Comment on Awful Austrians

Tue, 14 Apr 2009 02:44:55 GMT

But if people can be milked in the very short run (the Allais Paradox is of course not the only example)

But they weren't milked in the short run. They weren't milked at all! From their perspective, they got two free lottery tickets. Doesn't sound like a milking to me. They never go through the hypothetical "implication" of the Allais Paradox, that they would start to trade opportunities intransitively, because they never have a chance to. A scientist just throws two choices at them, and concludes that they would make some other stupid choices that, it turns out, they never do.

I disagree that a producer who produces at a ceiling rate rations based on who gets there first. The producer could increase supply in response to the price control. The only thing limiting him from doing so is the size of his bank account.

Yes, and that's exactly the Austrians' point! If that is what turns out to happen, then the goods are being rationed by a) the size of producer X's bank account, plus b) who is among the first n people to reach producer X before he exhausts the limits of his inputs. And that is -- wait for it -- non-price rationing. That is, it's not the price of that good that ultimately "rations" who gets it, since there will be people willing to pay the ceiling rate who won't get to buy at that rate.

So again, I don't see how these two examples substantiate your case -- they're counterexamples.

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