Paul Krugman on price controls (reference)

[naaman fletcher]

Since Price controls are an issue in Latin America right now, I thought it might be useful for people to understand how they work and why their are shortages in Venezuela right now and will be soon in Argentina if the temporary price controls are made permenant Here is a reference book from Paul Krugman in case anyone wants to read more. I give you though a summary:

So Why Are There Price Ceilings?
We have seen three common results of price ceilings:

■a persistent shortage of the good
■inefficiency arising from this persistent shortage in the form of inefficiently low
quantity, inefficient allocation of the good to consumers, resources wasted in
searching for the good, and the inefficiently low quality of the good offered for sale
■the emergence of illegal, black market activity



http://www.worthpublishers.com/Catalog/uploadedFiles/Content/Worth/Product/About/Look_Inside/Krugman,_Micro_in_Mods_2e/KrugMicro2eMods_Mod08.pdf

[naaman fletcher]

1. Kick

for those who don't understand the first week of econ 101

[Bacchus4.0]

2. its alot easier to blame sabotage by the US than reading about economic NF

never mind that the country doesn't have any industry besides oil. I just posted an article on the Colombia-Ven trade imbalance but it simply doesn't sink in. Ven will have to use more and more petrodollars to import more and more basic necessities if they don't modify their economic model that allows businesses to make money.

But there are those who simply want to believe that marxism is THE answer and are undetoured by repeated failure.

[naaman fletcher]

3. They are alot like RW global warming deniers

The science is irrefutable, but it doesn't mesh with their ideology so they just make shit up and call it a conspiracy.

[Bacchus4.0]

4. I'd say its even more delineated. I'd say like Birthers and Flat Earthers

The climate has been changing since the beginning of time with wide variability. It has indeed been a pretty cool spring so the climate change (warming) deniers will site periods of short term moderation or declining temps when trying to deny general long term warming trends. On the other hand there is no room for debate regarding Birthers, and Flat Earthers, and chavistas. The evidence is right and front of them but they actually choose ignorance.

[Socialistlemur]

13. I would love a flat earth

I like the idea of a flat earth. It would be like a giant circle with a huge waterfall falling off the edges. The sun would move from one side to the other and weather would be mild all the time, with rain falling only between 1 AM and 4 AM. We would always have a full moon rising just before the sunset and a really nice set of meteor showers on Saturdays.

[joshcryer]

6. +1, and since they sided with the US at Rio+20...

...they might as well be deniers.

[Marksman_91]

5. Thanks for including this

It seems apparent that a LOT of people in this forum don't seem to grasp the most basic aspects of economics, and really could use a lesson or two.

[bemildred]

7. The forms in which I approve of price controls are where you have

collusion, monopoly, or restraint of trade. So for public utilities, giant corporations, and companies that refuse to compete on price, I think it is appropriate.

The Gas Comapny here in Californai, for example, is regulated and price controlled out the wazoo, and yet it is cheap and works great (the occasionaly explosion notwithstanding, that doesn't seem to have to do with price controls so much as laziness and incompetence, as in West, Texas).

That said, once you go there, you have to get involved and regulate all the way, and you better know what you are doing. For example breaking up overlarge businesses, or preventing them in the first place, is much better than attempting to regulate them closely or fix prices, half-ass measures just make it worse.

And in war.

[naaman fletcher]

8. Yes,

the price controls argument I am making assume competitive markets.

[bemildred]

9. And THAT is what you regulate for, a competitive market.

That is where we in this country have failed, our Congress loves big companies as cash cows and future employers, and that is where the Commies fucked up. China seems to be going off the deep end in the other direction now (as compared to the USSR say).

[naaman fletcher]

11. YEs, agreed 100%. nt.

[bemildred]

10. It is probably worth mentioning that this whole argument applies to prohibition too.

History is full of such attempts and their failures.

[naaman fletcher]

12. periodic bump

for economic science flat earthers