You Buy From Other Consumers, Not From Producers

Source: American Institute for Economic Research
by Michael Munger

“If you want something, you are usually buying from other potential purchasers, not the owner. Failing to understand that leads us to adopt wrong-headed policies such as anti-gouging laws, rent controls, and attempts to reduce inflation with price planning. We’ve known this truth for centuries. A famous example, Diocletian’s ‘Edict Concerning the Sale Price of Goods,’ was apparently intended to hold down prices simply by forcing sellers to ignore the fact that someone else wanted to pay more than the buyer now in front of them. The economic reasoning for why this is a problem was clearly laid out by Eugen von Bohm-Bawerk in his widely cited (but largely unread) book, The Positive Theory of Capital.” (11/15/22)