My Five Seconds of Fame

I can hang up the sneakers: I have been mentioned briefly as the instigator of this podcast on prices, shortages, and the minimum wage. My original question was about the shortages that are always present at this time of year in flu vaccines, and the relationship between those shortages and a price cap. You have to allocate scarce resources somehow, so how do you do it. Russ Roberts and Mike Munger argue in this podcast that we should let the price allocate the resource, and I agree with them, though you sound like a jerk for saying so. A price is a signal, and if you mess with the signal then you mess with the supply. If you cap a price, basic economics says that you will create a shortage – because who wants to supply something that costs more to supply than they can charge for supplying it? The minimum wage is an example in the opposite direction – you put a price floor on something, and you create a surplus – in this case, a surplus of labor, i.e., high unemployment (among teenagers and minorities predominantly). Enjoy the podcast, and if you like it then search on all the Econtalks with Mike Munger – he’s my favorite guest.

The Farmer

One response to this post.

  1. Posted by Mike Munger on October 26, 2009 at 11:07 am

    Thanks for the suggestion….


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