Recently I’ve been toying with the idea of doing a series of posts looking at the recent survey purporting to know a lack of economic knowledge on the Left, with one post for each of the eight questions on the survey. As I look at the list of questions, however, a clear theme emerges, namely that liberals tend to think that the price of a good or service isn’t much affected by the supply of that good or service or visa versa. According to the survey, liberals tend to think that restricting the supply of housing doesn’t increase the price of housing (question 1), that restricting the supply of doctors (through licensing) doesn’t increase the price of doctors (question 2), and that price floors won’t decrease the supply of either rental space (question 4) or jobs (question 8).
Coincidentally, I’m currently reading a (surprisingly good) book by Paul Krugman, in which he argues that conservatives tend to minimize or dismiss the part changes in demand have on getting us into or out of recessions. Naturally this got me thinking whether one of the things separating left from right in this country is a difference in the importance of supply and demand in economic phenomenon. For the above issues, at least, liberals seem to be ready to discount the importance of supply, whereas conservatives underestimate the importance of demand.
Of course, the sample size I’m working with is fairly small, and what appears to be a fundamental political/economic disagreement may just be a result of sample bias. The easier way to refute the Left/Demand vs. Right/Supply theory would be to come up with examples where conservatives deny the relation of supply to price or where liberals discount the role of demand. But I can’t think of any. There are cases where conservatives want to restrict the supply of a given good or service (immigration, say, or drugs), but in such cases they would generally be either indifferent to or view favorably the idea that such restrictions would increase prices. Nor do any examples of liberals discounting demand spring to mind.
Can anyone else think of any examples?