I’m not disagreeing with your suggestion, but in that situation what would actually happen over the short term is prices would stay the same for much longer. Which is healthy for an economy.
Over a longer term people will make more money and $10 eggs won’t feel as expensive.
It’s not as exciting of a proposition, which is why most people don’t bother explaining it.
Prices for other goods have gone down (TVs, computers, etc) in the past without being disastrous for the economy. You’re right if we’re talking about deflation generally (ie. ALL goods), but that’s not what I’m talking about. I’m talking about tackling prices in specific, anti-competitive sectors like food, health care, etc, where there’s plenty of room for prices to go down. And all of those things are necessities where consumers can’t delay spending on them, so deflation wouldn’t even have its disastrous effect there (which is customers withholding spending because they can get more with the same money if they wait a month).
If you were to introduce competition within the whole chain all at once between farmers and consumers, prices would definitely go down. Obviously that will never happen because the government acts slowly and it can take a decade for a case to make it all the way through the courts, so within the current political context of the USA you’d never see prices go down. Economics itself doesn’t dictate that, and it wouldn’t be harmful if say the prices of eggs halved overnight due to more competition in the market or price controls, as long as it’s still profitable for the producers of the good.
I’m not disagreeing with your suggestion, but in that situation what would actually happen over the short term is prices would stay the same for much longer. Which is healthy for an economy.
Over a longer term people will make more money and $10 eggs won’t feel as expensive.
It’s not as exciting of a proposition, which is why most people don’t bother explaining it.
Prices for other goods have gone down (TVs, computers, etc) in the past without being disastrous for the economy. You’re right if we’re talking about deflation generally (ie. ALL goods), but that’s not what I’m talking about. I’m talking about tackling prices in specific, anti-competitive sectors like food, health care, etc, where there’s plenty of room for prices to go down. And all of those things are necessities where consumers can’t delay spending on them, so deflation wouldn’t even have its disastrous effect there (which is customers withholding spending because they can get more with the same money if they wait a month).
If you were to introduce competition within the whole chain all at once between farmers and consumers, prices would definitely go down. Obviously that will never happen because the government acts slowly and it can take a decade for a case to make it all the way through the courts, so within the current political context of the USA you’d never see prices go down. Economics itself doesn’t dictate that, and it wouldn’t be harmful if say the prices of eggs halved overnight due to more competition in the market or price controls, as long as it’s still profitable for the producers of the good.