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Comment by ggreer | Hacker News Reader

Price controls are almost always a terrible idea. Economists agree on this as much as dentists agree that sugared gum is bad for your teeth. If the price of a good increases, several things happen:

- People reduce their consumption of that good.

- People find substitutes.

- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.

- On a longer time scale, people start producing more of the good. They pay workers overtime to work more shifts, buy/build more equipment, and so on.

Economist Michael Munger wrote an article titled They Clapped: Can Price-Gouging Laws Prohibit Scarcity? which explains the problems with price controls, even in times of disaster.[1]

1. https://www.econlib.org/library/Columns/y2007/Mungergouging....

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Though with carbon fuels there's an extra layer of trying to avert global catastrophe where some of those affects are good.

I would love if we could use this crisis to get investment in renewables and EVs/batteries.

I could see Congress passing an emergency subsidy before the election if gas stays above $4 especially if it rises above $5. I would hope we can spend an equal amount or more for longer term 'green' investment, regardless of what happens.

IMHO we do need those high prices to discourage driving. It is after all probably closer to the true cost with externalities of global warming. Could spur more investment in renewables too if done right.

BUT would need to help lower earners during transition or will just get pummeled in the election and Republicans will do the opposite of what's needed on climate.

I personally think most equitable solution would probably be raise corporate rate back up a bit + on very high earners/get rid of some wealthy deductions.

Then do something akin to the child tax credit mailed out each month for maybe <50k households. An energy credit. Scale up slightly if have a bunch of kids.

Are you taking $5/gallon? That is still way lower than the prices in Europe have been for years. Society still functions here and has not transitioned to green alternatives. Anything below $10/gallon is not an 'emergency' and insufficiently high to force a transition if people do not want it.

Prices in Italy are currently at the equivalent of 8.3$/gallon, so I think that even your 10$/gallon threshold is too optimistic (keep also in mind that if the prices of everything rise together, and so does labor compensation, it might be hidden away in the inflation).

Maybe 20$/gallon would be what it takes for a quick transition?

The transition point in the USA is probably lower because we drive more miles and have an existing fleet of less efficient, older, larger cars.

Yeah I think symbolically that would have good chance of triggering political action before the election.

And yes it's not even that high relatively! I would love to see an analysis taking into account cost of global warming just that we are already feeling.

I read an article earlier today analyzing cost per mile driven in real dollars.

We're actually a good amount lower than 2007 recession. And way lower than 80s.

But people don't see that. They see $5 and $80 to fill up a giant pickup truck.

https://www.marketwatch.com/story/the-price-of-gasoline-isnt...

> Yeah I think symbolically that would have good chance of triggering political action before the election.

Ah there we go, you’re trying for “progress” despite the economy limping along right now. Kick them while they’re down ey?

> I would love if we could use this crisis to get investment in renewables and EVs/batteries.

> IMHO we do need those high prices to discourage driving. It is after all probably closer to the true cost with externalities of global warming. Could spur more investment in renewables too if done right.

And you believe the right time to do this is when we have record inflation?

Also gas is hitting $6+ a gallon where I’m at.

For energy, it's hard for people to either hoard it, find substitute, or producing more of the good. Reducing consumption is possible only to a limit (when you start freezing and getting sick).

Short term, it's a problem in the US, but long term, we have a lot of ways to trim some fat. Like those gigantic, deadly trucks that get used to ferry a kid to school or a dad to the office. Or re-legalize things like corner stores so people can walk or bike to do some of what they need on a day to day basis.

True :) that said upgrading to cleanest cars requires to build new car, which apparently requires some metals Russia has too... What a mess.

Are corner stores really illegal in the US? I could not find anything on the topic from a quick search

It's not as if corner stores are banned, but zoning restrictions have that effect in many places.

> requires some metals Russia has too

it's not like those metals are _only_ found in Russia. The upfront capital expense of opening new mines somewhere else is high, so doesn't make economic sense when Russia has already made this investment in the USSR era, and can pump it out cheap(er) now.

But if the need arises, other sources of such metals can be acquired in the medium to long term. Same can be said for the rare earths from China.

Much of the new developments for residential are single family residential. A house, a garage, and a yard - on a street where you need to then go and drive to get {stuff}. Whatever you need, you need to drive there.

The older style with business on ground level and residential above that isn't as profitable for developers and so isn't made as much. Cities, in bowing to demands of developers likewise zone for single family residential and it is thus illegal to build a commercial spot (other than the strip mall along one of the busier roads - that you need to drive to).

Mostly yes -- American residential developments built after 1960 or 1970 have typically forbidden any commerce. There are often no sidewalks either.

Can't you just recycle the metals from the old cars? I imagine the metal from a truck is enough to make two small cars.

> Can't you just

Usually such conclusions are a good time to Google and better educate yourself on the problem domain and solution space.

While that’s true from a purely economic perspective, nations and their goals aren’t always geared towards that economic perspective. For instance the trade war is economically ignorant but geopolitically it makes sense. Another example is the US in the 1800s. They used a ton of tariffs to force American companies to build out infrastructure within the US instead of importing everything we needed. This worked to create the economic juggernaut we see from the Spanish-American war onward.

This wouldn’t have made economic sense to an economist because the goals here weren’t entirely economic. Yet it built a giant economy.

>- People reduce their consumption of that good.

>- People find substitutes.

>- People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead.

This is only true when reduced consumption is possible, when substitutes are available, and when sufficient stockpiles exist to be sold.

If my only driving consists of the 20 miles I drive to work every day, I don't have the option to reduce my consumption if I want to pay my bills and keep from becoming homeless. If there is no mass transit and no opportunity to carpool, there is no substitute. Stockpiles of oil are generally insignificant when compared to overall consumption (which is why releasing oil from the strategic energy reserve is more of a pr move than something which has a substantive or lasting impact on prices).

The fact is that most of the US has been designed for people with cars. Outside of a very few cities mass transit is extremely limited or non-existent.

Dentists have an excellent track record when it comes to predicting tooth decay and treating decayed teeth. Economists have a terrible track record when it comes to predicting economic activity and prescribing sustainable solutions to economic problems that arise.

Tariffs are not price controls. They are taxes on implicit behaviors (like "price controls" (wage suppression) in other countries).

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