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Comment by dmix | Hacker News Reader

The same thing happened in Venezuela in the early 2000s when they initiated price controls to make food more "affordable" for the poor. The variety of products was the first thing that dropped to only the necessities. Then even the necessities started to drop in supply:

> Further yet, price controls, expropriation of numerous farmlands and various industries, among other disputable government policies including a near-total freeze on any access to foreign currency at reasonable "official" exchange rates, have resulted in severe shortages in Venezuela and steep price rises of all common goods, including food, water, household products, spare parts, tools and medical supplies; forcing many manufacturers to either cut production or close down, with many ultimately abandoning the country as has been the case with several technological firms and most automobile makers. https://en.wikipedia.org/wiki/Economy_of_Venezuela#1999–2013

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My wife was a student in the eastern part of Germany in the early aughts, when life in pre-unification eastern Germany was still fresh in peoples’ minds. One thing that people would say is that “before the wall fell, we had plenty of money, there just was never anything to buy.”

When I hear people say “X shouldn’t be subject to the market” I want to bang my head on the desk. You can’t just decide that, e.g. food won’t be subject to market forces by, e.g., imposing price controls. If you push on the balloon on one side, it will expand on the other side.

It's basically people with good intentions volunteering themselves into poverty during the greatest time of abundance of food in human history.

Of course it comes with plenty of western/foreign capitalist sabotage conspiracies thrown in to justify why their grand economic experiment didn't work. Then it devolves into basically purposefully underfeeding your population because of a giant lingering sunk-cost fallacy and, most importantly, an ideology to defend - on which the current power structures were built on.

> Of course it comes with plenty of western/foreign capitalist sabotage conspiracies thrown in to justify why their grand economic experiment didn't work.

An economy cannot work without foreign trade, being blocked from that by a major player essentially does that.

If you look at communist countries that are small enough to be self-sufficient, it tells a different story. Take Cuba, it is blocked from trade with the US and a fair chunk of other countries, however, Cuba is self-sufficient enough that it has not only survived but it has flourished, with a ridiculously high literacy rate, and a universal public health system that puts much of the world to shame.

I have but two observations left to make.

1. If the communist system was inherently a fail-state, then the US would have to do nothing but sit back and wait until it collapses. Instead of that they try relentlessly to sabotage any form of it. They tried, for example, over 600 times to assasinate the leader of Cuba. It's a real shame because it forces the communist parties to be anti-free-press, and anti-free-speech because of the risk of foreign countries abusing that to seed a revolution (Indeed, it was admitted on record that the only reason the CIA hasn't done that in Cuba is because it lacks resources, and Cuba doesn't allow full internet access (as I understand it)).

2. It took over 800 years to establish a stable republic. That doesn't mean that it could not be done, or that the republic was an inherently broken system, but it took a number of 'failures' to make a success, and the right political and societal advancements to be made.

Cuba isn't flourishing, they're entering the first stages of food deprivation right now. They've required large state sponsorship, previously by the USSR, and more recently by Venezuela, to keep from system collapse. The average income in Cuba is still close to $20 per month.

May 2019 "Cuba launches widespread rationing in face of crisis"

https://www.apnews.com/42b62f24be9b4e0d9f764f1a3fa9647a

This near starvation problem isn't anything new. The same thing happened when Cuba's last sponsor, the USSR, went under.

1994 "Millions of Cubans facing starvation: Hunger is fuelling an exodus of desperate refugees, writes Phil Davison from Havana"

https://www.independent.co.uk/news/world/millions-of-cubans-...

You're referring to: https://en.wikipedia.org/wiki/Special_Period#Famine

From quotes like:

    Cuba's history of colonization included deforestation and overuse of its agricultural
    land. Before the crisis, Cuba used more pesticides than the U.S. Lack of fertiliser
    and agricultural machinery caused a shift towards organic farming and urban farming.
    Cuba still has food rationing for basic staples. Approximately 69% of these rationed
    basic staples (wheat, vegetable oils, rice, etc.) are imported.[18] Overall, 
    however, approximately 16% of food is imported from abroad.[18]

and

    Diaz said importing food from U.S. producers had become more complicated under
    Trump, forcing Cuba to search for products that were more expensive and difficult to
    import.

it is pretty obvious that the US allowing Cuba to trade with the rest of the world would more or less 'solve' those problems.

Who is the United States stopping from trading with Cuba?

https://en.wikipedia.org/wiki/Economic_sanctions

https://en.wikipedia.org/wiki/United_States_embargo_against_...

    As of 2018, the embargo, which limits American 
    businesses from conducting trade with Cuban interests, 
    remains in effect and is the most enduring trade embargo 
    in modern history

and

    The UN General Assembly has, since 1992, passed a 
    resolution every year condemning the ongoing impact of 
    the embargo and declaring it in violation of the Charter 
    of the United Nations and of international law. In 2014, 
    out of the 193-nation assembly, 188 countries voted for 
    the nonbinding resolution, the United States and Israel 
    voted against and the Pacific Island nations Palau,
    Marshall Islands and Micronesia abstained. Human-rights
    groups including Amnesty International, Human Rights
    Watch, and the Inter-American Commission on Human
    Rights have also been critical of the embargo.
    Critics of the embargo say that the embargo laws are too
    harsh, citing the fact that violations can result in up
    to 10 years in prison.

and

    In a 2005 interview, George P. Shultz, who served as 
    Secretary of State under Reagan, called the embargo 
    "insane". Daniel Griswold, director of the Cato
    Institute's Center for Trade Policy Studies, criticized
    the embargo in a June 2009 article:

    The embargo has been a failure by every measure. It has
    not changed the course or nature of the Cuban
    government. It has not liberated a single Cuban citizen.
    In fact, the embargo has made the Cuban people a bit
    more impoverished, without making them one bit more
    free. At the same time, it has deprived Americans of
    their freedom to travel and has cost US farmers and
    other producers billions of dollars of potential exports.

You said:

>it is pretty obvious that the US allowing Cuba to trade with the rest of the world would more or less 'solve' those problems.

As you pointed out the US embargo prevents Americans from trading with Cuba. It affects no one else. Virtually the entire world apart from the US is against the embargo. They are all free to trade with Cuba. At the margins, the US embargo hurts Cubans, but the bulk of their economic woes are self inflicted.

The Castro family seems to be doing ok.

https://www.miamiherald.com/news/nation-world/world/americas...

just because you don't agree with something shouldn't be a reason to downvote

True, but if people are posting erroneous information, you can understandably want to downvote.

what erroneous information is he providing? That communism isn't necessarily destined to fail?

That's a matter of opinion.

I don't support cuba or leninism, but I just don't see anything controversial with what the parent has said, whether you are left or right wing.

If someone is earnestly posting incorrect information, you should reply with a counter-argument, or upvote one that exists. Otherwise what you're doing is the exact opposite of being conductive to a dialogue, which is the entire point of the hacker news comment section. Sure, downvote people who are being disingenuous, or not being honest.

Also:

> Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.

So far, everyone has responded to my talking about Cuba, an example I picked off the top of my head as a simple demonstration (It's a shame that America cannot boast such scores in education and health, to be honest). The example was illustrative, something mentioned off-hand to solidify and strengthen a point. Nobody responded to the core of my argument, which was the more meatier part and harder to disagree with.

My central point, however "An economy cannot work without foreign trade, being blocked from that by a major player essentially does that" is supported by economists literally everywhere. In fact, it's one of the major reasons why a trade embargo is created in the first place, to suffocate a country and cause a regime change:

     "By far, regime change is the most frequent foreign 
     policy objective of economic sanctions, accounting for 
     80 out of the 204 observations."
     - Economic Sanctions Reconsidered (3 ed.) -- Hufbauer, Schott, Elliott, Oegg

Has anyone considered that there are some things the state does well and others that it does poorly?

Health care and education are two areas where the public sector and public control does well.

Groceries are one where it does poorly.

I wasn't aware that state healthcare and state education works well.

A few examples of state healthcare systems in Soviet Union / Russia, UK, Hong Kong or Thailand seem to show that state healthcare is a miserable failure and those who are able to get access to private healthcare will always prefer it.

Similar with schools, it appears that people strongly prefer private schools to government schools, even in places where private schools are quite ordinary, not just for the elites, and don't require expensive tuition - competing with government schools for the same kids.

> seem to show that state healthcare is a miserable failure and those who are able to get access to private healthcare will always prefer it.

The reason why the healthcare system in the UK is failing, is because of a multi-fold problem that is too numerous to describe here, but boils down to political sabotage. Two other main reasons come to my mind:

One, privatization and outsourcing has caused mismanagement that expanded healthcare delays to an untenable point. Two, to 'repair' the 'failing' NHS, a 'target' system was set up. Hospitals that fail to meet targets have money taken from them, which causes a vicious circle whereby underperforming hospitals do not have the resources to perform better.

See: https://www.independent.co.uk/life-style/health-and-families... and https://www.bmj.com/content/346/bmj.f1848.full

Also, as I understand it, the privatization of the USSR's state healthcare system made things _worse_.

    The OECD reported[28] that unfortunately, none of this has worked out as planned and the
    reforms have in many respects made the system worse. The population’s health has
    deteriorated on virtually every measure. Though this is by no means all due to the
    changes in health care structures, the reforms have proven to be woefully inadequate at
    meeting the needs of the nation. Private health care delivery has not managed to make
    many inroads and public provision of health care still predominates.

(https://en.wikipedia.org/wiki/Healthcare_in_Russia#Reform_in...)

Most top Communist Party leaders didn't really care about ideology. That was just a lie they fed to the masses. All they really defended was their own power and privilege.

Their power and privilege was based on and justified by the ideology, is what GP said.

However, it is fruitful to point out that not all markets are created equal. Even if an exchange of money takes place in return for goods and services, the market that exists is not necessarily a free market. Sometimes this is true even in the most idealized of cases.

For example, healthcare isn’t composed of one market, but several between different operators operating under different market forces and regulatory rules. As it’s too complicated to go into each, I’ll go into one that’s most apparent; the market between patients and healthcare providers (not insurance companies!).

Assuming the most idealized of cases that exist without external constraints and regulations, this market would never be a free market. Because the buyer will never be in the position to make the decision to not buy the good. Even a rational free agent would not be in a position to disagree from making a purchase. The value each sentient lifeform places on their life is for all intents and purposes infinity in the healthcare context. No sane suicidal individual or hero would sign up for a purposeless, slow and painful death. This removes the essential mechanism that free markets have to regulate themselves; the freedom to not participate.

In most markets, if a good or service is too expensive then the business selling them will go bankrupt or remain small due to a lack of buyers. This creates an incentive for a cheaper mousetrap to exist. But healthcare isn’t like that. Your choice is severely limited. At best, you can choose between providers (though for serious, and sadly incredibly routine, issues the immediacy of needing treatment trumps this) and at worst you’re unconscious and unable to make any decisions yourself. So the element of choice isn’t present making it axiomatically not a free market.

Please note that I am not going into ancillary factors like the difficulties patients face in making informed decisions, the viral component that exists for certain classes of disease (you choosing not to do X in the case of a serious enough pathogen could lead to a sick household or an epidemic. See: the return of measles), the difficulty of rationing care (Americans spend more partly because they see their doctors less by design and are discouraged from accessing preventative care), and overall incentive misalignment between doctors, pharmaceutical manufacturers, hospital staff, insurers, HMOs etc that creates runaway effects.

We treat all markets in the same way, but they aren’t all the same. The market for healthcare is different from consumer electronics and the market for plastic surgery (a procedure where I must note there is an option to say no). Reductively put, you can choose not to buy a MacBook Pro. But you can’t choose not to treat sepsis. So why does our literature usually assume that both are the same?

>>this market would never be a free market. Because the buyer will never be in the position to make the decision to not buy the good.

A free market does not mean a market where a buyer has a choice of not buying something. It only means one where the market choices of agents are not constrained by coercive intervention of other agents.

We need to buy food, but the market for food is still quite free, and consequently, very efficient.

> A free market does not mean a market where a buyer has a choice of not buying something. It only means one where the market choices of agents are not constrained by coercive intervention of other agents.

That's not how I was taught this concept. I know, Wikipedia is a bad source, but I would like to point out how widespread my specific interpetation is amongst the economics textbooks I've read;

In a free market, individuals and firms taking part in these transactions have the liberty to enter, leave and participate in the market as they so choose. Prices and quantities are allowed to adjust according to economic conditions in order to reach equilibrium and properly allocate resources.

Note, enter and leave. This means both as a producer and a consumer, without this we cannot have efficient allocation.

> We need to buy food, but the market for food is still quite free, and consequently, very efficient.

The food market is a really good counter-argument to mine, but when I was first making my observations, I found that food is a very different market that was originally constrained in similar ways but isn't. First is that it's a "market" that's nearing globalized post-scarcity (this doesn't preclude localized scarcity). We produce enough food that we can feed the global population twice over https://ourworldindata.org/food-per-person (3k+ per capita for developed nations and 2k+ for underdeveloped ones).

Humans have reached this state due to government-sponsored research and sponsored application of revolutionary new technologies.

Second, our ability to process food has also led to a surplus in stored calories. We can feed ourselves even during catastrophes (though distribution will remain a challenge).

And third, historically (as I am not certain about this particular point, but it is consistent with my reading of history), prior to the green revolution, the food market was never this free - it has always been state managed to a varying degrees. From feudal lords and chieftains to the Roman grain dole, food has been a carefully managed resources until our time.

Due to its oversupply and heterogeneity, the food market has a very different structure and dynamics that are inherent to it. But, taking my argument at face value, I would argue that it is indeed possible to exit the food market - we can grow our own food! Even a small-ish farm with good practices can feed a family for a year or more using wild seeds, natural compost and herbicides alone.

This is an interesting comment, thanks! (Writing instead of just upvoting because the comment is deep in the gray)

Thanks! I have done my best to study about this topic as much as I can :)

I decided a long time ago that if I was going to be an entrepreneur; I was going to figure out how the whole stack works. And that definitely includes economics.

I’m doing my best to learn how to see things clearly and insightfully. :)

I could be wrong about the definition of a free market, but the main one on Wikipedia seems to align with my perception of it:

>>In economics, a free market is a system in which the prices for goods and services are determined by the open market and by consumers. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority and from all forms of economic privilege, monopolies and artificial scarcities.

Note "are free from any intervention by a government or other authority" which conforms with my argument that it's a market where the market choices of agents are not constrained by the coercive intervention of other agents. Other agents being the "government or other authority" referred to, and the "authority" alluding to an agent which exercises coercive power over others.

>>Humans have reached this state due to government-sponsored research and sponsored application of revolutionary new technologies.

In the US, since the founding of the country, it has been a very market-based sector, with government's most fruitful contributions being in basic research, as opposed to market inhibiting interventions like regulations.

That would be like the government funding basic research in healthcare, and leaving everything else mostly to people's free choices in the market.

The first places in the world where famine was vanquished were ones with heavily private agricultural sectors with strong contract and private property rights, in Western Europe and North America.

>>I would argue that it is indeed possible to exit the food market - we can grow our own food! Even a small-ish farm with good practices can feed a family for a year or more using wild seeds, natural compost and herbicides alone.

Most people cannot grow enough food to feed themselves. Saying we can exit the food market because we can grow our own food is like saying we can exit the healthcare sector because we can provide our own medical products/services. We can technically, but practically the vast majority would have a much lower quality of care if they did so.

The market for food is not strictly free due to heavy subsidies on the production side and varying taxes on consumption (e.g. SF tax on sweet drinks)

The market for food is different from the market for essential (=life-saving) medicine in that foodstuffs are largely fungible. Consumers can choose from a large variety of roughly equivalent products (e.g., substituting chicken for beef, potatoes for rice, etc.), whereas a diabetic patient cannot switch to a blood pressure medicine. Markets for many common foods can be about the same size as the national population. But markets for drugs will always be a fraction, often a tiny fraction, of the population. Price is also a consideration. While the USDA estimates it is possible to feed a family of four for around $10,000/year, many new drugs cost ten times that amount (well beyond the ability of many individuals, even insured individuals, to pay.)

> We treat all markets in the same way, but they aren’t all the same.

This is completely inaccurate. The US healthcare market (much like finance, pharmaceuticals, construction, most of the largest farming industries, etc, right down to the expensive licensing required to be a hair stylist or interior designer) are some of the most heavily regulated markets in the world.

The US health insurance market has been the farthest thing from a free market for some time. Whether health insurance would benefit from total centralization is one thing (one of the few markets I personally believe in being gov controlled).

Agencies like the FAA and FDA are some of the largest and most thorough of all regulatory agencies in the world. One that other foreign governments with allegedly "big government" administrative agencies look up to as a model replicate or simply take their findings as policy instead of testing their own.

Pretending the US economy is some capitalist free-for-all is one of the biggest global misconceptions.

The rising cost of the US health care market vs the world [1] has little to do with lack of gov intervention but the result of a centuries worth of half-baked compromises between two different worldviews, often featuring the worst of both worlds.

I feel that you are responding a different comment than mine. I have not said that it is a hyper-capitalistic free-for-all. Quite the opposite, from my comment;

> healthcare isn’t composed of one market, but several between different operators operating under different market forces and regulatory rules. As it’s too complicated to go into each, I’ll go into one that’s most apparent

The market that exists between Hospitals and Suppliers is different than Health Insurance and Consumers (and businesses) which is different from Insurance and Independent Providers... There isn’t one big “healthcare” market but several interacting with one another in removed ways.

My definition of a market is,

The term market refers to a situation where buyers (consumers) and sellers (producers) interact (directly or through intermediaries) to trade goods and services. It is a situation where forces of demand and supply interact to determine prices of goods and services being exchanged. Therefore, a market includes mechanism for: determining prices and quantities of the traded item, communicating information about prices, and for the distribution of the goods and services.

This can be argued to a certain degree for any modern commodity, but healthcare is a unique beast in how different forces for each market is and how interrelated they seem to be. However, I can be wrong about this part.

I have also said that I am proving my point in the context of an idealized free market. My goal is to show from first principles what pop literature seems to miss;

> Assuming the most idealized of cases that exist without external constraints and regulations, this market would never be a free market.

I have specified my definition of free markets elsewhere.

> But you can’t choose not to treat sepsis.

You can't choose not to eat food either.

> So why does our literature usually assume that both are the same?

What literature assumes they're the same?

My understanding was that East Germany actually had a better standard of living generally than your average Russian at that time.

So their thoughts that they were doing alright compared to Russia at that time was probably right.

The government had an interest in making the areas close to the ‘free world’ look better so these were propped up using resources from farther away.

I think the GDR was just a more effective country, just like Czechoslovakia and Hungary were. In the case of the GDR, despite being led by a very small-minded clown basically sanctioned by the USSR. Russia has never had it good in hundreds of years and it kept the tradition under communism.

That cuts both ways. Eastern Germany was also the best capitalism can buy.

Based on my understanding they were simply better managed and benefited from some cross border stuff that exposed them to other markets that weren't readily available to everyone in Russia.

Similar to other states that had some association with the west where in the end they could sell products and goods outside the planned economy and that helped keep things going.

Just curious as to how you think fire fighting services should be priced by the market?

I'm generally very conservative and against regulation, so no need to preach Adam smith to me (I actually read Wealth of Nations... not the synopsis). Though I will say, by ycombinator standards, I'm a centrist (way too left for the right, way too right for the left).

Market-priced firefighting is the norm, not the exception.

See e.g. https://www.sciencedirect.com/science/article/pii/S092575359...

Well, the state pays the market price, but people who use firefighting services ("consumers") typically don't pay anything. Just like health care should be, I suppose.

> when life in pre-unification eastern Germany was still fresh in peoples’ minds. One thing that people would say is that “before the wall fell, we had plenty of money, there just was never anything to buy.”

This is a pretty striking echo of Kipling's verse commentary:

In the Carboniferous Epoch, we were promised abundance for all

by robbing selected Peter to pay for collective Paul

But though we had plenty of money, there was nothing our money could buy

and the Gods of the Copybook Headings said: "If you don't work you die."

(The Gods of the Copybook Headings, 1919)

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