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Government run grocery stores and slopulism
I am not an American and don't live in NYC, but I've recently been thinking about the news of there being government run grocery stores in NYC. In my mind, NYC is in at least one way a heart of capitalism in the world, so this at least has some symbolic significance. On a more serious note, I find it interesting what the idea that government-run grocery stores would fix anything reveals about its thinkers.
If you speak to most people, even very intelligent ones, they tend to have narrative-driven models of reality. For example, if you go on Reddit, talk to a co-worker or whatever about health insurance companies or grocery stores, they'll often make these entities responsible for high prices for groceries or healthcare, claiming greed, manipulation and dishonesty in some fashion.
While it is absolutely true that these entities operate out of greed and not e.g. compassion, if one looks at the claims, they are often weak at best. Both grocery stores and health insurance companies have rather low margins (typically 1-3% of net margin for grocery stores, 2-5% for health insurers) in most places. The idea that the only thing preventing us from a post-scarcity, food and healthcare-too-cheap-to-meter society are somehow corporations made up of morally abhorrent people seems to quite attractive to a lot of people.
While both grocery stores and health insurance companies do have plenty of issues, my personal view is that they act in as kind of stand-ins for people's rage; between choosing to believe that either:
a. Healthcare is an enormously and ever-more expensive thing in most of the world, with 15-20% of GDP (!) going to healthcare in the US and usually >10% in most developed nations, because people's expectations of healthcare service are ever-rising and people believe that healthcare is a "human right" and the fact that it's such an expensive thing and requires a lot of staff (health services are the number 1 employer in a lot of US states now) means that when you need healthcare, it'll cost you a lot and insurance premiums reflect that. Similarly with grocery stores; food is actually cheaper than ever as measured by % of people's income being spent on it
b. There are evil people colluding to drive up the prices of essential goods
most people choose b.)
Even most smart people! I have some very sharp colleagues who are economically extremely illiterate and I work in quantitative finance, a field where one would hope people understand things about supply and demand.
And this extends to the right as well! Most populists-right movements have been exerting more, not less, command upon the economy; even Mottizens veer into this, seeing working in finance as parasitising upon society rather than allocating where goods and services ought to go.
I think this sort of feel-good, narrative-driven politics is ultimately an issue simply because reality is not narrative-driven; the progression to the modern world has broadly shown that in a lot of cases, reality is random, cruel, senseless, not governed by human-compatible narratively satisfying laws. There isn't necessarily a cabal; a lot of things are driven by emergent phenomena.
However, the "grocery stores are not evil camp" tends to have shitty marketing (perhaps due to not thinking in terms of attractive narratives itself too much) and loses to people like Zoran Mamdani. Indeed, that is broadly the story of populism and demagoguery, which seems to recently have gained a lot of ground in a lot of places in the world. Maybe the internet and especially things like TikTok makes small soundbites do better these days.
Most people, even often intelligent people*, approach economics with the mindset of a medieval peasant.
That is to say, they see it as a zero-sum, moralistic story. If the travelling merchant doesn't make anything but sells cloth for two ducats a yard while buying it for one ducat a yard, he's a greedy middle-man who doesn't do anything of value (although I'll still sell him my cloth because nobody else will buy it...).
I'm convinced this is the default way of thinking about things. Just as we hate the rich because he evolved as hunter-gatherers who had to share meat with our tribe-mates, we struggle to understand positive-sum interactions, prices as signals, and other essential economic concepts.
I'm not a fan of the general impulse of 'things I value should be on the national curriculum because then other people would think like I do', I don't care about forcing kids to do art, music, literature, foreign languages etc.
But economics should absolutely be taught to children. We can't trust leaving our elites alone to understand economics since they've burned that trust on things like open borders and abolishing the police, so normal voters should understand (or at least be able to repeat as a maxim) that building houses causes house prices to go down, or that nothing in economics can be explained by 'greed'.
*I once had a conversation with a very intelligent software engineer who argued that everyone should be limited to owning one house, so that greedy landlords couldn't buy them all up and stop everyone else sharing in the property market. How exactly he expected renting to work when owning a rental property in addition to a house you live in was illegal wasn't clear.
You put stuff in someone else's name and then rent it out anyways.
My programmer friend wasn't advocating for a law with the intention that everyone would break it. He genuinely thought that 'one house per person' was a good policy.
I think it's a good policy. Shelter is not like other goods - you can literally only use one house at a time, and you must have one house as a roof over your head. So you enforce no superfluous houses per person, and if you want to move, you sell your house and buy another house. Obviously you need a few other bits to make it work: hotels for people who need to be somewhere temporarily, sublets for people who can't afford a full house. But freeing up the majority of the supply and making the market much more fluid should do a lot of good work.
So if supply - demand curves are generally accurate, you want to decrease price but limiting supply, and think price will come down?
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I mean, you've essentially made full-property rentals illegal. So if you have a family and want to move city, but don't want to buy, tough. If you are young and starting out but want your own place, tough. And it doesn't make housing any cheaper or more abundant, it just makes it less convenient for everyone. There's a reason that even the most insane socialist hell-holes haven't pursued this policy, because it's the sloppiest of slopulism.
Your reply doesn't seem to deal in any way with the consequences of making housing abundant. The picture you are painting is just 'like now, but you aren't allowed to rent any more', and you don't seem to be engaging in any way with the massive systemic changes that would likely result in effectively 2Xing the amount of housing in the country and vastly increasing the buy/sell frequency of houses.
(Only 60% of housing in the UK is owner-occupier, and if we assume at least another 5% of that is second-homes, that's 2X the housing stock.)
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Ok, but what do people who can't afford a down payment but want to live in a house do? Someone has to own a house in order to rent it out.
Subletting seems ok. The idea is to prevent massing property empires, as e.g. the Swiss do by requiring that every building be partially occupied by a Swiss person. But if you zoom out I think this question becomes pretty similar to the question of what to do if you can't afford rent: you do something with your life so you can afford rent, like move, or you're homeless.
Obviously the paradigm assumes that if you free up the 40% of UK homes that are not currently owner-occupier then it produces a big, big drop in price. If not, you've failed and should put the previous paradigm back in.
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I think something like this happened in late Republican Rome.
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No one else will buy it because the merchant has patent from the king to only serve this area.
Modern businesses excel at creating environments where they need not compete. Regulations, vertical integrations, captive customers, licensing, cartels, centralization, credentialism - businesses love them. They hate the free and efficient market with a passion. Anything that raises the barriers of entry - they approve.
One of the great paradoxes of political economy is that the free market is the creation of the State, and must be carefully stewarded by the State if it is to survive. In fact, after law and public order, it's probably the paramount criterion of good governance in the modern age. How free are your markets = how good is your State.
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Agreed. Economics is as counterintuitive as quantum mechanics or general relativity. Except, of course, that most people have no reason to go around thinking about modern physics, but everyone must interact with the market.
Try explaining to people that wages are the price of work, and just as the price of meat must go up or down depending on whether there is shortage or a surplus of cattle, salaries should also go up or down depending on how the labor market is doing, and they will look at you like you are the villain of a fantasy novel. Hence, nominal rigidity, and the necessity of inflation.
This would go about as well as forcing everyone to learn algebra does now. The course would be watered down until the average student could memorize enough answers to get a C without understanding the concepts, then immediately forget everything after graduation.
Maybe if you made it a general education requirement for college students, that would actually do something... although even they often fail to absorb the concepts.
Salaries that don't go down fall under Chesterton's fence, and you should make a better attempt to understand why people want them before deciding that we should get rid of them.
Actual human beings need to do long term planning, if only for things like "I'll know that if I keep this job I'll still be able to survive next year". Predictability is important, and salaries that don't go down are a lot more valuable than salaries that do, over and above the loss in money from the salary going down.
(Note that a common libertarian answer, "well, they can take insurance against their salary going down", doesn't work because the argument is that this desire should be eliminated from the market, not just satisfied in some way other than through salary. After all, an employer who won't lower salaries is already providing implicit insurance.)
And we do have salaries that go up and down. They are limited to either 1) low-end jobs where the effective salary varies because of tips, but the jobs are undesirable in general, such as odd working hours, bad conditions, and low pay; or 2) high end jobs where the salary doesn't matter, i.e. executives getting bonuses.
Also, notice that your reasoning leads to "it's irrational to rent an apartment for a year under a lease that has a constant monthly rent, rather than letting the landlord raise and lower the rent."
Lots of midrange jobs have pay that effectively goes up or down. It takes many forms, the most common is a bonus, but also fixed period equity grants, incentives based on company performance, and taxable fringe benefits. Most big companies have a big chunk of comp in these areas over the base pay.
Equity grants work especially well because they automagically go down if the company is doing bad, but the company can always top them up. And if the company wants to cut pay even more than the drop in stonk price, they can decline refreshers.
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If the government is doing its job, the salaries will go down anyway, in real terms if not in nominal terms. That's why a small amount of predictable inflation is considered good for an economy; because it lets wages adjust without ever having to go down in nominal terms; you just grow some of them slower than others!
At that point, whether the job will still let you survive next year or not depends on how much your salary went up (if at all) compared to the price of other things; it is very much not guaranteed. Which is exactly the same as if the nominal wages had been allowed to go up or down without inflation; the mechanism is just hidden as a concession to human nature.
The alternative is that salaries never go down in real terms, which is actually really bad when you think about it? Solve for the equilibrium.
People object to inflation like they do to salaries going down, for similar reasons.
They have a lot less power to stop inflation. (yeah, they can vote for the other guy. It generally doesn't work, and when it does they notice the prices are still high and punish the guy they voted in for that by bringing the previous bunch back).
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I'm not sure to what equilibrium you are referring; can you elaborate?
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Wage stickiness is a complication, but salaries still do go up and down. Instead of individual salaries going down, expensive individuals get laid off and/or juniors are hired at lower rates than previously. Though the general "solution" to wage stickiness has been inflation, and that's been around long enough to pass the fence.
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