Wednesday, July 8, 2020

Podcast Episode 38: How a Free Market Handles Shortages (Toilet Paper Anyone?)

Auto-Adjusting Price

Empty shelves are evidence of government interference in the free market or an economically ignorant population educated by said government. In free markets scarce goods are always available at a price and competition keeps it as low as possible.

In an optimized market store shelves could automatically increase pricing as inventory fell and lower pricing as inventory rises.  Imagine if we used bancor to ensure everything is always available to those who need it most when they need it.

All the more reason to have prices rapidly adjusted to ration remaining supplies and reward those who prepared. Instead we punish those who prepare to serve this market by denying them profits.

Those guys take an economic bet that future demand will be higher.  Further more, if stores had dynamic pricing then it wouldn’t be possible to buy them out to resell higher.

In a market with fair money and free from government distortion those with money have earned it by providing value to others in the past.  If money is not the arbiter of scarce resources then political clout or those willing to wait in line at 3am become the “virtuous” entitled.

No comments:

Post a Comment