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Dialogue: 0,0:00:00.14,0:00:03.10,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,0:00:09.96,0:00:12.06,Default,,0000,0000,0000,,- [Alex] We conclude\Nour discussion of price controls
Dialogue: 0,0:00:12.06,0:00:14.66,Default,,0000,0000,0000,,by talking about price controls\Nand communism,
Dialogue: 0,0:00:14.66,0:00:16.41,Default,,0000,0000,0000,,or planned economy.
Dialogue: 0,0:00:16.41,0:00:19.02,Default,,0000,0000,0000,,This will be brief \Nbecause the idea is pretty simple.
Dialogue: 0,0:00:19.02,0:00:20.94,Default,,0000,0000,0000,,We've already looked\Nat all the effects
Dialogue: 0,0:00:20.94,0:00:23.16,Default,,0000,0000,0000,,of price controls\Nin different markets.
Dialogue: 0,0:00:23.16,0:00:26.54,Default,,0000,0000,0000,,But we can think about communism \Nas being in some ways
Dialogue: 0,0:00:26.54,0:00:30.47,Default,,0000,0000,0000,,a system of universal\Nprice controls.
Dialogue: 0,0:00:30.47,0:00:32.76,Default,,0000,0000,0000,,Everything is controlled \Nby the government.
Dialogue: 0,0:00:32.76,0:00:35.60,Default,,0000,0000,0000,,The price of all goods \Nis controlled by the government.
Dialogue: 0,0:00:35.60,0:00:38.66,Default,,0000,0000,0000,,So if a single price control \Ncan have bad effects,
Dialogue: 0,0:00:38.66,0:00:42.33,Default,,0000,0000,0000,,what happens when you control \Nthe prices of all goods?
Dialogue: 0,0:00:42.33,0:00:44.30,Default,,0000,0000,0000,,Let's take a look.
Dialogue: 0,0:00:47.76,0:00:48.99,Default,,0000,0000,0000,,Let's just remind ourselves
Dialogue: 0,0:00:48.99,0:00:51.02,Default,,0000,0000,0000,,of some of the important effects\Nof price control,
Dialogue: 0,0:00:51.02,0:00:52.69,Default,,0000,0000,0000,,both ceilings and floors.
Dialogue: 0,0:00:52.69,0:00:54.88,Default,,0000,0000,0000,,Shortages and surpluses,\Ndepending upon whether
Dialogue: 0,0:00:54.88,0:00:57.18,Default,,0000,0000,0000,,we have the price \Nbelow the market price
Dialogue: 0,0:00:57.18,0:00:59.53,Default,,0000,0000,0000,,or the floor above the market price.
Dialogue: 0,0:00:59.53,0:01:02.87,Default,,0000,0000,0000,,Reductions in product quality \Nor sometimes too much quality,
Dialogue: 0,0:01:02.87,0:01:04.14,Default,,0000,0000,0000,,too much waste.
Dialogue: 0,0:01:04.14,0:01:06.26,Default,,0000,0000,0000,,Wasteful lines\Nand other search costs.
Dialogue: 0,0:01:06.26,0:01:10.31,Default,,0000,0000,0000,,Loss in gains from trade,\Nand misallocation of resources.
Dialogue: 0,0:01:10.31,0:01:13.34,Default,,0000,0000,0000,,Now communism, a command economy,
Dialogue: 0,0:01:13.34,0:01:16.99,Default,,0000,0000,0000,,can be thought of as a system \Nof universal price controls,
Dialogue: 0,0:01:16.99,0:01:19.30,Default,,0000,0000,0000,,price controls on all goods.
Dialogue: 0,0:01:19.30,0:01:22.71,Default,,0000,0000,0000,,And we saw exactly\Nthese five elements
Dialogue: 0,0:01:22.71,0:01:24.56,Default,,0000,0000,0000,,occurring in countries
Dialogue: 0,0:01:24.56,0:01:28.16,Default,,0000,0000,0000,,which had universal price controls, \Nsuch as the Soviet Union.
Dialogue: 0,0:01:28.16,0:01:30.88,Default,,0000,0000,0000,,It was common for some goods \Nto be in shortage
Dialogue: 0,0:01:30.88,0:01:32.96,Default,,0000,0000,0000,,while other goods had surpluses.
Dialogue: 0,0:01:32.96,0:01:37.02,Default,,0000,0000,0000,,Low-quality goods for most, \Nwith wasteful quality for other,
Dialogue: 0,0:01:37.02,0:01:39.30,Default,,0000,0000,0000,,wasteful lines\Nand other search costs.
Dialogue: 0,0:01:39.30,0:01:43.20,Default,,0000,0000,0000,,During the Soviet Union\Ncommunist period,
Dialogue: 0,0:01:43.20,0:01:47.15,Default,,0000,0000,0000,,it was common for women\Nto spend, on average,
Dialogue: 0,0:01:47.15,0:01:50.10,Default,,0000,0000,0000,,two hours of every single day,
Dialogue: 0,0:01:50.10,0:01:51.61,Default,,0000,0000,0000,,weekdays and weekends,
Dialogue: 0,0:01:51.61,0:01:55.37,Default,,0000,0000,0000,,just lining up\Nto get consumer goods.
Dialogue: 0,0:01:55.37,0:01:59.59,Default,,0000,0000,0000,,Clear loss of gains from trade \Nand a misallocation of resources.
Dialogue: 0,0:01:59.59,0:02:02.53,Default,,0000,0000,0000,,So it was very common \Nin the Soviet Union
Dialogue: 0,0:02:02.53,0:02:06.77,Default,,0000,0000,0000,,to spend lots of resources \Nproducing agricultural products,
Dialogue: 0,0:02:06.77,0:02:10.68,Default,,0000,0000,0000,,and then not have the trucks \Nto bring those products to market.
Dialogue: 0,0:02:10.68,0:02:13.29,Default,,0000,0000,0000,,It was common\Nto be producing radios,
Dialogue: 0,0:02:13.29,0:02:15.79,Default,,0000,0000,0000,,have everything you need\Nto produce the radio,
Dialogue: 0,0:02:15.79,0:02:18.82,Default,,0000,0000,0000,,except for one single part\Nwhich was in shortage,
Dialogue: 0,0:02:18.82,0:02:21.51,Default,,0000,0000,0000,,so you could not produce the radios.
Dialogue: 0,0:02:21.51,0:02:24.97,Default,,0000,0000,0000,,Remember the situation\Nwe described for heating oil
Dialogue: 0,0:02:24.97,0:02:27.62,Default,,0000,0000,0000,,in the United States\Nduring the 1970s,
Dialogue: 0,0:02:27.62,0:02:31.76,Default,,0000,0000,0000,,when in some parts of the country \Nthere was plenty of heating oil?
Dialogue: 0,0:02:31.76,0:02:32.97,Default,,0000,0000,0000,,There was enough heating oil
Dialogue: 0,0:02:32.97,0:02:36.15,Default,,0000,0000,0000,,so that people were heating \Ntheir swimming pools,
Dialogue: 0,0:02:36.15,0:02:37.60,Default,,0000,0000,0000,,while in other parts of the country
Dialogue: 0,0:02:37.60,0:02:41.16,Default,,0000,0000,0000,,there wasn't enough and people \Nwere shivering in their homes.
Dialogue: 0,0:02:41.16,0:02:45.10,Default,,0000,0000,0000,,Those types of misallocation \Nof resources were the norm,
Dialogue: 0,0:02:45.10,0:02:46.23,Default,,0000,0000,0000,,were normal,
Dialogue: 0,0:02:46.23,0:02:50.30,Default,,0000,0000,0000,,were everyday occurrences \Nin the Soviet Union
Dialogue: 0,0:02:50.30,0:02:52.66,Default,,0000,0000,0000,,during its system of communism,
Dialogue: 0,0:02:52.66,0:02:56.26,Default,,0000,0000,0000,,or a command economy,\Nor universal price controls.
Dialogue: 0,0:02:56.26,0:03:02.83,Default,,0000,0000,0000,,All of these issues came to affect \Nan entire economy.
Dialogue: 0,0:03:02.83,0:03:05.03,Default,,0000,0000,0000,,In short, what communism did really
Dialogue: 0,0:03:05.03,0:03:08.66,Default,,0000,0000,0000,,was a substitution\Nof planned chaos,
Dialogue: 0,0:03:08.66,0:03:11.10,Default,,0000,0000,0000,,a chaotic economic system,
Dialogue: 0,0:03:11.10,0:03:14.85,Default,,0000,0000,0000,,instead of having\Nmarket coordination.
Dialogue: 0,0:03:14.85,0:03:17.19,Default,,0000,0000,0000,,Okay, thanks very much.
Dialogue: 0,0:03:17.19,0:03:21.33,Default,,0000,0000,0000,,That will conclude our lectures \Non price controls.
Dialogue: 0,0:03:22.73,0:03:23.100,Default,,0000,0000,0000,,- [Narrator] If you want \Nto test yourself,
Dialogue: 0,0:03:23.100,0:03:25.84,Default,,0000,0000,0000,,click "Practice Questions,"
Dialogue: 0,0:03:26.39,0:03:29.94,Default,,0000,0000,0000,,or if you're ready to move on,\Njust click "Next Video."
Dialogue: 0,0:03:29.94,0:03:32.92,Default,,0000,0000,0000,,♪ [music] ♪