Comment by Vt71fcAqt7
2 years ago
>every subsidy is a form of price control. Price controls are not just ceilings and floors.
You make many points and I didn't read the whole thread bellow but on this point specifically I think you are wrong especially in the context of GP which was saying that price controls are not effective. What GP means is that actual price controls are not effective. So I don't see how redefining price controls here is meaningful. That is, it would not be fair to say, for example, that since things that are "a form of price control," however we define that, are effective, therefore true price controls are also effective. So I don't see why you are trying to redefine this word here. And it is obvious that GP means price ceilings and floors. And, importantly, that's what people mean by the term. For example that is how Wikipedia defines it.[0] Also importantly, that's what the phrase literally means. If you subsidize something, you did not control the price as someone can still charge more for it after subsidies. They just won't choose to due to market forces. Even then if you only subsidize one company then they will not lower prices assuming that the scale effeciency created by more buyers does not provide more profit than keeping the current price. I suppose you can say that since the market force is so strong that the government giving subsidies amounts to literal price control. But this is obviously a very different meaning, and since it is not the common usage it makes no sense to define it that way in this one comment. Additionally, by that same token we would have to define every market action as a form of price control. So my point here is that nobody defines subsidies as price control and it makes no sense to do so from both a linguistic and economic standpoint.
>Also "subsidies don't work", the subsidy often not a consumer subsidy it's a producer profit subsidy. See EV's which all have subsidies built into their price except the Leaf.
I don't know who you're quoting here or what this paragraph is saying. But I didn't see GP say subsidies don't work. And nobody has said that price controls not working amounts to subsidies not working. Subsidies obviously work and have been shown to work for decades. Not in all cases does it work, but many times it has worked and the outcome is one that would most likely not have occurred in a completely free market. And this shouldn't be surprising as using capital to grow a company is one of the main 'discoveries' of Capitalism along with the division of labor. The only issue is that you lose market signals and you have to increase taxes. Government-free markets and Capitalism are not the same thing. To deny this is to say that the East India Company was not a form of Capitalism as it had government mandated monopolies over several markets.
My usage of price controls in that way is intentional. The average argument against price controls (e.g. price ceiling sand price floors) is like saying knives bad because I can cut my fingers off. Price controls are tool, it's about how you use them.
> Subsidies obviously work and have been shown to work for decades.
Subsidies obviously work and subsidies don't work in the same way that price controls obviously work and price controls don't work.
These are tools.
You're not talking about the application of tools, you're simply talking about ideologically preferential ways to change an economy.
Subsidies are considered good and price controls are considered bad because of how they affect private capital not due to any argument that a rigorous data driven modern application of economics would provide. By modern standards those statements "price controls are bad" and "subsidies are good" and their inverses are unfalsifiable.
I take back some of what I said about subsidies. This was because of how I read "every subsidy is a form of price control." On reading your post again you are talking more about welfare specifically. I was thinking of subsidies meant as part of industrial policy, but thinking about this more we are talking about welfare. Although this wasn't obvious to me at the time as price controls are also used in industrial policy. And arguably the Apple lawsuit and anti competition law in general is about industrial policy. I should also point out that I never said price controls never work, although I perhaps implied that by saying subsidies do work implying that price controls don't. But that wasn't my point. My point was that you cannot conflate subsidies with price controls because they are not the same. I don't think your usage of price controls being intentional here makes it any better and FWIW it didn't read that way at all to me, it just read like you don't know what you're talking about, especially combined with your usage of "ooga booga free marketers." I don't mean this in an offensive way I'm just trying to explain how your comment read to me.
>Subsidies are considered good and price controls are considered bad because of how they affect private capital not due to any argument that a rigorous data driven modern application of economics would provide.
For industrial policy this is certainly wrong. For welfare which is what I again assume now you are talking about I don't know enough to make a statement on it. I have read that price controls often decrease supply of the product in question. For example in a housing shortage price controls on rent decrease the number of new apartments built. Price controls make sense when the market in question is monopolized by a single company like in the case of utility companies. Generally these monopolies are given by the government and can be thought of as contractors for the government in the market in question.