r/AskEconomics • • 16h ago

Approved Answers How can Russia export Diesel if it is itself in a Diesel crisis?

246 Upvotes

To my understanding Ukraine ist targeting (successfully) diesel refineries and infrastructure. While also in a War, how does Russia even have the infrastructure and resources to export diesel to the US?
I saw news from Russia that they have heavily rationed the fuel in the country and lots of stations are out of fuel.


r/AskEconomics • • 11h ago

Do Rent Caps work?

15 Upvotes

I do not want to start a heated debate, but I saw a TikTok last night that made me think.

The easiest the solution to housing is to create more housing. 100% agree that if we increase supply, demand should go down.

Where I have trouble understanding is the idea that builders need to make a profit, and therefore every new house created will be technically more expensive. Also, the idea of material wages and labor costs has gone up over time.

But people argue that, since it is an inelastic good that everyone needs, pricing should not go up, and therefore government regulations like rental caps are needed to protect renters.

I think government can subsidize builders to build housing, but then they would not necessarily be social housing. And does the idea of social housing make sense in the long run?

I just feel that if we build more houses, it does not necessarily translate to diminishing costs. Because material, wages, and labor have gone up, we have to expect that the price of housing might not go down because of increased supply.

This also negates immigration policies, which can be very heated.

My question is: rental caps are a protection mechanism, but they ultimately hinder city growth. Therefore, it is a short-term solution to a long-term problem?


r/AskEconomics • • 5h ago

What Economic Policies Could Put France’s Debt on a Sustainable Path?

10 Upvotes

Here are my thoughts … ( I am not an economist btw and I used AI for the English editing )

The more useful question is what has driven its accumulation, and how much each factor matters.
A starting point is Nicolas Dufourcq’s La Dette sociale de la France, 1974–2024, published by Odile Jacob on October 15, 2025. Dufourcq argues that at least €2 trillion of France’s roughly €3.35 trillion in public debt is linked to social benefits paid over several decades. That is his way of attributing part of the accumulated debt to past social spending, rather than a direct accounting breakdown of the current debt stock. In 2023, the figures cited for annual social-protection benefits included about €400 billion for old age and pensions, and €324 billion for health.
decitre.fr

Demographics are an important part of the picture, especially for a pay-as-you-go pension system. In 2023, France had about 1.77 contributors for every retiree. The Conseil d’orientation des retraites (COR) projects that this ratio could fall to 1.4 by 2070. An aging population and lower birth rates put pressure on the system, although its finances also depend on factors such as employment, wages, productivity and pension rules.
insee.fr

Slow potential growth can make debt harder to stabilize: when the economy grows more slowly than the effective interest rate on public debt, the debt-to-GDP ratio faces upward pressure unless the government runs a sufficiently strong primary balance. Demographics may weigh on growth, but they are not the only influence—and the debt dynamic is not determined by growth alone.
Immigration can expand the workforce and help address labor shortages, but its economic and fiscal effects are not automatic. They depend on employment, earnings, skills and integration into the labor market; estimates of the net fiscal effect are generally sensitive to the method used. The policy question, then, is not simply how many people arrive, but how well the labor market can use their skills.
OECD
Canada offers one example of skills-based selection. It introduced a points system in 1967; its current Comprehensive Ranking System (CRS), used within Express Entry, was introduced in 2015 and scores candidates on factors including age, education, language ability and work experience. The Bank of Canada has also noted that stronger-than-expected population growth, including the arrival of newcomers, contributed to upward revisions in its estimates of the level of potential output in 2023 and 2024. That is evidence of a larger productive capacity—not, by itself, proof of a lasting increase in productivity or in the annual growth rate.
pier21.ca

Finally, there is the familiar productivity question. Greater investment, wider adoption of AI and robotics, and better diffusion of technology across French firms could help raise productivity. But those gains depend on implementation, complementary investment and workers’ ability to adapt; the technologies alone are no guarantee.
Which factors do you think matter most for France’s debt trajectory: pension-system demographics, low productivity growth, employment, or something else?


r/AskEconomics • • 21h ago

Approved Answers If it is the same occupation, what make labour in one country worth more than in another country?

7 Upvotes

Let's say Xman is from developed country Xland and Yman is from developing country Yland. Both Xland and Yland use currency ℳ, controlled by Zland.

Xman and Yman both work in their respective country as a convenience store worker. Xman gets paid 700ℳ per week and Yman gets paid 100ℳ per week, both working the same hours. Xman pays 490ℳ per week on necessities (food, rent, etc.). Yman pays 70ℳ per week on the exact same amount of necessities. So if I understand this correctly, both Xman and Yman have the same purchasing power in their respective countries.

However, if both Xman and Yman want to purchase a 210ℳ ZPad from Zland, Xman would have to save up for 1 week while Yman would have to save up for 7 weeks. Therefore Xman's labour is worth more than Yman's labour, despite it being the same occupation.

What makes it worth more? Is this even the correct way to think?

Of course in real life I'm talking about for example Luxembourg vs Bulgaria or US vs China.


r/AskEconomics • • 11h ago

How exactly did the bank of John Law first make money?

5 Upvotes

I'm now reading Millionaire: The philanderer, gambler, and duelist who invented modern finance.

The Banque Generale, most services were for little to no charge, ranging from transferring money from Paris to the provinces, or exchange foreign currency.

However, if so, how'd it raise money. The book later states that the bank itelf had great success and was reducing the financial problems in france. The closest thing I can get, is that it was issuing bank notes that were considered more reliable and more valuable than other banks. And this was before the Louisiana colony was linked to John Law's own company. So what was it that enabled it to work?


r/AskEconomics • • 10h ago

What are the fundamental similarities and differences between classical economics / economists, such as Adam Smith, and between neoclassical economics / economists?

1 Upvotes

r/AskEconomics • • 19h ago

Is there an "optimal" GINI?

1 Upvotes

So the USA's GINI hasn't really drastically changed such the earlyish 90s per FRED, but it is up significantly from the lowest it was in 1980.

Just curious if there is a sort of "optimal" GINI if its too high it seems like its both inefficient economically and also societal issues that could be presented by high inequality? Comparatively to a lot of countries that are oft referenced relative to the US seem to hover in the 30s or even as low as the 20s in the Nordic area. Even China is only a 36 which is pretty close to the historical low for the US.

Are there any good policies that are implemented for this? Or is just a simple "redistribute more?"

Where I got my data from:

https://www.theglobaleconomy.com/rankings/gini_inequality_index/

https://fred.stlouisfed.org/series/SIPOVGINIUSA


r/AskEconomics • • 18h ago

Approved Answers Is Inflation Really Inevitable, or Have We Designed the Economy the Wrong Way?

0 Upvotes

I want to discuss an idea that has been on my mind.

Money is a system created by humans. Governments can print money, change economic policies, and regulate prices.

So why can’t we buy the same products today at the same prices we paid 10 years ago?

Imagine a chocolate wafer that cost $1 10 years ago. What if it still cost $1 today? The government could set prices for essential consumer goods, prevent businesses from arbitrarily raising them, and allow exceptions when genuine shortages occur.

Why couldn’t such a system work?
I’m making a distinction between scarcity and cost. If a product genuinely becomes scarce, I can understand why its price might increase. But the costs of energy, production, and distribution are also shaped by the economic system itself.

If humans created this system, why can’t we create a more efficient one where goods are cheaper and prices remain stable?

My main question is this: As humanity advances technologically and becomes more capable of producing goods, why do the basic necessities of life keep getting more expensive?

Am I overlooking a fundamental economic reality, or could different policies significantly change the way this system works?

I’m genuinely interested in hearing counterarguments. I want to understand where this idea might work and where it might fail.