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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?


To: TimF who wrote (321266)1/16/2007 8:01:06 PM
From: TimF  Read Replies (3) | Respond to of 1574260
 
More on Price Controls

The killer tsunamis that yesterday ravaged Asia call to this economist’s mind discussions about price gouging. I don’t know the laws and legislation of Sri Lanka, Indonesia, and other countries whose citizens are now suffering so grievously, but I hope for the sake of these people that so-called price-gouging is not prohibited. (Hoping, alas, isn’t synonymous with predicting.)

To prevent the price of some staple good (say, lumber) from rising to its market level in the wake of a natural disaster is to camouflage the underlying reality. The underlying reality is that the disaster (1) appreciably reduced supplies of lumber available in the devastated area – both by destroying inventories of lumber and by destroying supply lines; and (2) appreciably increased the demand for lumber in these areas. In short, the underlying reality is that the value of lumber to people in these devastated areas is now significantly higher than it was just before the tidal waves hit. These people need lumber more than they did before, and there's less lumber immediately available.

This reality is unfortunate, but it is, well, real. Being real, it must be dealt with. It cannot be hollered, hoped, dreamed, prayed, or legislated away. And it means that the welfare of the people whose homes and businesses (not to mention love ones) were destroyed is much lower than it would have been had the tsunamis not hit.

In the aftermath of hurricane Isabel, which struck Virginia in 2003, I wrote this essay opposing restrictions on price hikes. Here’s the basic, familiar argument: if prices are allowed to rise to their market-clearing levels, these high(er) prices perform two important functions: (1) they encourage suppliers to supply more than they would supply at lower prices; and (2) they encourage people who want to use the now-much-scarcer goods and services to use them as judiciously as possible (what I call "economic triage.")

But I’ve learned that many people are unconvinced by this argument. "What about poor people?" the Unconvinced understandably ask. "The poor who can’t afford to pay market-clearing prices will be forced to do without."

Seems true. But I’m not so sure – at least, I’m not sure that the poor will fare worse when prices are not controlled by government than when prices are controlled.

If the price of lumber is currently below its market-clearing level, the quantity of lumber demanded at that price will exceed the quantity of lumber supplied at that price. With no controls on prices, this "excess demand" will cause price to rise. As price rises, some quantity of demand is choked off and the quantities supplied are increased. That is, the chief means of allocating available supplies among the demanders is the higher price.

But if regulation keeps price from rising, some method other than higher prices must be used to determine which of the many demanders of lumber get the relatively few supplies of lumber.

What are these other methods? They include principally queuing, black-market transactions, and use of political or commercial connections. They might include even violence.

An inevitable consequence of price caps, therefore, is to raise the value of the skills and other assets useful in carrying out these other methods of rationing – skills at queuing; skills at successfully conducting black-market exchanges; skills at manipulating personal and political connections.

Even if you’re concerned only with ‘the poor,’ therefore, the correct question is not "are the poor less able to pay higher prices than lower prices for staple goods?’ The answer to this question is all too obvious: yes.

The relevant question instead is "are the poor less able to pay higher market prices than they are able to pay to take advantage of the other methods of rationing that necessarily replace higher prices?"

The answer to this question isn’t at all obvious.

The poor might be better able than others to pay the cost of queuing – the time and aggravation of waiting in long lines. But not necessarily.

Even though no monetary cost is paid to wait in line, the poor might well be less able than others to be away from their families (in order to wait in a queue) following a disaster – say, because they have young children who must be watched, or because they must personally repair their plumbing and their roofs, unable to afford to hire repairmen even at normal rates.

But while the poor might conceivably be better able than the non-poor to afford to queue, it’s unlikely that the poor can outbid the non-poor for the assets that are necessary to compete in other ways for supplies of goods or services in short supply.

Are the poor likely to have a comparative advantage over the non-poor at creating and protecting black markets? Are the poor likely to have a comparative advantage over the non-poor at taking advantage of personal and political connections? Are the poor likely to have a comparative advantage at deploying violence as a means of acquiring goods?

Unlikely. Very unlikely.

If the poor would have even more difficultly paying for the assets, connections, and skills useful for acquiring price-controlled goods and services than they would have paying higher market prices for these goods and services, they will be better off without price controls.

cafehayek.typepad.com



To: TimF who wrote (321266)1/17/2007 2:33:56 PM
From: tejek  Read Replies (1) | Respond to of 1574260
 
You are 'nuancing' your definition in your effort to be right. Its just plain silly.

Not that nuance is bad, but it wasn't what I was doing. I gave a simple explanation, and then gave examples. The simple definition is that totalitarian means exerting near total control. It doesn't mean non-Democratic. A monarchy or dictatorship that doesn't exert much control isn't totalitarian.


You don't have a clue what you are saying when it comes to democracy, so give it up. I have a suspicion most Republicans skipped social studies.

It is very difficult for an independent league to succeed because they usually do not have profitable venues from which to play.

Give them the venue free and it would still be difficult for them to compete.


You don't know that. If you are student of supply and demand as you claim, then you know that at current ticket prices and player salaries, demand has yet to be sated. So your answer makes little sense.

Should AMD face anti-monopoly measures because it has a monopoly on Opterons? Should Apple face them because they are the only place you can buy a Mac?

No, because there are alternatives to those products. There is no alternative league playing NFL football in the US.



To: TimF who wrote (321266)1/17/2007 3:46:08 PM
From: tejek  Respond to of 1574260
 
"Predicting the future is folly. History, however, teaches that when strong majorities of Americans want something, our political system usually finds a way to give it to them."

Lyons: Surge toward impeachment?

By Gene Lyons/Syndicated columnist
Sunday, January 14, 2007 - Updated: 12:15 AM EST

Game definitely on. With Democrats assuming control of Congress, the pieces are in place for a struggle that could redefine American politics for a generation or longer.

Personally, I've always opposed impeaching President Bush. After the Republicans' ludicrous attempts to remove Bill Clinton, for Democrats to "normalize" the practice by appearing to retaliate in kind could only inflame partisanship, boosting TV and radio shoutfest ratings at the expense of weakening the Constitution. Although polls show slight majorities favoring impeachment, the votes just aren't there.

Even so, it's not hard to imagine how it could happen. Because to allow an arrogant, arguably delusional president and his shrinking band of ideologically driven aides to "double down" in Iraq, gambling "the lives and sacred honor" of American troops to save face in a misbegotten war would also do incalculable harm to the idea of self-government. To remove Bush, however, Republicans would have to take the lead.

As Bush is currently wrecking the GOP everywhere but the Deep South, that chances may not be as remote as they seem. The cult of personality surrounding the White House has broken down. Last November, American voters delivered as clear a verdict on Iraq as an off-year electorate can possibly render. No Democratic incumbent lost anywhere. Yet Bush acts as if it never happened.


For 3-1/2 years after the administration forced Gen. Eric Shinseki into retirement for testifying that a far larger force would be needed to occupy Iraq than Defense Secretary Donald Rumsfeld planned, the White House insisted that the United States had precisely the right mix of soldiers in place, that victory was imminent, and that Bush never failed to heed his brilliant generals in Baghdad.

Only after Rummy got fired did we learn that he'd himself proposed "an accelerated drawdown of U.S. bases" in Iraq in 2007. Instead, more than three years and 3,000 American lives into the war, Bush dumped him and cashiered the brilliant generals, also apparently for opposing escalation.

He's chosen Gen. David Petraeus, the author of the Army's manual on counterinsurgency, to replace them. True, Petraeus's 101st Airborne troops did a better job pacifying the locals in Mosul in 2003 than other U.S. forces. But his second job there involved training the Iraqi army and police forces, an unqualified disaster.

Some conservatives argue desperately that a "surge" of 20,000 troops will save the situation. Writing in the Washington Post, former NATO Supreme Commander (and Democratic presidential candidate) Wesley Clark sets them straight: "We've never had enough troops in Iraq. In Kosovo, we had 40,000 troops for a population of 2 million. That ratio would call for at least 500,000 troops in Iraq; adding 20,000 now seems too little, too late. Further, U.S. troops so far have lacked the language skills, cultural awareness and political legitimacy to ensure that areas cleared' can be held."'

The larger problem is the same one that confounded Gen. Patraeus's efforts to train Iraqi forces. As a nation, Iraq scarcely existed in 2003 when the United States invaded. Since then it's disintegrated into sheer, bloody chaos, with tribal and sectarian loyalties overwhelming all others. The transformation of Saddam Hussein's execution into a sectarian snuff film ought to teach Americans all they need to know about the government we've installed there.

Mere reality, however, has never made an impression on the Bush White House. What's more significant is that Gen. Clark, valedictorian of his West Point class, after all, no longer looks like a maverick. The president's political support is melting like the polar ice cap. And it's not merely pundits like the Washington Post's George Will and Charles Krauthammer and the New York Times' David Brooks who've pronounced themselves appalled. ABC News recently polled the members of the 2002 U.S. Senate that voted 77-23 to authorize Bush to use force in Iraq. Knowing what they know now, they'd oppose the war 57-43 - a 34-vote swing.

Writing in Human Events, right-wing icon Col. Oliver North argues, "sending more U.S. combat troops (to Iraq) is simply sending more targets." Recently back from Baghdad, North says contrary to Senators John McCain and Holy Joe Lieberman, "(n)ot one of the soldiers, sailors, airmen, Guardsmen or Marines I interviewed told me that they wanted more U.S. boots on the ground. In fact, nearly all expressed just the opposite: 'We don't need more American troops, we need more Iraqi troops."'

Fat chance.

Even more ominous for Republicans not named Bush was a recent Military Times poll. Since 2004, active duty service members calling themselves Republicans dropped 14 percent (from 60 percent to 46 percent) seemingly in direct response to Iraq. Thirty-five percent think Bush has handled the war competently; 75 percent believe the military's dangerously overstressed.

Predicting the future is folly. History, however, teaches that when strong majorities of Americans want something, our political system usually finds a way to give it to them.


Arkansas Democrat-Gazette columnist Gene Lyons is a national magazine award winner and co-author of "The Hunting of the President" (St. Martin's Press, 2000). You can e-mail Lyons at genelyons2sbcglobal.net.


milforddailynews.com