Tuesday archive : Schoolboy error

From 15th July, 2006.

My school used to offer two varieties of food. There was canteen food, which was inedible, and there were chocolate bars from the tuck shop. For two years, I had four chocolate bars for lunch every day.

These days schools are trying to outlaw the unhealthy options, but some markets are irrepressible. William Guntrip is a 13-year-old boy whose Northamptonshire school banished vending machines and tuck shop food in favour of nutritious offerings at the canteen. Guntrip spotted a market opportunity and has been buying soft drinks and sweets and reselling them in his school playground. The school is trying to stop him and claims that most students are happy with the new regime, although if that was true then Guntrip wouldn’t be making £50 a day.

Suppressing a market is a bit like squeezing a balloon – the trade will usually pop up somewhere else. The Soviet Union was full of markets. The factory in north Vladivostok would be allocated too much sheet metal but not enough coal. The factory in south Vladivostok had the reverse problem. Both factory managers would ask for extra resources but in the command-and-control system the incentive was to ask for more of everything, with little hope of success. So the managers would quietly, and illegally, do a deal with each other. Professional expediters would be sent out to barter for scarce inputs and the informal market reached a high level of sophistication…

Continued at timharford.com.

Tim Harford’s blog

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Tim, also known as the Undercover Economist, writes about the economics of everyday life.