The easy of a violation of price controls
1. Zhang Wuchang of the most important papers
Whenever the price by human intervention, other than price will be competitive, we call this a shortage or surplus. But what will lead to shortages and surpluses those types of competition?
Chinese economist Zhang Wuchang answered this question in "a price-control Theory". He first wants what price controls. Price controls and taxation are not the same. If an apartment rental price is 100 yuan, from the government to impose a $ 40 tax, the government became a principal tenant, the rent that is 60% owned by the landlord, 40% owned by the principal tenant - government. This is called tax.
But price controls are not taxed. The Government do not want money. The Government just say, $ 100 rent this house is too high, you need to add a limit, the rent can not be more than 60 yuan, so the landlord will take less 40. It took less $ 40, the government has not been.
At this time, Steven Cheung in its paper presents two propositions.
2. The price controls inevitably lead to dissipation value
A rental price of $ 100 is obviously a house, according to 60 yuan have to rent out, it will finally fall to the hands of those who value the use of only 60. The house finally is only worth $ 60, $ 40 and that value should have been implemented on a white dissipated.
As long as valuable control, the landlord will not use the house to use the highest value on the value of the house will be dissipated. In short, whenever the resources are not used wisely, it is not so valuable.
3. The person is the pursuit of minimizing the loss of animals
As long as price controls, it will have dissipated resource value. But people have countermeasures, people do not want to be looking at 40 yuan spent in vain away. When people are forced to compete beyond price, they will choose that way to maximize the competitive recover losses.
In these ways, allow assets to fall back on a higher valuation of those succeed, or change the contract structure so as to reduce transaction costs and unnecessary loss of competition, either a valid combination of these two approaches. In any case, it is hoped will be worth the price control caused by dissipation to a minimum. Maximize profits and minimize losses, human nature also has two measurements.
4. How people cope with price controls
According to this idea, we can speculate about, the landlord under rent control, there will be what kind of countermeasures?
First, he will first pamper your own preferences, such as selecting tenants. In the past, the landlord mercenary, who is out of money, he put the rent to anyone. Now, anyway, price controls, and anyway, it does not receive the 40 yuan. Then he can pamper their preferences, real-discrimination: There are renting children, dogs do not rent, cats do not rent. Then the first countermeasure.
Second, the landlord can use bundling approach. The landlord of the tenant that the house because of government control, received only 60 yuan now, but the way you ask, you have to key? The key to the value of 40 yuan, then the so-called "golden key."
Third, in the case of real-time price controls, there may be some of the boss of the factory, the house rented out to their employees, rent a house does not violate the government's control, only 60 yuan, 40 yuan but the other that the boss can deducted from the employee's wages. Speaking sense of the word: employees can enjoy low rent dormitories, low pay is understandable. By this way, the boss put the loss of 40 yuan to save back.
In fact, tenants and ultimately pay the price. To please the landlord, is a cost; to please those intermediaries, is also a cost, after all, let us find an intermediary to the original market value of $ 100, now only $ 60 per house is not easy.
The end result is that tenants pay an intermediary to give "gold shoes." That is, we are looking for an apartment for intermediary, too hard, gave the shoes worn, give us another 40 yuan to buy shoes with intermediaries. The last tenant to pay all the price, in fact, close to the 100 yuan.
Although these practices violate the government's regulatory policy, but in fact still a good thing. Because they are able to make the house as much as possible back to those higher-value uses the hands, but the competition is more circuitous way, and not directly pay less straightforward.
There is another way to circumvent rent control, landlord is changing the use of the house.
Not difficult to see, month strict price controls, the greater the value of dissipation, people find ways to circumvent the enthusiasm of greater government regulation; and greater government containment efforts, the more people detour countermeasures adopted, which wasted the greater the cost of the competition. From this perspective, under price controls, all kinds of illegal activities and the order of their appearance, are also understandable.
Two Spring Festival train ticket price is not high enough
We say that economics is not difficult, because its principle is very simple; difficult economics is difficult in the use of: a difficulty in not forget, anytime, anywhere to use it; difficulty in objectively assess around things to their own interests and emotions from stripped out. Life, we found that many people do not talk about problems in economic theory, and once their own interests, the whole idea will change. We see that these people do not develop a stable quality of thinking in economics.
Touchstone 1. Economics Mind
During the Spring Festival "ticket price increases should not be," this issue is a good test of whether people establish a stable economic thinking quality touchstone.
We all know that China's reform and opening up 40 years, urbanization highly developed, every Spring Festival period, a large number of people out of work necessary to return home, then it will produce the peak of the Spring Festival.
Studied economics people are aware, the peak period is necessary to use means to adjust the price, the price law can effectively alleviate the problem of peak periods. If we are just so abstract that in economics class, pointing to the demand curve so that no one would disagree. But once we put it into a specific commodity - train tickets during the Spring Festival, people's emotions suddenly surged up, they will move out of all the reasons not to say Spring Festival train ticket prices.
2. does not recognize the train is a commodity belonging to the ostrich mentality
The first reason people oppose the Spring Festival ticket prices are: home for the holiday is not a commodity. It ostrich mentality is often the case, when discussing the price, say those goods are of very special touches nerve, not a commodity, the price rule does not work. When talking about water, said water is not a commodity; the time to talk about tuition, education is not a commodity; talk about drugs when the health is not a commodity; the time to talk about travel, home for the holiday is not a commodity. However, with this kind of mentality, one can only unrealistic, but can not address the problem and seeking a solution. After all, the economic laws is not the people's will transfer.
Obviously, home for the holiday is not only a commodity. And it can be expensive commodity. Media Renderer says no reason to go home, but, back home in particular when you need a reason. In fact, the Spring Festival syndrome has occurred continuously for many years, why it has not been fundamentally resolved, precisely because so many people want to go home at the same time, and then once a year, it becomes Russia luxury needs.
3. Spring Festival is not just to be home for the holiday
The second objection is that, just need to go home New Year. Meaning that no matter how high the price, people still want to go home New Year, thus increasing the price of the railway system will only make more money, but can not reduce the desire of people home for the holiday.
In fact, the Spring Festival is not just to be home for the holiday. Chinese people in the past to leave home, they rarely go back, not to have to go back to New Year's. The reason why we now have to go home New Year's, mainly because transport costs declined. Outstanding students studying abroad for many years did not go home, in fact, the same can the New Year.
4. Scalpers can reduce the deadweight loss to society
In fact, after we have mastered the price theory can understand the reason why there will be scalpers, because the ticket price is not high enough, people have to compete beyond price, which is the line up. Queuing process, it will bring unnecessary losses. And people will seek to minimize losses. People in order to save their precious time, will please some time relatively low cost of people to line up, so the presence of scalpers can reduce the deadweight loss arising because the queue. Scalpers reduce the deadweight loss for society to make a contribution of.
5. Spring Festival transport capacity can not do without difficulty
There is another point of view, the problem is attributed to insufficient capacity of the railway sector. It always views can not withstand scrutiny. We want to think about it, every Spring Festival period, our country has experienced two large-scale migration, hundreds of millions of people in a short period of time, from one place to another, and from another place quickly back to the original local.
If we can put rail transport capacity, to improve during the spring have no difficulty, then the remaining 11 months, the railway transport capacity not to idle yet? This time how much of the waste, losses and who bear it?
6. reasons not against monopoly commodity market pricing
Others believe that the reason why your ticket, why not buy, because of the railway monopoly. They went on to say that since the railway monopoly, it should implement the regulation on train tickets, train tickets so that price down.
In fact, a commodity, whether it is competitive or monopoly enterprises, the price should be determined by the market. Otherwise, there will be a shortage or surplus previously mentioned phenomenon, resulting in unnecessary losses.
For monopoly - mainly those monopolies formed by administrative protection, reasonable corrective measures, not their product price controls, but stop administrative protection, open channel into the market, competitors are encouraged to get into the . Otherwise, just do price controls, we not only can not eliminate administrative monopoly, but also cause unnecessary loss of product distribution process. Administrative monopoly is wrong, price control is wrong, wrong and wrong, and not become right.
7. airline ticket pricing should refer to the practice of
There is a view that poor people can not afford to buy a train ticket. A person working a year in the city, can not afford this money? If he can not afford to pay, why should we compete with others in the peak time? During the spring, ticket pricing can refer to the practice of airlines, or approach is very flexible fare fluctuations. The most expensive ticket is the twelfth lunar month time value XXIX cheapest time New Year's Day, two days.
8. The official limit ticket price induced corruption
Since the New Year, people's needs have changed, the price should fluctuate with, but was denied a commodity when home for the holiday, then went to the train fare restrictions. After the train fare is suppressed, one would have to compete means other than price, that is, to find a queue or scalpers. The Government further law enforcement, the scalpers seized and turned over to public security organs, so that people would have to expand more circuitous competition. In fact, a way to bribe is for those who have the privilege can grant train tickets. Who have reported a Commissioner Railway Bureau, long-term access through the story of black income is the difference between the fare.
9 three countermeasures
"Spring Festival train ticket price is not high enough," the problem, in fact, there are three basic measures:
First, how much is the full ticket price? Referring to spring full count returned to normal order.
Second, how to price it reasonable? Daily increments years ago, after decreasing day by day in order to encourage low-cost time people leave early stay late.
Third, what are the consequences of price increases? Part of the lowest bid (but not necessarily the poorest) who can no longer make the trip the Spring Festival travel peak period. In addition, other passengers can still go home, but they do not pass line up to fight the ticket, but by labor income, purchase the full price of a train ticket home.
Spring Festival train ticket, is the era of the planned economy left by the tail, is accustomed to a market economy and young people to understand sample past lifestyle. Imagine, if other than the "home New Year" more basic necessities - water, electricity, hotels, food and medicine - as both implement and train ticket price controls, our life will be back to what extent. Of course, today with the increasing popularity of high-speed rail and motor car, their fares from the outset, given high enough, the problem of insufficient ticket prices during the Spring Festival, may gradually disappear.
Three lifting of price controls - decisive and calm moderation
China implemented a planned economy in the past, people compete not by commodity prices, mainly ticket. Not only was there food stamps, as well as cloth votes, sugar ticket, bike ticket, ticket bulb. So a goal of the reform is to cancel all tickets, only one ticket, and that is money.
But the reforms did not go well. In 1988 for the first time "Price checkpoints", the Government decided to price liberalization, news came out, people began to grab blankets, grab the pot, and even grab the match, it was bought 500 boxes of matches at home, and later there was a fire. Results of the first price break through the barrier fails, the entire price liberalization action stopped. It took many years, slowly release the price again.
On this issue, Zhou Qi Ren teacher in his "logic of reform" this book, had this comment: "total privatization, quite up very quickly, but this claim underestimate the cost of institutional change to pay, as long as outdated ideas and vested interests get entangled in a considerable number of people, any radical and fundamental reform in practice are unable to move. "
When Chou publish this book, I attended his press conference. There was a round-table discussion, I asked Chou: China's price controls to let go, you feel the need to slow down, but you see the German release price controls but overnight thing, Erhard went to the radio announced loudly, Germany lifted its price controls. People are courageous, we are patient, between courage and patience, how should draw the line?
Chou asked me: when Germany lifted price controls overnight, Allies not? I said. He said: Allied easy to handle, the Allies, Germany will not mess up the Allied stabilizing factor is very important. And China's reform is reform ourselves, without a stable social order, reform will be in danger.
Chou's remarks gave me great inspiration, not when price controls, which is easy for us to understand, but the lifting of price controls, the factors we need to consider much more complex.
Of course, in real life there is another possibility, that is, people do not want reform, always take social stability as an excuse. Anyway, between the courage and patience to be bold and draw the line between calm and reasonable it is not easy.
Weigh four-kind subsidies and price subsidies
When talking about competition in the way we said earlier, compared with other means of competition price competition, it is a competitive optimum efficiency, bringing the deadweight loss is minimal. But when people ask, if we are to allocate based on the price that the poor how to do? For this problem, we have already slightly replied that if the rich can not enjoy a certain priority, and that the price mechanism can not work. This lesson, we will focus on solutions for the poor.
1. Zander came to China
Fair famous Harvard professor Zander came to China, he remembered where scalpers: money can buy scalped tickets, the doctor may not line up, the spring can not suffer; money can make pregnant women bounce back, so that polluting enterprises sewage. In this era of money, we should give money to victory in the community do? What are the ethical boundaries of the market? What money can not buy?
Then Sandel question raised, ringing! But I did not agree to the views of Professor Sandel.
2. Enjoy Sandel's not to spend money
I have two questions: first, Professor Sandel own personal enjoyment, mainly by fair queuing to get in, or use the money to buy?
Professor Sandel came to China to promote their books, travel is very dense, the first day of Beijing, Shanghai the next day, the third day of Wuhan. So dense is how to arrange the trip it? To test aircraft, to test the hotel. But planes and hotels compete for so many people, if the line up, he is not on the row. He relies on money to lower demand people off.
3. What Sandel solution is
The second question I asked was: a strategy Professor Sandel, is continuously ask questions, but do not give an answer. When he did not answer a question that everyone must face the fact, that is if no money to decide, people compete a scarce resource, should what?
Do not have money, you can only compete through other way, and we know that bigger problems caused by other competitive basis.
4. Help the poor: things subsidies or monetary subsidies
In fact, already form a consensus among economists, both left-wing economist, or right-wing economists, there is a consensus among them - consensus on how to help the poor. They say: The best way to help the poor, is a monetary form of subsidies to the poor, and let the market play its own proper function, rather than directly to intervene in commodity prices.
We give the poor a bottle of milk, he can only get a bottle of milk; milk coupons to the poor, it will be able to choose their favorite brands from different brands of milk summary; but if you give money to the poor, then he can not only choose milk , you can also choose eggs, vegetables, meat, even choose not to food, but to a better living environment, or better educational conditions.
Most economists always believed that money to the poor than to the poor food, the greater their help.
It is noteworthy that we found in all societies, governments often do not give money to the poor, but to give them kind; or do not give in kind, only for those in kind, such as housing, bread, milk and so on, real-time price controls.
In such a way to help the poor, for many reasons. First, if you give money to the poor, the government must first own money. The government's own ability to find money not only to collect taxes or print money, but it is not easy to do two things. The price controls, the benefits that do not have their own money, just under one command on it, even a good thing to do. Such little things matter, officials more willing to do.
Second, the government paternalism. After they did not believe the poor, fear the money to the poor, the poor will be squandering. So they gave the poor in kind. Government is aware of the poor lack bread, lack of milk, lack of education, put in kind to the poor, to think as long as the kind, will be able to really help to them. As for the deep-seated problems of the poor and the lack of government officials it is difficult to understand the depth and relief.
Third, the benefits in kind can be self-dealing. Implementation of in-kind subsidies, officials can give priority to those merchants have a relationship with their in-kind to the poor. For example milk to the poor, who will provide milk it? Of course good relations with official milk supplier, they can get government orders.
5. Bus subsidies: give the money to the company or the public
Subsidies for the poor, in fact, there are two completely different ways: First, those subsidies to providers of goods; but in the way of money, direct subsidies to those beneficiaries. Up former supplier, which make up the demand side. Two approaches, the effect is very different.
Such as a city, to subsidize public transportation system, there are two ways: First, the money directly to every citizen, and second, give the money to the bus system. In both of these different forms of subsidies, the behavior of the public transport system will be very different. If the money directly from the government, the public transportation system, it was only to please a government, and its focus on public relations as long as the government, so the government believes it can. As to whether the passenger is able to receive quality service, it is not within the scope of its interest in. Many big cities, over time, the position of the people living in has changed greatly. Bus lines should vary with the position of living, a new plan, but we found a lot of big cities, bus routes have not changed over the years.
If, in turn, the money directly to the passenger, the bus system that will be converted from curry favor with the government to please every passenger, their behavior will change significantly, re-planning bus routes enthusiasm will be greatly increased.
6. Friedman's school voucher recommendations
Subsidies for education, but also a similar thing. Government to subsidize education in two ways: First, give the money to the parents, the second is the money to educational institutions, to the school.
Government is usually the latter, the money directly to the school. At this school to please the object is the education authorities. And how the quality of education, students and parents are satisfied with, it is difficult to say.
Economist Milton Friedman advocated in the United States year-round education voucher system, in essence, subsidized school changed from subsidies parents and students. His suggestion is that the government should grant school vouchers to parents, so that parents freedom of school choice, those that stand out from the competition, due to the better quality of education to attract more students to the school, parents will be relying on vouchers to pay for education government funding for education exchange. This conversion subsidies, in fact, gave parents and students greater autonomy, let the market education system.
Of course, Friedman's proposal, to this day have not been achieved. Because American schools have strong unions, they suggested that the market has been stubborn resistance.
After weighing benefits in kind and monetary subsidies, we find that to really achieve the purpose of helping the poor, the subsidy money is a better choice, not only a waste of smaller, more efficient, and returned to the poor more choices.