Sunday, April 01, 2012

Argumentum ad confusion #422

Statement: "I should have raised the price last year because the world price was increasing dramatically. But because I was very concerned with the people I didn't raise it"

Why it is a fallacy: 1) If you really care about the people, you don't act as if the supply of the good in question is abundant, 2) You knew that the world price was increasing and you knew that it was a reflection of a supply shortage (or else, increased demand given the same level of supply), but you didn't want the domestic price to transmit this signal; instead you put a subsidy to mask it, or else ration the limited amount of supply (forgetting the fact that the best tool for rationing is price, not quantity allocation by the government)

Conclusion: You were either not concerned about the people or you were in denial of what you knew.

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