When prices are capped, it creates a supply and demand imbalance, the demand is higher than supply can keep up with and so the thing with the capped price experiences shortages. People want (at the capped price) the thing and can’t get it. This usually results in a black market for the item, where scalpers buy it up at the artificially reduced price and sell it for a profit at close to or above what the market rate would be.
For a good example of this look at the price controlled housing market in Sweden, people wait years for an apartment and some people rent them illegally when they get them.
Supply and demand have basically no weight in the housing market, lots of capitalist countries have more empty homes than they have homeless people. Once landlords and mortgage banks form a cartel, it becomes only about fleecing the working class that can’t live healthy lives without a roof.
What you describe there is actually a good example of escalation, where a good reform has some negative effects simply because real estate bourgeois types still want to keep profits. If people using the capped price to rent illegally is a systemic issue, then the next step is to curb ownership of multiple homes. If working with reform, every reform should usually be the stepping stone for the next one, and the blame should not fall on the reform itself if the ones causing issues are the same capitalists who made it necessary in the first place.
This doesn’t seem like an unsolvable problem, so I don’t understand why someone would conclude that price caps “never” work just because they can lead to some problems.
I’m not “concluding”, I’m just answering OPs question. He asked if price caps have a place in capitalism I don’t understand why you guys have to be so adversarial all the time.
How is that not a conclusion? Just because capitalism is about having free markets doesn’t mean that price caps have no place in it. To me, it’s the same as saying that regulations have no place in capitalism.
Never.
When prices are capped, it creates a supply and demand imbalance, the demand is higher than supply can keep up with and so the thing with the capped price experiences shortages. People want (at the capped price) the thing and can’t get it. This usually results in a black market for the item, where scalpers buy it up at the artificially reduced price and sell it for a profit at close to or above what the market rate would be.
For a good example of this look at the price controlled housing market in Sweden, people wait years for an apartment and some people rent them illegally when they get them.
Supply and demand have basically no weight in the housing market, lots of capitalist countries have more empty homes than they have homeless people. Once landlords and mortgage banks form a cartel, it becomes only about fleecing the working class that can’t live healthy lives without a roof.
What you describe there is actually a good example of escalation, where a good reform has some negative effects simply because real estate bourgeois types still want to keep profits. If people using the capped price to rent illegally is a systemic issue, then the next step is to curb ownership of multiple homes. If working with reform, every reform should usually be the stepping stone for the next one, and the blame should not fall on the reform itself if the ones causing issues are the same capitalists who made it necessary in the first place.
Having to wait some time to buy an apt seems like a better choice than being priced out for a much longer period (or forever)
I think they’re saying the problem is that sub-landlords get hold of the properties through the scheme.
This doesn’t seem like an unsolvable problem, so I don’t understand why someone would conclude that price caps “never” work just because they can lead to some problems.
Possibly hyperbole. If it’s under any kind of capitalism, it is doomed to fail.
I’m not “concluding”, I’m just answering OPs question. He asked if price caps have a place in capitalism I don’t understand why you guys have to be so adversarial all the time.
How is that not a conclusion? Just because capitalism is about having free markets doesn’t mean that price caps have no place in it. To me, it’s the same as saying that regulations have no place in capitalism.
I also don’t see how I was being adversarial.