Many things suffer from scarcity, but not humor. Nothing shows this better than the jokes of “Radio Eriwan”. They toured the Eastern bloc and consisted of fictitious questions from listeners on a radio station, such as: “Is it true that in the West, everyone has a car? Answer: In principle yes, but with us everyone has a parking space for that.
What was widely known at the time is today forgotten by many: large sections of the population suffer the consequences of poorly set prices. Even in the 1980s, waiting times for buying a car were an omnipresent subject in the socialist GDR: people waited more than ten years after ordering to receive a “Trabi”.
The experience of the Eastern Bloc shows why prices are so important. They balance supply and demand. If this is not the case, it is generally necessary to spread an offer that is too low over too many applicants. In addition to nepotism and a thriving black market, such situations always lead to long delivery delays. When prices are poorly set, waiting is inevitable.
This phenomenon, once observed in the former Eastern Bloc, is increasingly visible in Western countries. The housing market is a perfect example. People who have to wait for hours in a queue for a visit are a recurring topic in the media. In Stockholm, the Swedish capital, people now wait more than nine years on official lists to obtain an apartment, almost as long as for a car in the GDR.
The housing market is also dysfunctional in Argentina, where Javier Milei has been president for almost a year. During his electoral campaign, he made the chainsaw his emblem, to symbolize his desire to reduce the State and regulations. Barely taking office, Milei walked his words, particularly on lease law.
Recent analyzes agree that the effects show a relaxation in the real estate market, accompanied by a marked increase in the supply of housing. It remains to be seen whether this development will be sustainable. Regardless, the short-term reaction once again shows that functional prices can work miracles.
Until a few decades ago, this knowledge was widely spread and valued in Switzerland. But in recent times, the principles of the market economy have been eroded. The State’s share has moved closer to the European average and various market prices are distorted by the State. It is hardly surprising that Switzerland also experiences various examples of economic shortcomings, particularly in the housing market, but also among family doctors and pediatricians.
When it comes to queues in Switzerland, motorways have recently been at the center of public attention. There are good reasons for this. The Federal Statistical Office (FSO) has recorded more than 48,000 hours of traffic jams on the Swiss national road network in 2023, an increase of 22% compared to 2022. As with the housing market, there is many factors that drive demand for mobility. However, from an economic point of view, the central point is that supply does not match demand, leading to traffic jams.
One of the main reasons for the increase in traffic jams on the Swiss national road network is the imbalance between supply and demand. (Adobe Stock)
The obvious answer is expanding supply, a subject we will vote on in November. But that’s not enough. As the examples mentioned above show, you need to get the prices right. These are lacking on Swiss roads. Today, you pay 40 francs per year for a sticker and can therefore use the infrastructure “at your discretion”. It is not surprising that such a situation leads to overuse.
What Switzerland needs are time-dependent prices for road use. As experiences abroad show, such “road pricing” can effectively prevent traffic jams, while financing the development of roads according to the polluter pays principle. International examples also show that electronic systems can keep road toll operating costs within reasonable limits.
A fully integrated “mobility pricing”, which would include public transport, would be even better. It would make it possible to establish the truth of the costs for the different types of transport. Here again, this is not a technological utopia. The problem lies with politics, which has been reluctant for years to take such a step. But turning a blind eye does not invalidate economic principles. And this is how Swiss motorists experience the same thing as citizens of the GDR or Argentine tenants: when prices are poorly set, waiting is inevitable.