by Gary North The economist rarely uses the words "glut" and
"shortage" without adding: at some price. Other scholars are not
equally wise. A free market theory of pricing rests on the
supposition that gluts and shortages are temporary phenomena.
Prices adjust so as to clear a market. If this does not take
place, the free market economist goes looking for evidence of
state intervention. Consider the problem of excess inventory. It
is better to get something for unused and unwanted inventory
than to pay for storage. So, selling prices adjust downward.
This eventually eliminates the glut. The unpleasant experience
also warns the producer not to do this again. Why does a glut
exist? Because of an error in prior forecasting. Suppliers
believed that there would be buyers at a specific price. It
turned out that there was an insufficient number of buyers at
that expected price. Then why does a glut persist? One answer:
ignorance on the part of suppliers. But why should this
ignorance persist? Why don't suppliers get