decent job can save up for/borrow for something the really need. Most people who feel they really need a car for example manage to spend that sort of money and often much more. Or perhaps you actually didn't need to private jet.
nradov 12y ago
Your example is wrong. Outside of short-term supply disruptions caused by natural disasters or violence, commodity shortages only ever occur when corrupt and incompetent governments fix prices below the market rate. We're running out of water in California because the state and local governments practically give it away to farmers who do silly things like growing water intensive crops in the desert.