That’s a bizzare-o libertarian definition of “shortage.”
Most people would say that there’s a shortage if there’s an insufficient supply to meet the needs of society. If there’s a shortage of food but there’s no lines at the grocery store because an apple costs $1 million, and so poor people starve at home because they can’t afford the food anyway, libertarians would say that there’s no shortage because the market has found the market clearing price. People who aren’t ideological nutjobs would say there is a shortage because people are staving.
I think a lot of the opposition to your ‘formal definition’ of a shortage would disappear if you gave examples of credible institutions using that definition.
Also I don’t think it’s true that there were price caps put on toilet paper by the government everywhere there was a TP shortage.
I would propose that a shortage is when inventory is depleted or prices rise such that buyers seek sources previously considered outside the market.
The shortage ends when the novel sources are no longer sought. (Either because novel sources have been normalized and inventory/ prices restored to equilibrium, or traditional sources manage to restore equilibrium making the previouslt novel sources irrelevant).
Note that in my definition it’s only a shortage if it’s inability to buy [or perception/concern therof] that’s motivating the search for novel sources.
Craigslist was considered outside the TP market before the pandemic, and is again considered outside the TP market. During March 2020, it was very much in the market. The shortage had nothing to do with price caps and everything to do with supply chains being unable to handle spikes in demand.
A food shortage is when food inventory in a market is diminished or prices increased to the point that people seek novel sources. Like if people are eating mud in order to not feel hungry, that’s a food shortage.
Wikipedia does indeed refer to a shortage the way he described it. The very next paragraph gave the colloquial definition, which you’ve described. Your response is the direct result of his decision to be obtuse. Don’t feed the trolls.
My first point was about part of the reason you’re getting a negative reaction is that you’re declaring your personal definition of a shortage is a formal definition which is basically claiming that experts agree with you. Please support this claim or stop making it.
Does your definition mean there is a shortage of restaurants?
Restaurant patrons aren’t buying the restaurant, they’re buying food and ambiance etc. Can you give some examples of people looking for what restaurants provide outside of the conventional market?
These are inseparable concepts. It’s supply and demand, not supply or demand. In a normally functioning market…
Yes shortages don’t occur in an ideal market, but ideal markets don’t occur in reality.
…a supply chain struggling to produce something people want to have will raise prices to start to scare some buyers away.
Stores can only raise their prices so many times per day (like physically). Toilet paper factories can only make so much toilet paper in a day they can’t increase production much at the drop of a hat. If I went to the pharmacy and there wasn’t any toilet paper and I went grocery store and there wasn’t any toilet paper, the normal market can’t meet demand so I have to go outside the normal market to get some, that’s a shortage. It’s a shortage whether or not there was a price cap, the fact of the matter was that there was no inventory in the conventional market, that market had a shortage. It doesn’t matter what the price tag on the shelf says, if there is nothing on the shelf, there is a shortage. Yes price caps often create shortages, but they aren’t identical to shortages.
Formally speaking, a shortage occurs when that price is unable to rise.
Formally according to whom? Shortages seem to occur even when price are allowed to rise.
If you have ever visited a medical doctor in Canada, which for patients are capped at zero (they are prohibited from accepting payment from you), you may have also felt a shortage.
Medical salaries aren’t what cause doctor shortages in Canada. The shortages are caused by supply restrictions. The government and college of physicians in medicine restrict the number of doctors allowed to enter the work force (to limit expenditure, and keep individual earnings high respectively). Many physicians operate on a fee for service model so while the fees are fixed (renegotiated every few years) so in many cases there isn’t really a limit to how much a doctor can earn. In fact increasing doctor pay sometimes reduces doctor supply, because now they don’t need to work over time to maintain their level of spending.
The accusation someone made that you were a crazy neoliberal was because when you said:
The formal definition of shortage is: A situation where an external mechanism, such as government intervention, prevents price from rising.
You were saying that price caps ARE shortages. Which is ridiculous and untrue. It seemed you were saying that there wouldn’t be shortages if there were no regulations. Which is ridiculous and untrue. You probably should have decried the injustice of our food distribution system before saying there isn’t a food shortage. Like when Haitians were eating mud so they wouldn’t feel hungry while starving to death, you should acknowledge the injustice and dysfunction of the market, and propose better terminology.
If you had said where you were getting your definition from I could have understood why you were insisting your definition is correct while failing to capture some pretty obvious failures of the market.
I think you believe you’re using the definition as it’s given in Wikipedia for example. But read what it says carefully:
In economic terminology, a shortage occurs when for some reason (such as government intervention, or decisions by sellers not to raise prices) the price does not rise to reach equilibrium. In this circumstance, buyers want to purchase more at the market price than the quantity of the good or service that is available, and some non-price mechanism (such as “first come, first served” or a lottery) determines which buyers are served.
It’s the second sentence that’s the definition of a shortage. The first sentence is a cause of shortages, but the shortage is inadequacy of supply described in the second sentence.
I was lazy with terminology re doctor salaries I understand the distinction but didn’t think it was important. I thought you were saying that if doctors could be paid more there would be more doctors this alleviating the shortage. You were actually saying that if people had to pay incrementally for medical care, there wouldn’t be a shortage because people would decide they didn’t want it.
It wasn’t clear because you didn’t specify price cap. Medical service doesn’t really occur in classical market at all. There is a price but it’s paid through insurance contributions implemented through the tax system. Medical service is also a terrible example of basic market principals because medical service isn’t a commodity. The value of critical life saving treatment is all the money the buyer has.
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That’s a bizzare-o libertarian definition of “shortage.”
Most people would say that there’s a shortage if there’s an insufficient supply to meet the needs of society. If there’s a shortage of food but there’s no lines at the grocery store because an apple costs $1 million, and so poor people starve at home because they can’t afford the food anyway, libertarians would say that there’s no shortage because the market has found the market clearing price. People who aren’t ideological nutjobs would say there is a shortage because people are staving.
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I think a lot of the opposition to your ‘formal definition’ of a shortage would disappear if you gave examples of credible institutions using that definition.
Also I don’t think it’s true that there were price caps put on toilet paper by the government everywhere there was a TP shortage.
I would propose that a shortage is when inventory is depleted or prices rise such that buyers seek sources previously considered outside the market.
The shortage ends when the novel sources are no longer sought. (Either because novel sources have been normalized and inventory/ prices restored to equilibrium, or traditional sources manage to restore equilibrium making the previouslt novel sources irrelevant).
Note that in my definition it’s only a shortage if it’s inability to buy [or perception/concern therof] that’s motivating the search for novel sources.
Craigslist was considered outside the TP market before the pandemic, and is again considered outside the TP market. During March 2020, it was very much in the market. The shortage had nothing to do with price caps and everything to do with supply chains being unable to handle spikes in demand.
A food shortage is when food inventory in a market is diminished or prices increased to the point that people seek novel sources. Like if people are eating mud in order to not feel hungry, that’s a food shortage.
Wikipedia does indeed refer to a shortage the way he described it. The very next paragraph gave the colloquial definition, which you’ve described. Your response is the direct result of his decision to be obtuse. Don’t feed the trolls.
Ah yes, I’ve been trolled. He is conveniently omitting the part of the definition which specifies in ‘prefect markets’.
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My first point was about part of the reason you’re getting a negative reaction is that you’re declaring your personal definition of a shortage is a formal definition which is basically claiming that experts agree with you. Please support this claim or stop making it.
Restaurant patrons aren’t buying the restaurant, they’re buying food and ambiance etc. Can you give some examples of people looking for what restaurants provide outside of the conventional market?
Yes shortages don’t occur in an ideal market, but ideal markets don’t occur in reality.
Stores can only raise their prices so many times per day (like physically). Toilet paper factories can only make so much toilet paper in a day they can’t increase production much at the drop of a hat. If I went to the pharmacy and there wasn’t any toilet paper and I went grocery store and there wasn’t any toilet paper, the normal market can’t meet demand so I have to go outside the normal market to get some, that’s a shortage. It’s a shortage whether or not there was a price cap, the fact of the matter was that there was no inventory in the conventional market, that market had a shortage. It doesn’t matter what the price tag on the shelf says, if there is nothing on the shelf, there is a shortage. Yes price caps often create shortages, but they aren’t identical to shortages.
Formally according to whom? Shortages seem to occur even when price are allowed to rise.
Medical salaries aren’t what cause doctor shortages in Canada. The shortages are caused by supply restrictions. The government and college of physicians in medicine restrict the number of doctors allowed to enter the work force (to limit expenditure, and keep individual earnings high respectively). Many physicians operate on a fee for service model so while the fees are fixed (renegotiated every few years) so in many cases there isn’t really a limit to how much a doctor can earn. In fact increasing doctor pay sometimes reduces doctor supply, because now they don’t need to work over time to maintain their level of spending.
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The accusation someone made that you were a crazy neoliberal was because when you said:
You were saying that price caps ARE shortages. Which is ridiculous and untrue. It seemed you were saying that there wouldn’t be shortages if there were no regulations. Which is ridiculous and untrue. You probably should have decried the injustice of our food distribution system before saying there isn’t a food shortage. Like when Haitians were eating mud so they wouldn’t feel hungry while starving to death, you should acknowledge the injustice and dysfunction of the market, and propose better terminology.
If you had said where you were getting your definition from I could have understood why you were insisting your definition is correct while failing to capture some pretty obvious failures of the market.
I think you believe you’re using the definition as it’s given in Wikipedia for example. But read what it says carefully:
It’s the second sentence that’s the definition of a shortage. The first sentence is a cause of shortages, but the shortage is inadequacy of supply described in the second sentence.
I was lazy with terminology re doctor salaries I understand the distinction but didn’t think it was important. I thought you were saying that if doctors could be paid more there would be more doctors this alleviating the shortage. You were actually saying that if people had to pay incrementally for medical care, there wouldn’t be a shortage because people would decide they didn’t want it.
It wasn’t clear because you didn’t specify price cap. Medical service doesn’t really occur in classical market at all. There is a price but it’s paid through insurance contributions implemented through the tax system. Medical service is also a terrible example of basic market principals because medical service isn’t a commodity. The value of critical life saving treatment is all the money the buyer has.
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