
The Perils of Free Coffee - dbreunig
http://freakonomics.blogs.nytimes.com/2008/05/16/the-perils-of-free-coffee/
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mhartl
Queueing is a well-known side-effect of mispricing. Think bread lines in
Soviet Russia---or 'car lines' at rush hour.

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ardit33
Having lived in Albania during the bring of communism, and having been in
similiar lines myself, I can tell you that it was not the price that was the
problem.

There was no FOOD!! that was the problem. You either bought the bread, or went
to bed starving. It was a period of transition (about few months) that no
matter how much money you had, food was hard to find.

The rationing was a result of scarcity. If priced the food such that there
were no lines, only the rich would afford it, and the rest would just starve.

Well, guess what? Those starving people eventually would have had it enough,
and throw your goverment out sooner than later. By rationing during hard
times, everybody was guaranteed some kind of minimum level of nutrition, and
avoided some people hoarding food, while others went to bed hungry.

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mhartl
_If priced the food such that there were no lines, only the rich would afford
it, and the rest would just starve._

Queuing doesn't solve the problem; it just means that the people at the front
of the line survive instead of the rich. (Of course, the rich tend to be so
well-connected that they can just bribe the officials for food.)

When food is scarce, the equilibrium price rises. If the government imposes a
price ceiling, one effect is queueing. Another effect is a catastrophic
undermining of incentives. If food is expensive, sellers will transport it
even at great cost in order to reap the profits. The result is that supplies
will rise over time, alleviating the shortage and lowering the price. A price
ceiling undermines this incentive, guaranteeing that the 'shortage' will
persist.

Rationing is intuitively appealing, but it doesn't work. The surest way to
avoid starvation in times of great shortage is to let the price system do its
work. Conveniently, that's also the right answer when there are no shortages.
'Do nothing' is often politically untenable, though, and as a result harmful
market interventions lamentably persist.

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cstejerean
if you're arguing that communism is a bad idea I fully agree. But if you're
arguing that communist governments should not fix the price of food and this
would magically solve the shortage of food you must not be too familiar with
communism.

The usual reason for a shortage of food was rampant lying at all levels of the
government about how much food was produced in the country. Due to high levels
of exports (based on the fictional supply) there was little food to serve the
population. Letting the price fluctuate with the market would do nothing
unless food could be imported, but imports were also highly regulated at the
national level (and the currency had no official exchange rate). I'm speaking
here of Romania under communism.

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OneSeventeen
Also, I don't know how uncommon that perfect storm is. Isn't one of Starbucks'
primary products convenience? They're all over the place so that it's always
really easy to change your plans to include a "Stop in at Starbucks" step. So,
not that they've targeted DD for overflow pick-up, but they've positioned
themselves so that whenever someone is thinking they might want some coffee
and wherever they're standing doesn't have it, they don't have to go far. DD
just needs to keep from being a place like that.

