Comment by fc417fc802

People aren't as stupid as you appear to think. Yes, there are second (and third, forth, ...) order effects. Typically these sorts of systems will settle into an equilibrium. A reasonably competent government agency will account for that where necessary.

It's strange. You object to the government here yet expect private industry to fill the same gap. Why do you believe private industry would navigate these issues better than a government agency would? Given the difference in incentives it doesn't make any sense.

It's a good thing for the regulator to be able to step in at will rather than blindly hope that things go well. Industry is notoriously bad at making short term sacrifices for long term risk management. Would you rather the government force them to maintain their own reserves via regulation?

> This isn't a different thing from the first thing. There being less supply is what causes the price to go up.

No, the two are not at all the same. Rapid price fluctuations are one issue. Essential resources are an entirely separate problem. Volatility and starving to death both involve price movement but are otherwise very different things.

> encouraging the market to take all the slack out causes there to be less supply.

So if the reserve is run by the government it's removing slack and reducing supply, but when run by private industry ... ?

No amount of regular slack is ever going to be able to compensate for a tail risk that blocks the import of an essential good. Take oil for example. No company is ever going to voluntarily warehouse enough to keep the entire US economy going for any significant amount of time. It's a crazy small tail risk and very expensive to counterbalance.

Food is similar. No grocery store or wholesaler or whoever else is going to voluntarily stockpile enough to keep people from starving in the event of widespread crop failure or similarly devastating adverse environmental event.

> If the government keeps an enormous reserve, they're going to cause the price to be higher even when nothing is wrong and burn through a disproportionate amount of tax money doing it.

Why would that be? Filling and emptying shifts demand but doesn't create additional. Anyway you seem to be arguing that private industry should do this for themselves. So whatever the effects are they will be present either way.

Why do you expect disproportionate expenditures? The cost is that of warehousing. The benefit is the entire economy running more smoothly which presumably increases taxes by quite a lot if money is all you're concerned with. It also just generally improves everyone's quality of life which I would hope is the entire purpose for the government to exist when you get down to it.