Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/5/84; site psuvax1.UUCP Path: utzoo!watmath!clyde!burl!ulysses!gamma!epsilon!zeta!sabre!petrus!bellcore!decvax!genrad!panda!talcott!harvard!seismo!rochester!cmu-cs-pt!cadre!psuvax1!berman From: berman@psuvax1.UUCP (Piotr Berman) Newsgroups: net.politics.theory Subject: Re: Re: Health Care, Wonderful Market fo Message-ID: <1774@psuvax1.UUCP> Date: Mon, 9-Sep-85 03:10:01 EDT Article-I.D.: psuvax1.1774 Posted: Mon Sep 9 03:10:01 1985 Date-Received: Wed, 11-Sep-85 08:14:29 EDT References: <1764@psuvax1.UUCP> <10300@ucbvax.ARPA> Organization: Pennsylvania State Univ. Lines: 117 > >/* Written 1:20 am Sep 4, 1985 by psuvax1!berman in inmet:net.politics.t */ > >/* ---------- "Re: Health Care, Wonderful Market f" ---------- */ > >Warning: may be boring. > > No, just wrong. > > >Market forces indeed. More schizofrenics, > >obviously, will cause more people to care about schizophrenics. > >Why? Because in the economics course they teach that demand increases > >supply. What about another economical law - supply generates demand. > >More charitable contributions - more schizofrenics (another way of > >cutting unemployement in Libertaria). > > If you meant "economics" rather than economical -- in which case I don't know > what you're talking about -- then it occurs to me that Samuelson, Hirshlifer > and Addison were all remarkably reticent about this supposed "law". Offhand, > I can't think of *any* economics text which states this "law", and I can't > think why demand should rise to meet supply; nor can I think of any instance ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ > in which demand has arisen in response to a supply. I can think of instances ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ > where the consumption of certain products has risen when their supply curves > moved leftward and down, but the demand for the product already existed. The > consumption of small computers is an excellent example: the demand for their > product, information, existed and was largely unmet -- as witness the (then- > existing) demand for a host of substitute products. In contrast we can find in > abundance many goods for which there is no demand whatever -- toxic chemicals > and sand are two that spring to mind immediately. > > Piotr, I suggest a good freshman or sophomore economics course. If "PSU" > is a university, I am sure that they have one or two to offer. However, if > the reading list includes anything at all by noted nitwits such as Galbraith, > go take a course at a reputable university. > > -- Rick. > I happen to have a course in economics + I have read several books. As Rick duly quoted, the "law" of demand increasing to meet suply was formulated (by Say, if I remember), otherwise Samuelson, Hirshlifer and Addison could not be > remarkably reticent about this supposed "law". This law, although flawed, was not altogether irrational. The problem is that ALL economical have limits on their application. The law of markets says that if an abundance of a product emerges, then new uses are found, and hereby the market for the product increases. Rick cannot think of an instance in which demand has arisen in response to a supply. ************************************************************************ *Since my reading list includes noted nitwits such as Galbraith, * *I can think, unlike others, who are learned in reputable schools. * *Notabene, I was listening to my nitwits in MIT, not PSU. Regretfully * *enough, I rely more on disreputable sources like history books, Wall * *Street Journal and Fortune than on textbooks of economics. * ************************************************************************ As an example, if an abundance of small computers emerges, one uses them instead of typewriters, calculators, file cabinets etc. One may even invent uses, were never heard about, like flaming on net, electronic billboards, programing as a pasttime etc. Sugar, coffe, tea etc. were initially used as medicines and spices, once abundance of those products appeared, they became staples. Before their abundance, the need for sweetening everything or adding foreign substances to water one drinks was barely existent. Currently, the law of markets is quoted as an example of limited scope of economical laws, and that was exactly the reason I quoted the existence of this law. But you pulled my remarks out of context quite mercilessly. The argument which I opposed was as follows: if there is a need (like helping schisophrenics), free market (if unhibited) will supply help. The claim was that the law of supply and demand applies here. I claim it to be nonsense. But instead to argue with that, you prefer to advise me to repeat my sophomore education. Since you are closer (I presume, sorry if not true) to your sophomore year, may you please explain how this law will apply here? Perhaps the price of a schisophrenic will go down? Seriously, that was a classical solution of this problem: shisophrenics were werehoused in quite inexpensive, if not inhuman, fashion. That may be a "free market solution", but I do not buy it as a preferred one. Now you say that these were the abuses of the state monopoly on psychiatric care for the not wealthy. There is major flaw in applying the laws of economy to society in general. The most general law is that the market has a tendency toward equilibrium: the demand stimulates the prices up, the supply stimulates the prices down. Increase of prices may stimulate the production, decrease may stimulate removing marginal producers from the market. The real problem is that the equilibrium does not imply superior fulfillment of social needs. Consider an example. Imagine that hiking, picknicking, hunting and fishing increase in popularity in Libertaria. The owners of forests, streams and mountains invest in building roads, trails, picknic areas etc. The prices (especially in attractive areas) increse. The value of the land in the attractive areas increases, and so the costs for the new providers of the outdoor recreation. As the result, the fees for the use of streams, paths, picknic tables, parking etc. go up. Finally, only the more wealthy 50% of population may engage in outdoor activities. Currently, by a statist mistake, majority of the attractive areas for outdoor activities is public. Thus the fees are either not existent, or small (like fishing licences). Everybody may engage in his/her favorite form of outdoors. Since the land in question is public, it is not a subject of trade, so the costs cannot be influenced by the demand. Let us compare the outcomes of two processes: free market and state regulated. In free market, the portion of GNP related to outdoor recreation would go up considerably, thus the economic indicators would measure an increase in satisfying social needs. In the current statist model, GNP barely suggest that public lands satisfy a major social need. However, not 50% but 100% has the ability of participation. As a student, I was very happy that I could hike in Boston Blue Hills or NH White Mountains without a charge. Similarly, not wealthy farmers and workers of my part of Pennsylvania are quite happy with the state beaches, hunting grounds, streams etc. I doubt that they long to a pure market model. Paraphrasing my libertarian friends "they believe in a Ponzi scam, they payed taxes for those things and now they are deluded to think that they got something for nothing". In fact, most of those people never had sophomore course in economics. They just do not believe that everything should cost money.