Hacker News Reader

I don't support those policies, but the US economy had its best ever during a period of price controls, etc. in the post-WWII era (edit: I mean, from then until the late-1970s / early-1980s).

The idea that it's anathema for the American people to take control of their economy, that they must be subject to a wealthy few and the 'free market' forces, seems odd, and a bit too convenient for the power, pocketbooks, and egos of wealthy few.

Most of the price controls post-WWII were holdovers from the great depression - if anything, the post WWII boom was stimulated by the end of New Deal Price schemes.

It's also important to note that a lot of the price controls of this era were minimum prices. You couldn't make or sell steel below a certain price, etc.

I wasn't clear and I updated the GP: I meant the regulation, controls, etc. until the 1980s.

Almost anything is better. Wealth tax, regulations, minimum wage, anti trust laws, land tax, whatever. Just don't do price controls unless you're correcting for market failure. They're objectively bad.

Why do you think that? Give us reason to believe!

Also, don't many of the solutions you name exist to 'correct for market failure'? Why are price controls different?

Because it means the market can't find equilibrium which leads to deadweight loss and problems like shortages. Allocation becomes inefficient and it's a matter of who can stand in line the longest to buy the bananas that are mispriced. Better to have correct prices so you don't get shortages, and rely on welfare or UBI to fill the same need.

Minimum wage is a form of price control but it's one that's quite well studied empirically to have not super negative consequences as would be predicted by basic theory, perhaps because monopsony leads to mispricing of labor so minimum wage is fixing a market failure.

Regarding wealth and land tax. Whatever your view on taxation it's a necessary evil so may as well pick the least bad taxes.

Regulations can be a positive because they correct market failure. For example tragedy of the commons. Price controls that don't correct specific well defined market failure will add dead weight loss for no benefit.

My view on this isn't fringe. It's mainstream among Keynesian economists that price controls are uniquely bad as a general rule.

Aren't you missing the countless examples where price controls have led to shortages?

The free market also leads to shortages - see the news about chips, housing, health care, education, etc etc etc. Don't compare a policy to the almighty, compare it to the alternative.

The free market allocates resources to those who can pay the most for them. That's good for corporations using lithium, but not, for example, for sustenance, shelter, healthcare, or education.

That said, I don't support price controls except for very specific situations. For example, when health or safety is threatened (lack of food, shelter, health care, for example) or to prevent extortion or exploitation.

> except for very specific situations. For example, when health or safety is threatened (lack of food, shelter, health care, for example) or to prevent extortion or exploitation.

Even when health or safety is threatened, price controls don't work; or more accurately, it works for some at the expense of others.

"Anti-gouging" laws on gasoline or bottled water during natural disasters, for example, remove incentives for market participants to on one hand supply those critical goods when where they are most needed and on the other conserve those scarce goods[0], and result in fewer people getting what they need.

Rent control and other forms of price controls on shelter have a long and deeply-documented history of having a lucky (or well-connected) few obtain housing, while others wait in line. It's further exacerbated by, again, the supply being disincentivized at the same time.

In all cases, there's a highly-visible benefit for those who are able to obtain those goods and services at a price lower than the market-clearing price, contrasted to the invisible suffering of those who couldn't. After all, setting a price of something to a value does not magically produce enough supply to match demand at that price (and often times actually reduces the supply over time). As an analogue to the idea that some profit-seeking enterprises "privatize the profits, socialize the losses", policymakers in situations like this "publicize the benefits, hide away the costs" of such policies.

> The free market allocates resources to those who can pay the most for them.

An important clarification: the free market allocates resources to those who value those resources the most, expressed by the signal of price.

Let's say a town is struck by a tornado and essential services are down, and there are 100 bottles of water, normally going for a dollar each. Let's assume that if the price is allowed to change, it'll go up to $10 per bottle. It's not like the rich man of town is going to buy up all 100 bottles at that highly inflated price; he'll buy one and take miserly sips, since he doesn't want to waste the most expensive bottle of water of his life. An 18-year-old who thinks he can get by for a day or two might not buy any bottles. A family with young children will be happy to spend the money for those extra bottles that just became available. In that way, the scarce resources are distributed along the lines of who value it the most. And the enterprising people of the next town over will brave the elements and the downed trees on the roads to deliver more water, hoping to make a profit.

But if the price must remain at a dollar per bottle due to anti-gouging laws, there's less incentive for people to conserve their water, and more incentive for people to stock up "just in case". After all, bottles of water just became a lot more valuable than a dollar to everyone; it's perfectly rational for people to take advantage of that deal. And a lot fewer people from the next town would risk damage to their cars and themselves to meet this need.

This isn't just a story; variants of this has occurred in the wake of natural disasters.

[0]: https://www.cato.org/regulation/spring-2011/problem-price-go...

I understand the theory very well - I used to make your arguments. In practice, it doesn't work out so well, and also (and in theory also) people have other drives in addition to maximizing profit. I have a drive to not distribute freedom, survival, peace, and safety based on ability to pay.

Cato's mission is to push this ideology. I don't really buy them as a source (but I already know the theory anyway).

(Also, I should admit that I don't have time to read the entire parent comment.)

> people have other drives in addition to maximizing profit. I have a drive to not distribute freedom, survival, peace, and safety based on ability to pay.

Those other drives (let's boil it down to "altruism") are perhaps dependable at a small, personal scale, but not at larger scales. Public policy certainly should not be made on the basis of selfless angels working tirelessly for the benefit of all.

> Cato's mission is to push this ideology. I don't really buy them as a source

Well, everyone has an agenda. The original article was "compiled by the progressive Groundwork Collaborative thinktank", so their mission is to push the opposite ideology, I suppose.

> In practice, it doesn't work out so well

I would love to read your factual counterpoints where it didn't work out so well. I promise I'll read it even if it's long ;-)

> Those other drives (let's boil it down to "altruism") are perhaps dependable at a small, personal scale, but not at larger scales.

They don't boil down to anything, nor are they necessarily altruistic. You are a human too! You must feel those other drives instrinsically. Almost all people are more driven by other things than greed and profit-seeking.

You probably live in a democracy, whose foundation is liberty and justice for all, not profit-seeking and greed. It's the most successful form of government in human history, with no competition.

> Public policy certainly should not be made on the basis of selfless angels working tirelessly for the benefit of all.

It shouldn't be made on the basis of any extreme or strawperson.

> Well, everyone has an agenda.

To greatly varying degrees. Everyone is violent, but some will never touch you and some will kill you. Everyone is a liar, but some you can trust and some you can't.

That PPI price increase includes a profit margin... From the article: "Prices for consumers rose by 3.4% over the past year, but input costs for producers increased by just 1%."

[edit: clarity, tone, and added the below]

3.4 - 1 = 2.4% increase in profits/revenue for corporations while consumers see a 3.4% increase in costs...

>Diaper prices have increased by more than 30% since 2019

One of the greater correlations on maternal happiness is whether she has access to supportive childcare (whether self or govt funded). A single mother, literally "doing it on her own" without any outside help is perhaps more likely to be most-miserable.

It would make sense to me that if our Oligarchies want to increase population replacement (fertility) rates, perhaps they ought'a consider excess profit-seeking outside of child-rearing products; an increase to publicly-funded daycares would definitely help.

¢¢

But women with no access to affordable child care or sex education or birth control or proper reproductive rights and health care tend to get knocked up all the time. On average, they have more children too.

If you don't value the lives of Women, that's a much easier, cheaper, and more effective "solution" to birth rates. It's also popular enough to enough Americans to be the explicit plan/goal/effort of the Republican party in many states.

It's much easier to exploit a worker that grew up in a poor family too.

> I'd rather they just enforce existing antitrust laws and enjoy market forces working in their favor.

Amen. This has worked out over and over again best for the consumer. Literally every problem we have is caused by monopolies.

I do not disagree at all, but we've got 40+ years of lax anti-trust enforcement complete with backing doctrine and underpinning philosophy to overcome to get there.

If Microsoft in 1998 wasn't a monopoly deserving of breakup, I don't think anything except a strict 100% of the market, with precisely 0 competitors, owned by a single, comically scarre and universally loathed tycoon will count.

Yes, antitrust enforcement has really been lacking for decades; though it seems as of late, big mergers have been struck down, so perhaps there's a counterswing in the works.

Yeah. I’m disappointed that the fed has such assymmetric ability to deal with the money supply. The velocity of money went way down at the start of lockdowns. The correct move is to inject huge amounts of M1 to conpensate. The fed did this mostly with direct lending, I’m not even sure if they still buy government bonds the way I was taught in school. But the fed also greatly encouraged all the stimulus spending as well. Unfortunately, what we know quite well from video game economies, is that for every money source you need an “equivalent” money sink to avoid inflation (it can get quite difficult determining equivalency, since inflation is not uniform, and there may be hidden multipliers). Basically there needed to be massive taxes once the velocity of money rebounded, and that is a much harder bill to pass. What we really needed as part of the stimulus package was new taxation built in, something that directly taxed profits and per unit price increases might be something I’d try to include next time we have such a need. The fed was truly surprised at how well direct stimulus to consumers worked, they’d always been of the mind that you want to make money available to business. But it somehow makes sense to me that you’d want to put the money in at one end and pull it out the other. I very much recognize the dysfunction that price controls can have, and their contribution to the great depression, but there needs to be some way to claw back money, and some kind of targeted taxation I suspect would be better than just general tax increases.

How does that account for inflation dropping in the last year?

The fed has been slowly draining money with higher interest rates (or maybe more precisely have slowed the increase in the money supply). That part is potentially symmetrical. It’s the inability for the fed to effectively convince congress to increase taxes and pay off debt with it that is the impossible problem. What drives inflation is the expansion of the money supply, which didn’t happen when spending happened, the expansion essentially happened when the velocity of money rebounded (I am grossly over simplying BTW, since inflation can never be uniform). The fed needed to be able to pull money out at a fast rate as velocity started to rise, by doing the reverse of what happened when velocity fell, which was, for all intents and purposes, spending money. Taxing is generally the way to take money out of ciculation. Selling stockpiles of assets is also how the fed historically dealt with this, but if congress spends “on the fed’s behalf”. They need to also tax “on the fed’s behalf”.

Typical corporatist hand-wavey economics bullshit. "Market forces" and a lack of regulation are precisely why we've ended up in this situation in the first place, so yeah, great idea, let's just double down on letting corporations do whatever they want, I'm sure that will go great for... the corporations.

The increase of the M2 money supply is also completely irrelevant. Sure there's more "Money" floating around out there, but as with all other forms of wealth, the vast majority of it is concentrated in the pockets of relatively few wealthy individuals, not in the pockets of the many millions of regular folks who are actually buying diapers. Talking averages in the context of individual wealth and consumer spending is also utterly useless, as it would be far more useful to talk about the wealth and spending habits of the median consumer, but that would obviously show that the typical regular person living out here in the real world does not in fact have "40% more money" in their pockets to spend on diapers or groceries. If anything they have LESS money now than before all that new money flooded into the system, as the rich have gobbled up damn near the entirety of all that "New money" yet are still putting the screws the the masses with their shameless, greedy profiteering.

> Let's make money artificially cheap

Money is artificial, and whatever its price is is artificial.