“How could he know how much to make of each kind every day?” Couldn’t the minister of bread do a survey of what people want? What would be the challenge of doing a survey and using it to determine how much to make of each kind of bread? How would the process change when people’s preferences change or there is a drought in the midwest that reduces the supply of wheat?
Responses
Bread is an interesting choice for the tale, because it is expected to be fresh every day. My dad was a System Control Supervisor at Kansas Gas and Electric's Wichita plant. The job was especially critical and demanding, due to the key fact that electricity has NO shelf life. It is a commodity where supply and demand must be married instantaneously, 24*7. This was in the sixties. There were no computers. My dad would multiply numbers on a lever-activated adding machine. There were meters and lights and a telephone switchboard. Weather reports came across the teletype machine. And here, they made decisions every few minutes affecting millions of people.
Like the Internet or the brain, the power grid is a vast network, consisting of myriad redundant connections. Because a power plant has reserve capacity for times of peak demand, it can often generate more power than its service area requires at other times. The power grid makes it possible to use that capacity, generate that power, and sell it to a plant whose clients are consuming more power than the plant can generate, as on a 100-degree day in the heat belt. This massive commodity-trading architecture enables leveling of loads most of the time. When my father sat at the helm, he was, in a very literal sense, a power broker.
The power grid is an organic, self-organizing human infrastructure network. From footpaths to airways, the Silk Road to the Internet, such networks are a natural bi-product of the very human endeavors which they facilitate. They constitute the fabric, the nervous system, of mankind. They continue to function as long as millions of people each keep their little piece of them working, from vast data clouds, to small web servers. And as long as they function, economies from the local, to the global, keep running.
In answer to your question, you would have to survey everyone daily to get it right. Instead, we rely on the reach, redundancy, self-correctiveness, and sensitivity to demand afforded by huge networks of people and things just doing what they every day do to survive.
I agree that the bottom up approach system is the best. However, It is not as simple or as perfect as indicated. Most bakeries have a day-old discounted section. Also, much of the bread sold in stores is baked in such a way to have a long shelf life. And some bread even goes bad before it is sold.
To answer the question, a survey would be useless because people don’t know what they want. People often change their minds. People change their diets to improve health, to save money, to lose weight, to bulk up, to fit in with different people and for a whole host of other reasons. People make last minute purchases and impulse buys. A survey could only work if people were unchanging. Also, how would the preferences of immigrants, tourists, and foreign importers be assessed?
“How could he know how much to make of each kind every day?”
- The baker will ideally produce as much as he is willing to sell, where the marginal benefit of producing the next piece of bread equals that of his marginal cost. At this point, he is maximizing his profits and consumers are getting their bread.
Couldn’t the minister of bread do a survey of what people want?
-He could, but it would be really hard to keep track of everyone's preferences and doing this survey in a way that takes into accounts people's changing tastes. Such system would produce much inefficiency and probably not deliver the right amount of bread to consumers.
What would be the challenge of doing a survey and using it to determine how much to make of each kind of bread? Several. The biggest one is being able to make a survey that accounts for every consumer who wants bread. Another would be the changing preferences of bread-purchases, as they can change quite rapidly and a survey could not take that into account.
How would the process change when people’s preferences change or there is a drought in the midwest that reduces the supply of wheat? In a perfect market, a drought would cause the supply to decrease and the price to increase. Some who are willing and able to pay for higher bread will pay, others will consume less bread, and some consumers will look to other substitute goods (e.g. rice or another carb) that is more affordable.