causal
Shortages are rational behavior in socialist economies
In socialist economies, chronic shortage is not a strange outcome but the rational result of soft budget constraints: each enterprise hoards as many inputs (labor, raw materials) as possible, producing the simultaneous presence of a glut of stockpiled inputs inside firms and a shortage outside as everyone bids for the same scarce goods.
causalpending
Speaker
Branko MilanovicEvidence Quote
“It's a rational behavior when you had soft budget constraint where each enterprise tries to hoard as much inputs, whether it is labor or raw materials and everything else.”
Created: 6/13/2026, 12:16:00 AM
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