Well, Part 1 was about eco-Socialists not really understanding choice, Supply and Demand, and the importance of Price in describing value to either a Seller or a Consumer and how it is EXTREMELY important in managing markets between 10, 100s, 1000s or Billions of people by acting as a “Black Box” indicator (e.g., you don’t know what goes on inside the box but the product and its Price pops out – the complexity of the creating and distributing is simplified by Price). I had decided that I’d hide “the hook” to provoke a debate in the middle of my comment over at TreeHugger (“And I’ll bet I’ll get some replies to this reasoning.“); it worked (emphasis mine):
Nigel Mawhinney -> GraniteGrok
Or what happened is that the sellers, under the rubric of “fairness”, instituted rationing of number of items that could be purchased at a single time. Higher Prices would also have created rationing , IMHO. And I’ll bet I’ll get some replies to this reasoning.
OK. For lack of anything better to do today, I’ll bite.
When demand outstrips supply by definition you cannot match supply and demand, using any mechanism. Instead you get unfulfilled demand or what I believe economists call Suppressed Demand. Should there be a rebound in supply, sales will occur until the suppressed demand is met.
Until the supply is increased however some mechanism will have to come into play which decides which part of the demand sector gets its orders fulfilled and which does not. I am not an economist but I am aware of four ways in which this can occur, namely: (1) First come, first served, when it is gone it is gone; (2) Rationing, each customer gets less than they want so that everybody gets some; (3) Price mechanism, the price goes up and those who can not or will not pay the price being asked become the suppressed demand sector; (4) The Dutch Auction.
You have asserted that, IYHO, mechanism (3) is fairer than mechanism (2). Now, I’m old and find that listening teaches more than telling. So. I’m curious. Please tell me why you think this is so.
Actually, his basic assumption is not one that I agree with – Price, when allowed to float without Government intervention, “fixes” the over Demand to under Supply (or under Demand to over Supply). At least this guy (somebody I’d never see comment at TH before) was reasonable and didn’t immediate go the “PROFIT OVER PEOPLE” idiocy that many Socialist throw out (as if EVERYTHING was a Right – but that’s another post):
GraniteGrok -> Nigel Mawhinney
Easy – 3) is self-rationing rather than imposed rationing by others. It causes people to think “do I REALLY need this”? Does this item, at this Price make sense for me?Maybe, maybe not. I like steak, especially ribeye. For me, the Price is rather elastic as it can go up a fair amount before I stop buying it (it ceases to have a greater value to me than the dollars in my pocket). For others, that pricing may be very inelastic based on their value-add determination.
What could be fairer than you deciding for YOU what is best for yourself (instead of having it placed upon you by some external entity)?
NO one is ever guaranteed something at a price they are willing to pay. Suppressed demand is basically stating “I DO want that – just not at that price”. The seller is under no consideration to make you happy.
And as I try to buy disinfectant wipes, seller rationing still means that most people aren’t going to get any because you can easily game that “Limit Two” (go buy 2, have your spouse buy 2 in a different transaction (and different check-out), and your kids doing the same). Or, not knowing when the next shipment comes in, you never know when there is something available to buy the rationed apportion.
You can’t game higher pricing in that manner.
I do appreciate the question!