I love how in economics, a shortage can be solved by increasing the price instead of by increasing the quantity. It really makes you understand that the field of economics uses stupid definitions of words.
Economics says in the event of shortages, make supplies only available for more wealthy people. This 'solves' the problem because the wellbeing of less wealthy people is entirely irrelevant to economists.
If you are trying to slow down sales to the point that you are able to consistently replenish stock before the last batch sells out, raising the price will reduce the volume of hard bread being sold. At some point the volume should be low enough that it stops going out of stock.
Just “having hard tack in stock” isn’t the objective to solve for, though.
I’m actually skeptical this shortage affects people too badly, since the stuff lasts forever. Probably enthusiasts have enough in their pantries to last them through a temporary factory downtime?
Why would they stockpile it when they're used to just buying it in the supermarket?
It's not bought for its long-shelflife property anymore, it's basically just an ingredient in some popular traditional local recipes. Sure, those recipes emerged because the shelflife used to make hard-tack a reliably available source of calories, but that's basically gastronomical skeumorphism.
Raising the price doesn’t “solve” shortage and no one in economics makes that claim.
Instead, the claim is more limited - that even in times of shortage if you want to make sure that the item in question is still available, raising the price will accomplish two things: it will encourage marginal production and discouraged marginal consumption.
Without prices, the only mechanism you would have to accomplish the same effect, would be a political decision about who did or not deserve to have hard bread, while you work out the production issue.
In both systems, you’re doing rationing, just by different means.
Whether under capitalism or collectivism the way you solve a shortage is always the same - you produce enough for everyone who wants the thing.
The difference is the presence for absence of the feedback mechanisms like prices. The problem with collectivism is that once you get rid of prices, there is no explicit feedback mechanism. There may be implicit mechanisms such as a waitlist, but ultimately the decision to increase production is turned into a political decision. I doubt many people care if production decisions about hard bread are made by politicians or business people, but in more consequential areas, such as housing, we have a century of experience of what happens in production decisions are collectivized and politicized. (it is illegal to increase the national stock of interior residential floor space by even one square foot without prior political approval, I.e. rezoning, variances, etc.)
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How does that solve the problem?
I love how in economics, a shortage can be solved by increasing the price instead of by increasing the quantity. It really makes you understand that the field of economics uses stupid definitions of words.
Economics says in the event of shortages, make supplies only available for more wealthy people. This 'solves' the problem because the wellbeing of less wealthy people is entirely irrelevant to economists.
If you are trying to slow down sales to the point that you are able to consistently replenish stock before the last batch sells out, raising the price will reduce the volume of hard bread being sold. At some point the volume should be low enough that it stops going out of stock.
Just “having hard tack in stock” isn’t the objective to solve for, though.
I’m actually skeptical this shortage affects people too badly, since the stuff lasts forever. Probably enthusiasts have enough in their pantries to last them through a temporary factory downtime?
Why would they stockpile it when they're used to just buying it in the supermarket?
It's not bought for its long-shelflife property anymore, it's basically just an ingredient in some popular traditional local recipes. Sure, those recipes emerged because the shelflife used to make hard-tack a reliably available source of calories, but that's basically gastronomical skeumorphism.
"struggling to keep hard bread in stock" the article says it is what the stores are struggling to do. It is the objective they are failing at.
Well if the goal is to never be out of stock, just keep one more packet in the back room and never sell it.
That clearly isn't the goal.
Raising the price doesn’t “solve” shortage and no one in economics makes that claim.
Instead, the claim is more limited - that even in times of shortage if you want to make sure that the item in question is still available, raising the price will accomplish two things: it will encourage marginal production and discouraged marginal consumption.
Without prices, the only mechanism you would have to accomplish the same effect, would be a political decision about who did or not deserve to have hard bread, while you work out the production issue.
In both systems, you’re doing rationing, just by different means.
Whether under capitalism or collectivism the way you solve a shortage is always the same - you produce enough for everyone who wants the thing.
The difference is the presence for absence of the feedback mechanisms like prices. The problem with collectivism is that once you get rid of prices, there is no explicit feedback mechanism. There may be implicit mechanisms such as a waitlist, but ultimately the decision to increase production is turned into a political decision. I doubt many people care if production decisions about hard bread are made by politicians or business people, but in more consequential areas, such as housing, we have a century of experience of what happens in production decisions are collectivized and politicized. (it is illegal to increase the national stock of interior residential floor space by even one square foot without prior political approval, I.e. rezoning, variances, etc.)
The GP provided a great example for why metrics are often shit.
Raising the price fixes the metric (is it in stock?) but doesn't fix the actual problem.
Sure, but price is both a mechanism and another important metric.
The problem with the capitalist mechanism here is
- the producer has already repaired the factory that will restore supply shortly, so the signal is effectively useless
- your customers are going to remember that you gouged the shortage situation