Price Controls = Bad

Ok budding third world despots, I see you there Scott, let’s say it together…. Price… Controls… are… BAD!!!!

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5 Responses to “Price Controls = Bad”


  1. 1 SWong February 9, 2007 at 8:25 pm

    “…leaving only unsavory bits like chicken feet…”

    So… what did they do with the rest of the chicken?

    I jest, I jest. Fixed prices -> diminished production -> diminished supply -> black markets -> poor get hosed anyway. Subsidies, also, can lead to problems with the diversity and quality of goods, like with dairy or energy in the US.

    Really, I’m not inclined to argue on this one. Hard price controls only make sense if the government has tight, efficient control over the means of production. Which, like, never happens.

  2. 2 Will February 13, 2007 at 4:09 am

    Black markets or queuing… There are stories from Soviet Russia (SNL accent required to say that last phrase) of people getting in line because just because they saw a line.

    Government needs more than control of production. The soviets had control of production, but what was produced was out of whack with what people wanted. They need to know the preferences of consumers and they need to have control of the distribution of wealth. The second seems doable, fascistically thinking, but the first is a pretty hard information problem. Unless of course, the government controls thoughts, in which case it can form whatever preferences it would like…

    This is a rather creepy line of thinking, but it should be pointed out how easy it is to get to “creepy” from “price controls.”

  3. 3 SWong February 13, 2007 at 6:35 am

    Funny that you should mention that. Doesn’t marketing heavily influence preference, and therefore demand? Isn’t that the point of marketing?

    I really think that the total population of people with “untainted” preferences in the western world is a tiny minority. I’d go so far as to say that this is an unacknowledged weakness in the classic libertarian platform.

    Distribution of wealth is a tougher question.

  4. 4 Will February 13, 2007 at 6:24 pm

    Yeah, preferences are squeeshy. But to be the devil’s advocate (the devil being marketing)… does marketing set your preferences or does it help you discover them? does it instead help you associate your preferences with particular products?

    I don’t want to buy a soda because I saw a Coke commercial, but I’d be more likely to buy a Coke because I saw the commercial.

    That said, I think marketing helps determine social norms (e.g. what is appropriate, in particular circumstances, to consume) and norms help form a person’s preferences. Of course, collectively people’s preferences in turn help determine the norms themselves.

    If you, Scott the evil third world despot, want to control people’s preferences, you still have a huge information problem to overcome. To set preferences, you’d have to know how to evolve the norms, but to know how to do that, you’d need to know people’s preferences.

  5. 5 SWong February 14, 2007 at 8:48 pm

    Both. There’s a positive feedback loop between marketing and tastes. Good marketers identify existing tastes and appeal to them. Good consumers respond to marketing, and their tastes adapt. Really excellent marketing gets people to spread their tastes beyond the direct reach of a marketing campaign. It’s called brand awareness.

    Your tastes include sweet foods and stimulants. You can get this from coffee with lots (and lots) of sugar in it, or you can get it from a can of Coca Cola. Coke’s excellent marketing has linked that sensation of well-being with their product; they supply the key, you supply the emotional attachment. This is called brand loyalty.

    That said, I don’t think that there’s one big conspiracy to enslave you. I think that there are a million tiny conspiracies.

    Hm, you should have brought up drug abuse as a counterpoint. There’s a healthy market operating with a total absence of broadcast marketing. The mechanism for the spread of tastes uses entirely social means.

    re: Despotism. Yes. You’ll also notice that despots tend to grab the means of communication and tightly regulate things like advertising. I suspect that the really successful despots in the future will have a lot more in common with Steve Jobs than Pol Pot. Locking down all communication is much more difficult than quietly subverting it. That’s a discussion for another day, though.


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