105 sats \ 11 replies \ @Undisciplined 15 Aug \ parent \ on: Kamala Harris First Economic Plan Proposes Price Controls To "Combat Inflation" econ
I don't think game theory is required. We need to be better at spreading easy to understand messages.
In these cases, the easy to understand message is "You aren't helping anyone when you take away their best available option."
Trying to think like a normie. That statement doesn't make sense to me. Has it worked for you?
I have tried to explain to people that prices help equalize supply based on the need of the buyer. If an outside party arbitrarily sets prices, demand and supply are taken out of the equation.
If there is a hurricane in an area and price controls (either by the corporation due to social pressure or the state) it is likely that the supply is going to run out(shortages). Also the incentive for other companies including individuals to bring in new supply is reduced. That is if there are laws against price gouging.
If price controls are not in place the price can be increased and then people that can defer their purchase will do so. They could also broaden their search. Those that need the materials right now can buy it, all be at a higher price.
We saw this during covid without the state putting price controls in place. Due to the public's disdain for "price gouging" Costco didn't hike their prices on toilet paper even though it would have made sense. Instead they tried to limit how many people could buy. That's there choice but it shows the social side of the market and how ignorance can cause damage even without the state.
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That statement doesn't make sense to me. Has it worked for you?
Not really. People nod their heads, but I don't sense that they get it. Why doesn't it make sense? It seemed pretty obvious to me, when I first read it.
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It makes sense to me because I get what it points to. But its a dense statement.
If someone doesn't ask a question after this statement
"You aren't helping anyone when you take away their best available option."
they either get it or don't care to get it. That's what makes it hard I think.
If I didn't get it and wanted to get it I would ask. How are price controls taking away an option? I don't think it is obvious how price controls cause harm. Once you see it, it is obvious.
That's what I'm getting at. Maybe I'm wrong though.
Edit:
In my experience most people just go on feelings and huge price jumps don't feel good. It is easy to think this is just greed.
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Yeah, I agree with that. You'd have to explain what it means to people, initially. My point is that it's a widely applicable principle and would be easy enough to remember.
The value would be that once someone gets it, they can remember it more easily than several steps of logic about prices and incentives.
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Hey there, let's go through this in a smooth language.
Firstly, @siggy47 thinks that the government is playing a part in inflation by generating too much money. He believes the root cause of rising prices isn't big corporations being sneaky, but rather the government's money habits.
Then, @grayruby and @Undisciplined suggest that taking control of prices by the government (like setting a limit on how high or low prices can go) has not been a very effective strategy in past, and might lead to shortages, which can upset people.
@kepford hops in to say that many people don't totally understand that having a control over prices might not be the best solution. He compares it to the situation when there's a sudden demand for something, like gas during a disaster, and prices of it increase. He believes people usually don't like it when prices go high suddenly, and that's why they like the idea of price control.
Then our friends @Undisciplined and @kepford have an interesting conversation about how to communicate this complex idea in a simple way. @Undisciplined thinks we need to tell people that controlling prices won't really help them in the end as much as they think, while @kepford proposes the idea that prices are like an invisible hand guiding the sellers to where they are needed most, especially during tough times. And if somebody (like the government) ties that hand, it might not work as well. They agree this is tricky to understand but hope once understood, will stick.
Made with 🧡 by CASCDR
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I actually didn't like this one. I'm still tweaking it for eli5. I'm trying to get it to use @ mentions but still actually explain it like you're five with very plain language.
In this context, I think it's useful because it will actually attempt to do what you are all describe (simplify economics that is counter-intuitive to the normie mind)