Wednesday, January 11, 2012

Solve the Mystery! Why is There an Aspriin Shortage in Greece?

Market fails, government must act! Desperate citizens wander the streets holding their heads!

All because there is no aspirin. Me? I'd blame "speculators."


1. Aspirin is a homogeneous good. Aspirin is aspirin. There are slight differences in brand name, based perhaps on purity and how quickly it dissolves, that sort of thing. But aspirin is aspirin.

2. There is a world price for aspirin. People use aspirin.

3. Aspirin stores well, and is easily transported.

4. If the government sets the domestic price for aspirin below the world price for aspirin, there will be a "shortage." The reason is that I can sell it for $5 a bottle in Turkey, or $1.75 at the government-mandated price in Greece. I ship the stuff to Turkey. That's not speculation. That's a sure thing. And the only greed at work here is the greed of the idiots who blame speculators, so they can gain electoral advantage from abusing the Greek citizens who need aspirin but can't get it.

5. The shortage in Greece is not the result of scarcity. The shortage is the result of an explicit, simple government policy that is having the effect that any sophomore economics student could predict.

Greece may have the worst combination of stupidity and misplaced indignation of any state apparatus in the world.

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Do you have suggestions on where we could find more examples of this phenomenon?