Every single time someone says "there's a shortage of <goods>", you can mentally substitute it for "we can't get <good> for cheap".
Try this with: housing, nvidia GPUs, toilet paper (when there's a pandemic)
Every single time someone says "there's a shortage of <goods>", you can mentally substitute it for "we can't get <good> for cheap".
Try this with: housing, nvidia GPUs, toilet paper (when there's a pandemic)
Technically true. I think a "shortage" is technically defined in terms of price. But the example of housing is a hint at the limitations of this rule. Sure, we'd like houses to be cheaper, but most buyers don't have the option to just pay more. So what do we actually do about it? Increase supply, yeah, but why is the supply limited? Well, it's various weird, annoying restrictions on housing that you don't see unless you dig past "lol they want it cheap".
> Sure, we'd like houses to be cheaper
People that can't achieve home ownership right now want houses to be cheaper.
People that already got theirs don't. Yeah, supply is a problem but it's more than that. Housing cannot both be an investment and broadly affordable, those two goals are in conflict.
We need to change the way we treat housing so that it cannot be used to both store and generate wealth.
Yep, that's a good pointer to why those annoying restrictions survive.
>but most buyers don't have the option to just pay more.
You can argue the same for labor as well. Everything from off-shore competition to strained government budgets are excuses for why employers "don't have the option to just pay more".
Sure, some of those might be worth looking into. But also, we can be a lot more cavalier about saying a company that can't pay its workers should go out of business than we are about saying that a family that can't afford housing should just live on the street. I think the latter case is more worth attacking directly.
The point is, shortages being a price phenomenon is not all that actionable. You can't avoid digging in to the details.
We keep making the argument that supply is limited, ignoring corporate housing buyers, foreign investment (buying a house abroad might yield a visa), and people holding too much property. Limit these 3 and suddenly there's a lot more affordable housing on the market.
This logic assumes something is always available for sale somewhere at some price. It shouldn't hold when something is actually short to the point of rarity. If someone is unwilling to sell something that you can't buy elsewhere, this reasoning will conclude that its price is infinite.
Is there a difference between people and goods?
Of course not. That would ruin their analogy!
Honestly, between how soft-science macroeconomcis is, combined with the fact that this planet does not contain a single person willing to argue about it in good faith, makes it simply impossible to have real conversations around it, especially on the internet.
Not really, when you consider both the interests of the buyer or the seller. The buyer of course would rather like goods and services be cheaper. It might be tempting to say that "people" deserve special consideration over "goods", it breaks down when you consider that goods are also made by people. Moreover gatekeeping whether you can use the characterization of "we can't get ... for cheap" depending on whether the seller is sympathetic or not (ie. "people" vs "goods") is a blatant way of smuggling in a conclusion via wording, similar to "terrorists" vs "freedom fighters".
I don't think this is correct. The reasons economists separate capital and labor is that they do have different characteristics. Labor has skill, capital can have technology. Assets exist regardless of utilization, labor cannot be stored up in an inventory since labor is time which flows inexorably onwards.
A shortage of an asset is a reflection of inventory levels. A shortage of labor reflects a lack of skill or time OR a lack of willingness to pay for that skill and time.
They're different for good reasons.
>A shortage of an asset is a reflection of inventory levels [...] OR a lack of willingness to pay for that skill and time.
So the housing crisis in just an "inventory" issue? Maybe it's just that people aren't willing to pay enough for a dwelling in desirable coastal cities?
>A shortage of labor reflects a lack of skill or time OR a lack of willingness to pay for that skill and time.
How's this different than for goods? You're just substituting "time" for "production". Moreover
A shortage exists at a point in time, propensity to pay to make the asset may react to the demand for the asset, but there is no guarantee that supply of labor and capital meet at an efficient point. (art is a great example where the overlap between supply and demand may have no overlap at all for certain pieces).
Lack of demand for labor and skill can produce an asset shortage, but in an economy where supply and demand float, the theory is that shortages reflect supply-demand failures, and the degree to which supply of labor is invoked to solve shortages for goods depends on the elasticity of demand and the elasticity of supply.
But assets and technology itself is ultimately created by labour.
There might be an exception for natural resources that are exceptionally easy to exploit even without labour, like sunlight or fresh air.
Also if you sideline too many goods, the goods can't rise up and force a new economy.
Someone here posted that the balance was better in the west in the past because the Soviet Union was sitting there on the sidelines like a boogy many to capitalists waiting if they pushed people too far.