The fix is to produce more stuff. It's that simple. It might not be easy though. It would require us to focus on production, remove barriers, streamline regulations, encourage and actively celebrate production.
It seems these days we're ambivalent toward the production of stuff, or even antagonistic to it in many cases. So we have less stuff. Combine this with giving people more money and you get inflation.
> It seems these days we're ambivalent toward the production of stuff, or even antagonistic to it in many cases.
I cannot emphasize this enough. Wealthy Western nations have been wealthy for so long that people know how to cut up the pie in different sizes more so than they know how to bake more.
The negative moralizing of other people existing is genuinely out of control in California. From housing, to transportation, to climate change, to conservation, the major cities just causally like to pretend that if we can may other people go away, it'll solve our problems. It's thrown around causally like it's the state of nature, or an actual workable solution to anything.
I think the basis for this feeling is that people keep moving here. We feel it when traffic gets worse, etc... Not really sure IF there's a real solution. The more people there are, the worse things get in small spaces. We have an entire country that is mostly empty.
> I think the basis for this feeling is that people keep moving here. We feel it when traffic gets worse
A city in Japan would build new dense neighborhoods and a new commuter rail line to serve them. A city in California would refuse to build new homes nearby, so people are forced to live in a far-away suburb and commute 2 hours by car. Then Californians complain about increasing traffic congestion.
Construction zones in Japan have barriers erected around them with digital noise meters (in decibels). Painted next to the meters are the legal limits, and a phone number to call the authorities if they're exceeded. Try that in the U.S.!
Japan actually has about 3.25× California’s population. OTOH, California has a lot more land area that is, say, desert than Japan does, so there’s that (it also has a lot more that is controlled by a separate sovereign; 47.7% of California is federal land.)
The federally-owned land in California is mostly deserts and mountains.
Besides, even if we're generous and say that half of California is too mountainous to live in and another quarter is too desert-y to live in, leaving only a quarter of the state's area suitable for habitation, that leaves roughly 40 million people living in roughly 40,000 square miles, or about a thousand heads per square mile. That's comparable to Israel or Belgium in terms of population density, and certainly not as though people are packing into Kowloon.
Yeah, but you can't move to the empty space either. People will complain that's a desert and nobody should be allowed to live there cuz water. Or that its uninhabitable because the current population is distasteful to coastal sensibilities. Or it's too hot and humid or too cold and windy. Or whatever.
All you did is restate the same dichotomy. Complex systems in the real-world are almost always too complex for such a simplistic take.
For example, just enabling additional supply can create second order effects in terms of perverse incentives to overproduce creating all sorts of knock-on effects. We can stimulate the supply of corn and end up with distorted food markets and high-fructose corn syrup as a near-ubiquitous food additive. All I’m saying is we need to be mindful of these systemic effects and creating a false dichotomy tends to turn a blind eye towards them.
It’s interesting (and telling) that is what you inferred from that. You can replace corn with a non-subsidized commodity/service and the principle still holds.
Any mechanism with the explicit intent to increase supply is tantamount to a subsidy. Tax breaks are an informal “subsidy” to spur business, with a cost incurred by other societal goals. Decreasing environmental regulations are an informal subsidy to increase energy production with externalities borne by others. Etc etc. The broader point is that defining the utility function that captures these societal costs/benefits is complex and your false dichotomy misses all that nuance.
You’re an idiot, we should tax the wealthy, take half the money of people with £1bn+ (including the King) and pay off the national debt or force them to invest it in small businesses.
We should not equate rent seeking and genuine innovation as the same things.
There's no incentive to produce more stuff if you can just price gouge your current supply for equal or more profit with less manufacturing investment. Especially for necessities like electronics or food where your entire supply will be sold regardless.
You might say there's then an incentive to undercut, sure, but if you undercut too much you'll be left with no inventory as the rest of the manufacturers decide on fixed prices as a cartel (which has now become the norm in most industries). The trust busting has been nowhere to be seen in the last decades and the results are in.
Why not? Surely if you can get away with price gouging, then you would want to price gouge on more stuff, right? Of course, there are diminishing returns here, because as you produce more stuff, you might be able to gouge less and less. But certainly there must be some max-profit equilibrium higher than the current price, if you are already able to gouge.
Price gouging usually leads to producing more stuff, if it goes on long enough and you are allowed to produce more.
Healthcare is an example where this doesn't work, because you aren't allowed to produce more stuff. You can gouge all you want, but can't provide any additional quantity of services. (See: Certificate of Need laws in the US)
In many countries there is a tendency in healthcare to perform a lot of medically unnecessary or even harmful surgeries (back, hips,...) to make a larger profit. The optimal treatment would be cheaper and less profitable, so it is not chosen.
I think there are other factors that contribute to the uniqueness of healthcare. In the US, for example, it seems to be the one area where you aren't told the price before receiving the product/service. This obviously makes it easier to jack up the prices. Also, the urgent need often makes people insensitive to the price even if they knew it.
Hospitals kill people all the time. Especially elderly. Many treatments are invasive and cause complications. They won't catch the complication until it's too late, or now you have two compounding medical problems, and many elderly can't survive that. The medical bias is the sicker you are, the stronger intervention / medicine you need.
Supermarkets in my area have a near monopoly and don’t meaningfully compete anymore - they can charge whatever people will pay. It’s all owned by Kroger and the nearest non Kroger supermarket is a dozen miles away.
Grocery chains are notoriously low-margin businesses though. Maybe a few places are able to gouge, but as a whole, they cannot and still be low-margin as an industry.
If they doubled the price consistently, they would no longer be a low margin business. The fact that they are low margin is evidence that they are not gouging.
I think there's also a misperception of the public on a lot of items. Many of the dramatic price increases we see are deferred inflation from not raising prices (and subsequently eating the added supplier cost). We generally don't see steady 2-5% price increases every year, but rather large step increases every few years. Many of those step increases are catching up for the previous years where there was no increase.
FWIW, I'm not saying there isn't opportunism going on, but it's much less likely in low-margin commodity businesses.
How much are you willing to pay for the basic necessities of life, life land, shelter, food, water?
If the providers of those necessities possess a monopoly, either natural or through regulatory capture, humans will pay whatever they have to get those necessities. It is important for social prosperity to prevent extracting excess profits through monopolisation, either by destroying the monopoly or by taxing it and reducing other taxes on the individuals.
Commodities need to be produced as well. The more we produce, the more we will have. Giving people more money does not produce any additional bread or tomatoes.
But we didn’t give people more money, there was the largest in history redistribution of wealth from the poor to the rich. I really don’t believe supply is 100% the problem here and there’s just no need for 20% hikes on some goods. The compound interest on this is insane 1 -> 1.20 -> 1.44 -> 1.728 —> 2.0736 so more than doubling in cost every 5 years.
People seem to think inflation is temporary but it seems much more stubborn and central banks are very scared of it, hence rate rises when the banks might collapse.
We have to be careful about how we define our utility function. I'd argue that it's not as simple as just "producing more stuff" but rather being able to focus on producing "more of the right stuff." All production increase is not the same, unless your goal is just "more GDP." Rather, I think what a lot of this discussion alludes to is that more blind production does not necessarily lead to better quality of life (what we really care about in general).
It seems these days we're ambivalent toward the production of stuff, or even antagonistic to it in many cases. So we have less stuff. Combine this with giving people more money and you get inflation.