You can set reasonable price benchmarks to define "shortage" by.
Your definition of shortage is too narrow. Price is always able to select a buyer. People will skip eating if you give them enough money. But if that only supplies a couple percent of buyers, that's not going to disprove a shortage.
> You can set reasonable price benchmarks to define "shortage" by.
If there is some kind of useful benchmark, exclaiming "shortage" doesn't tell you anything about that benchmark. Again, nothing is communicated. Pointless, indeed.
> Price is always able to select a buyer.
Always, except for when there is a shortage. There are all kinds of examples of where price cannot select a buyer, most commonly as a result of government intervention making it illegal to pay more than a certain price, leaving many buyers all willing to pay the maximum allowable price for a given good or service, thereby requiring some other kind of mechanism, such as a lottery, to determine the 'winner'.
Do you think there can only be shortages if there's price fixing?
If not, please give an example that doesn't involve price fixing.
I'll give an example for my argument: If there's only enough food for 90 people out of 100 today, it's easy for anyone with enough money to get fed, but it is also a shortage of food.
> Do you think there can only be shortages if there's price fixing?
Clearly not. I just got finished pointing to government intervention as the most likely reason for a shortage. How did you manage to not finish reading the comment before replying?
Price fixing can also theoretically lead to a shortage, but this is the least likely case. Usually price fixers want to push the price higher than buyers are looking to spend, not the other way around.
> If there's only enough food for 90 people out of 100 today, it's easy for anyone with enough money to get fed, but it is also a shortage of food.
Agreed, in two ways:
1. It is apt to end up a shortage as many governments have 'price gouging' laws that would prevent the vendor of that food from charging the fair market value in this type of event.
2. In this scenario, eventually no amount of money can buy food. You could be the richest person on earth, willing to spend every last cent you have, but you're still not eating if you happen to come late to the party. Price is unable to select a buyer, relying on a first-come, first-served mechanism instead.
That doesn't match the housing situation, though. The richest person in the world isn't going to find himself unable to buy a home, even if he takes his sweet time deciding whether he wants one or not. Even at the peak of housing insanity, there were still many houses available for purchase by anyone in the market.
When I say fixing I primarily mean government fixing. But thanks for insulting my ability to read because I used the wrong synonym (fixing/control).
Therefore I will ignore price gouging laws because that's a form of the above but also if reasonable they won't apply to a person selling their own single allocation.
> In this scenario, eventually no amount of money can buy food. You could be the richest person on earth, willing to spend every last cent you have, but you're still not eating if you happen to come late to the party.
If you come after everyone eats for the day then that's not a shortage by my reckoning. Price works just fine as long as you're not insisting on being served between meals.
It's not like you can expect to buy a house in less than a day no matter your budget.
So I still don't see a big difference here between 90 meals and 90 houses for 100 people. There's always a price that will get you one.
> So I still don't see a big difference here between 90 meals and 90 houses for 100 people.
The difference is that once the meals are consumed, that's it. 91st in line can't buy food no matter what. No amount of money is going to produce the 91st meal. As such, when food stocks are tight, you cannot rely on price to determine the buyer. You have to resort to some other mechanism. Given the limited information you provided, it would appear that you chose a first-come, first-served mechanism.
On the other hand, 91st in line for a house, if he has enough money, will buy a house from someone in the first 90 who got there first. There is always a house for sale. They don't disappear (freak disasters excepted). They are not consumable items. Even during the tightest inventory periods we've ever witnessed, there were still many houses available for sale.
Price can continue to determine the buyer here. Those who cannot afford them leave the market. Economically, this is not a 90 houses for 100 people situation. If there are 90 houses, then only 90 people will remain in the market. The other 10 are priced out. Those 10 are not market participants, they are simply dreamers. Dreamers don't count.
Socially, there can be a 90 houses for 100 people situation. I get you are wishing you could use shortage here, but what are you communicating? Everything with a price attached has more people dreaming of ownership than there are units available. That's why there is a price attached. That's literally what price is for – to reduce the number of potential buyers until the number of buyers matches the number of units available for sale, with price increasing until that is satisfied. Basic supply and demand.
When using shortage to include dreamers, everything is in shortage, always. What is the point in drawing particular attention to something that is always the case? It's pointless. You are not saying anything. Nothing has been communicated.
> if he has enough money, will buy a house from someone in the first 90 who got there first
Which takes longer than waiting for the next day. You're making a distinction that doesn't really exist.
> The other 10 are priced out. Those 10 are not market participants, they are simply dreamers.
I can only laugh at this. If people give up, then it's not a shortage?
You claim my definition makes everything a shortage, because you ignore the other rules I would apply because you think they're too subjective. But your definition makes nothing a shortage.
No...? That doesn't make any sense. People also have to give up when there is a shortage. Some people giving up is a constant here. I am sorry to report that the world does not have infinite resources. Economics is a thing only because we have to manage allocation of the limited resources.
If you want to take that angle, the mechanism by which they give up is what is significant. If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage.
> You claim my definition makes everything a shortage
Frankly, I have no idea what your definition is. I stated that if you want to consider dreamers participants in the market then everything that comes with a cost is in shortage. Obviously. That's why there is a price. If we had the resources to allow everyone to have everything they could ever dream up, everything would be free. Any time you see a price of more than free – even just 1¢ - you know there are people wanting more of something than there are of those somethings available.
If it is that this does align with your definition – which I'm guessing is why you called it your definition – what are you communicating by exclaiming 'shortage', exactly? It doesn't say anything.
> If they give up to a price-based mechanism, then you have what is considered a normally functioning market. But if price is unable to rise and thereby they have to give up to some other mechanism, then you have what is considered a shortage.
In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage? Assume I haven't changed production or consumption at all.
For example, if there's a lottery then simply allow resale after the lottery runs.
> Frankly, I have no idea what your definition is. I stated that if you want to consider dreamers participants in the market then everything that comes with a cost is in shortage.
We can establish a ballpark for what a sensible price is for most things. Don't worry about the exact number right now. If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.
> In that case I can take just about any situation that has a "shortage", then reintroduce prices. Did I just solve the shortage?
If there was a situation where price was unable to rise, and you found some way to enable price to start rising again thereby seeing a reversion to a price-based mechanism, yes, you 'solved' the shortage.
> For example, if there's a lottery then simply allow resale after the lottery runs.
Or just allow price to rise in the first place, not requiring a lottery to fall back on at all. If you can wave your magic wand like that so easily, I'm not sure what you've gained in the indirection?
Of course, in reality, if price is unable to rise before the lottery, for whatever reason, it's probably still not able to rise after the lottery. Sure, if it is policy driven you might be able to change the policy, but, again, why not change it right from the get go? You don't need to wait.
> We can establish a ballpark for what a sensible price is for most things.
Okay, let's put that to the test. OpenAI releases true AGI tomorrow. What's the sensible price for it? I've picked my number. Now you pick yours and let's see if we're in the same ballpark. What happens if you aren't in the same ballpark as me? Does that not invalidate your claim?
My intuition is that the only way we can come to agree on a ballpark is if we actually stop and talk about the numbers. Which is all well and good, but just saying "there's a shortage" does not get us there. "Shortage" does not communicate anything here.
> If every house costs $1-10, there is not a shortage. If every house costs $1B-10B, there is a shortage. I think over 90% of people you ask would agree with those two statements.
But what have you communicated with the use of shortage? Let's remove shortage and just say "Every house costs $1-10" and "Every house costs $1B-10B". What information was lost in the removal of "there is/there is not a shortage"?
Are you trying to use shortage as an indication of your emotions? As in, "Every house costs $1B-10B, there is a shortage." being roughly analogous to "Every house costs $1B-10B, I feel that is too expensive."? If that's the case, how can others agree? What grounds would you disagree on? You can't logically dispute how someone else is feeling. That like you saying "My romantic partner is great, I love them." with the retort "I disagree, you actually hate them!". It is nonsensical.
I have no more detail to give to my argument, so I'll keep this very brief.
> It is nonsensical.
You can have that opinion, but I find the idea that price-based distribution makes shortages stop being shortages, with no change in supply, significantly more nonsensical.
> What information was lost in the removal of "there is/there is not a shortage"?
Shortage is less information but it's also easier to say. For more realistic numbers the word shortage is more than an order of magnitude easier to communicate than raw statistics.
This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.
A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
> Shortage is less information
Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
> This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.
> A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
Raising the price so high that demand disappears is not a way to alleviate a shortage. If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage, even if it's a perfect free market where anyone with X amount of money can still get a house.
You can always find a point on the demand curve that fits any supply situation. That doesn't stop there from being shortages. "Shortage" is not a niche word that only applies when supply and demand has been prevented.
> Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
This is like saying "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
The advantage of the summary is that you can use it in lieu of the full explanation and it's a lot quicker.
> Raising the price so high that demand disappears is not a way to alleviate a shortage.
Then this must mean that there is a shortage of jets? I most definitely am not paying that high price – you presumably aren't paying that high price – the price of jets is so high that demand has disappeared from almost all people. I'd certainly buy one if they were significantly cheaper. Who wouldn't? But at the prevailing price, no way.
Does that differ from a $1 plastic trinket? I'd take a plastic trinket if it were free, but for $1 my demand is lost. I'd rather spend $1 on something else. I guess that means the plastic trinket is also in shortage since I have decided not to buy due to the price tag being too high? And not just me. The average run for a plastic trinket is around 25,000 units, so we know demand disappears by the vast majority of people at the high price of $1.
What's not in shortage? Even literal garbage will see an increase in demand if the price goes low (negative) enough.
> If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage
Agreed. The nature of lag would ensure that price could not react in a timely manner to such an extreme event. Eventually correction could take place, but a shortage would ensue for a period of time.
> "Shortage" is not a niche word that only applies when supply and demand has been prevented.
What on earth does "supply and demand being prevented" mean? You cannot prevent supply and demand. It's not a thing that can be manipulated, it's just the observation of humans (and sometimes animals!) interacting with each other in the face of scarcity.
> "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
Well, then, let's reverse it: "Housing, there is a shortage" and "Housing, there is not a shortage". What did I learn from those statements? We will assume I didn't learn that price is able to rise in one case and not in the other. But there is nothing else I can possibly learn from that. It doesn't say anything.
If I read you correctly, I am of the understanding you intend it to mean that housing costs more/less than some "reasonable" number range you've randomly come up with, but as you have not communicated the range held in your mind, it leaves me with nothing. The only way that can work is for you tell me the range, but once you've done that, "shortage" doesn't add anything. Why would you include it?
If you can't learn any information from "shortage" then that's your problem. Most people can.
> Agreed. The nature of lag would ensure that price could not react in a timely manner to such an extreme event. Eventually correction could take place, but a shortage would ensue for a period of time.
Even after the prices correct, it would still be a shortage.
Digging out of that pit of missing units would take orders of magnitude longer than the price adjustments.
> jets, trinkets
You could easily get a trinket at trivial cost if you wanted it, so it's not a shortage.
For jets, we need to consider the utility of them and the production cost. You can't get one, but having one is not important to you, and the price is not being inflated by supply problems. So it's not a shortage (For individuals, at least. Airlines or countries can experience a jet shortage.)
> What on earth does "supply and demand being prevented" mean? You cannot prevent supply and demand. It's not a thing that can be manipulated, it's just the observation of humans (and sometimes animals!) interacting with each other in the face of scarcity.
The stuff you said earlier about government intervention, lotteries, etc.
> If you can't learn any information from "shortage" then that's your problem.
I can learn information when used as people usually use the term. The dictionary definition conveying how most people use the word is quite clear. It is just your usage that doesn't seem to communicate anything. Although I keep asking what it is you are trying to say in an effort to figure out what your non-standard usage is attempting to communicate, but perhaps it is not explainable. I do wonder if your usage's intent is as a scare word? Do you hope we are frightened when you say "shortage"?
> You could easily get a trinket at trivial cost if you wanted it
Yeah, okay, it's trivial compared to my means, but exceedingly expensive to other people. $1 is a substantial chunk of the typical yearly income in Niger, for example. They flat out can't afford a $1 trinket. That is a shortage by what you're telling us, surely?
If not, I take it that shortage only applies when people are as well off or more well off than you? But how can we know how well off you are? And what makes you the benchmark? Why not, say, Jeff Bezos?
> but having one is not important to you
Says who? I would say it is quite important to me. My quality of life is severely diminished not being able to afford a jet. If I want to fly, I have to, <shudder>, rent space on a flight with other flightmates to get the cost down to something manageable, and even then it's still a substantial cost.
If that's not important, then buying a home isn't important either. You can equally find a group of housemates and rent a house. Everyone who wants a roof over their head can have one, even if it requires some compromise on comfort. Owning a home is not a necessity. In fact, historically, owning a home was quite unusual. Only in last ~75 years has it become 'normal'.
> The stuff you said earlier about government intervention, lotteries, etc.
I don't follow. How does that relate to "preventing" supply and demand? That is supply and demand.
I'm not seeing how "a state or situation in which something needed cannot be obtained in sufficient amounts" favors your description over mine.
And yes both "needed" and "sufficient" are partly subjective. Most concepts are.
> Why not, say, Jeff Bezos?
Is this a real question, in good faith?
Having a fuzzy line is different from "yolo, no lines, nothing subjective can decide" as you seem to be suggesting.
Bezos is not a reasonable benchmark.
> In fact, historically, owning a home was quite unusual.
It affects rent too. Keeping a roof is getting unreasonably difficult.
> I don't follow. How does that relate to "preventing" supply and demand? That is supply and demand.
Fixing the price or using a lottery to allocate "is" supply and demand? What? I can't understand your logic at all now, this isn't worth continuing if we're drifting this far apart.
> I'm not seeing how [...] favors your description over mine.
The difference is that I am speaking economically, you are speaking socially. We already covered this quite some time ago. Both are linguistically valid, but the gap is in that it's not clear what meaningful information is obtained by taking the social perspective?
The best we've been able to come up with is that it comes from an emotional perspective, where "There is a shortage of housing" ≅ "I feel housing is too expensive." I can gain information about how you feel in that, but why would I want to know how you feel in the first place? It doesn't really tell me anything. I mean, why not say "Housing, it makes me feel tired"? Because nobody cares if you're tired, of course. And they equally don't care if you think it is too expensive.
> It affects rent too. Keeping a roof is getting unreasonably difficult.
Pack in the people as tight as a plane and you'll be fine. It "is not important", so they say...
> Fixing the price or using a lottery to allocate "is" supply and demand?
Broadly speaking, yes. When observing supply and demand, things like price fixing are all part of the conditions that make up the (in the case of price fixing) demand you are able to observe. Again, supply and demand isn't a thing that exists out in the world, it's observance of the world. As said earlier, you can even observe supply and demand play out in animal populations. It is not a human invention. It's a fundamental property of the universe, so to speak.
I'm not trying to use personal emotions, I'm trying to invoke broad consensus for words like "sufficient", and reference both history and cost (as independent from price) to help detect shortages.
Needs are a part of economics even when they're socially defined/refined.
> supply and demand
It feels like you're not attempting to understand what I'm saying, though.
The concept you were talking about with "a situation prevents price from rising, thereby warding off a change in demand". That is the type of situation I am trying to refer to.
> I'm trying to invoke broad consensus and reference to both history and cost (as independent from price).
Perhaps I'm not interpreting you correctly, but trying to compare houses in history to houses today is like trying to compare modern jetliners to the Wright Flyer. Houses have changed dramatically.
For one, houses have more than doubled in size over the last 100 years. And while I don't have size data for the previous 100 years, to my eye the typical home from 200 years ago was probably half the size again. Those early homes were tiny – just one room – with an average of 7 children living in them! The bigger the house, the higher the cost.
Secondly, we have much higher building standards today. Build a home to 1800 standards and you could build it for a song. But you'll be in violation of all kinds of codes. Those standards are not free. Not even close. Even trying to build a home to a more normal size is a code violation in many jurisdictions.
> It feels like you're not attempting to understand what I'm saying, though
I'm just waiting for you to say it. When I asked you point blank what "shortage" added to a sentence, all I got back was "I have no more detail to give to my argument".
> That is the type of situation I am trying to refer to.
Got it. Yes, if price is able to rise then demand can adjust as the market needs. That is a normally functioning market. When price is not able to rise then something has broken down. That unique situation is deserving of unique identification – to have a word to describe it. What word do you suggest?
A normally functioning market doesn't mean you can get what you want, of course. "Normally functioning" is not in reference to quality of life, or ensuring that you have a roof over your head, or whatever, it just refers to behaviour matching a certain economic model.
That makes it easier to have a shortage, but doesn't disqualify there being one. It's not like I can buy a 200 year old house at a discount proportional to the difference in build methods.
> I'm just waiting for you to say it. When I asked you point blank what "shortage" added to a sentence, all I got back was "I have no more detail to give to my argument".
"Shortage" is the summary. It provides no value if you already explained the entire situation. It provides plenty of value if you're starting from a blank slate and want to describe the situation concisely.
> Got it. Yes, if price is able to rise then demand can adjust as the market needs. That is a normally functioning market. When price is not able to rise then something has broken down. That unique situation is deserving of unique identification – to have a word to describe it. What word do you suggest?
I'm not sure, but definitely not "shortage". Shortages are about the supply at a "reasonable" price, whether or not the market is functioning normally. You can have that kind of market error without a shortage, and you can have a shortage without that kind of market error.
Yes, economically it summarizes a situation where price is unable to rise. Your regional milage may vary, but I've seen a few shortages around town lately. Here are a couple of them:
1. Price gouging laws prevented the price of toilet paper from rising when supply stocks were low in 2020. Instead of them selling for thousands of dollars per roll (or whatever it would have taken to satisfy the market), people were running the store as fast as they could to cheaply buy up everything they could get their hands on, soon leaving the shelves bare. Eventually stores had to place limitations on how many rolls individuals could buy. Here, a price-based mechanism failed to manage resource allocation, so other mechanisms (first-come, first-served initially, followed by rationing) came into effect.
2. Laws intending to maintain fairness in the medical system prevent medical practitioners accepting any amount of money from patients (i.e. the price cannot rise above zero) as to not allow those with means to offer more money to pull a doctor away from surgery to look at their common cold symptoms. As a price-based mechanism is not available, we resort to a needs-based system. If you show up with cold-like symptoms and someone else shows up with a heart attack, and there is only one doctor available, you have to give up on seeing the doctor no matter how much money you have to spend. Sorry.
That's what shortages look like, from the economic point of view.
But what does "shortage" summarize socially? I respect that you have a social take, but you've still not explained it. You hand-wavingly say it summarizes supply at a "reasonable" price, yet fail to offer the mathematical formula for determining what is reasonable. No doubt because it cannot be described mathematically as it is just arbitrary judgement.
But if you accept that it is, indeed, just arbitrary judgment then how can it be summarized further? I can't read your mind. You have to explicitly tell me what judgment you have made. Once we have established what you have judged, why are you providing a secondary summary? All the information I need to know about your judgment has already been communicated.
"Shortage" works economically to summarize a situation as the conditions that define it are external. But socially, it seems the conditions are internal and thus needs to be communicated in full anyway, so there is nothing left to summarize. This so-called summary doesn't say anything.
Your definition of shortage is too narrow. Price is always able to select a buyer. People will skip eating if you give them enough money. But if that only supplies a couple percent of buyers, that's not going to disprove a shortage.