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Points of Agreement about Say’s Law

I’m grateful to LK for writing his blog, and for the poster at Mises.org who brought it to my attention, for it made me think again about the whole thing.

Let’s start with a few areas where I hope we are all in agreement, from Keynes to von Mises, from LK to Smiling Dave.

There are certainly cases where there is a glut of items on the market in which the producers of the glut should not be bailed out or helped in way. In other words, there are cases of lack of demand which deserve to stay that way.

One is when the producer is making dangerous things. If the Acme Toxic Waste Company is trying to sell toxic waste to the general public, but finds no buyers, I think we can all agree that we have a case of lack of demand that we should just turn our backs on. We do not want to encourage the production of more toxic waste. The Acme Company should be left alone to go out of business.

Another is if the producer has made more of his product than people will ever want even in the best of times. If Huggies makes some fantasic amount of diapers, like a million, literally, for every person who has ever lived and will live in the next thousand years, I think we can all agree that the last thing they need is some kind of govt bailout or money printing or higher taxes just to help them sell all those diapers. Nor should the govt buy the diapers and save them that way. Huggies is run by incompetents, and deserves to die.

Another is if the company insists on selling at too high a price. If the Terrific Toothpick Company sells its toothpicks at a million dollars per pick, either because they are made of some rare wood they imported at great expense from a distant galaxy which decomposes after being in a mouth for a few seconds, or because they are made out of simple wood but that’s what they feel like charging, I think we can all agree that the correct response to their pleas is “You’re on your own, guys.”

There are other variations on this theme, all of them being that one company or industry made a wrong decision or ran into bad luck. When Ford invented the motor car, the horse and buggy industry went into a recession from which it never recovered. I think we all agree there is nothing to be done for them.

I imagine Vote for Anthony Weiner T-shirts will not have as brisk sales today as before his scandal broke, but that’s the way the weiner roasts. All we should do is shrug our shoulders.

If Lady Gaga or Vampires fall out of fashion due to the inconstancy of the public, and some people from Lady Gaga on down to the meat dress industry lose money as a result, too bad. Nothing should be done, we all agree [I hope].

Neither Say nor Keynes nor LK nor I am talking about when there is a clear reason some manufacturer is suffering. The discussion we are having centers on cases where two things are happening:
1. The manufacturers of all or most industries are making reasonable amounts of product and selling at reasonable prices.
2. For some mysterious reason, the shelves are all full. Nobody is buying.

While we absorb this, let’s take a break.

P. S. My next post talks a bit more about this.

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2 Comments

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