A Survey on the Importance of Prices

[The Whit]

Really?  That's how you look at it?  Helping other people is "waste"?

That's how most people look at it.  The poor can't afford to spend money on anything but subsistence, and the rich get rich by not spending money that doesn't directly benefit them.

Wrong.

http://www.looktothestars.org/celebrity/bill-gates
http://www.huffingtonpost.com/tag/warre ... tt-charity
http://www.looktothestars.org/celebrity/jay-z
http://www.looktothestars.org/celebrity/oprah
http://www.looktothestars.org/celebrity/angelina-jolie

Have you ever watched an episode of Oprah?  She's given everyone in her audience a god damned car, and gave away a total of 570 cars during the 25 seasons it was on air, not that I watched (although I did Youtube Tom Cruise going nuts).

[Colanth]

A few nice people don't define the 3 million who work the other way.  When was the last time Mitt Romney gave cars away to poor people he didn't know?  Or Dick Cheney?  (For every wealthy person you can name who gives to the poor, I can name 25 who make people poor.)

[Plu]

So how would you deal with this problem?

I have no answers to this question that would not make the holocaust look like a papercut in comparison, I'm afraid.

I think I do, and it's called getting the government the hell out of the way.  To get back on topic, the price system is what a society uses to interpret supply and demand over a certain use of resources.  Based on that information (profit generated) people can judge whether or not to expand/restrict production or invest money into research and development to improve the product.  

Competition among suppliers forces the price down by increasing supply.  This in turn forces these companies to strive for the lowest cost of production to maximize profits.  That drives up demand for ingenuity and problem solving skills, which translates to more jobs.  As the companies fight over the resource of human capital in employees, the price of that resource (wages) increases.

When there is more money being paid out to the working force, there is more money to be spent on product, which means more money for the workers and more expansion for the companies.  More expansion in turn leads to more jobs, and the mechanism feeds itself.  More and more money is being used in the economy because more people have money, and this is the trail to prosperity.  This, I maintain, leads to increases in altruism as more people do not have to conserve their resources to survive and those excess resources can be used to help those in need.

The non-profit economy wouldn't work because there is a complete lack of certainty.  Bakers don't know how much bread they're going to be able to buy next time.  How do the employees know they're going to get paid?  How does the manager know he's going to be able to pay them?  If it's voluntary work, where do these people get their money to live?

It's a nice thought, but in reality a market based on non-profit organizations seeking donations for their contribution to society is not going to do very well.

It's all cool in theory (just like all the other systems of government and economics) but this is not how it would go in practice. In practice, when you are supplying a vital good that is very expensive to produce, it is in your interest to find all the other people who are rich enough to produce that good and then set the price together. Because it's a vital good, people have little choice but to buy anyway, and because it's expensive to produce new businesses cannot really pop up to compete with you.

In addition, the drive for ingenuity and problem solving skills no longer translates into more jobs. It translates into more jobs for highly trained, skill and intelligent people but it decreases the overall number of jobs, because ingenuity means replacing people with machines.

And finally, in their competition to drive down production, people will be paid less and less. Even with a minimum wage system in place, big companies find loopholes in the law to still pay people so little they cannot subsist on a full-time salary. Without government, that too will only get worse.

Capitalism is great when everyone plays by the rules, but nobody ever plays by the rules. There is much more money to be made in cheating the system and circumventing the supply/demand chain. Artificial demand, researching breakthroughs and then locking them away from the public, vendor locking, price gouging, monopoly positions, all these things will happen in an attempt to abuse the market and make more money. And they are not in favor of the consumer at all.

But the system you propose, where the government doesn't get involved and pure capitalism is allowed to do its thing has actually been used a lot. Read up on the European Industrial Revolution. It was not a good time to be a worker, and with the advances in machinery and computers it would go over even worse today, considering how many people there are and how few you need anymore.

[The Whit]

A few nice people don't define the 3 million

The opposite is true as well.  25 is a long way from 3 million.

[Jason78]

When individuals do not have the freedom to decide which uses of their limited resources they value most...it's a given that resources will not be put to their most valuable uses.

This rests on the premise that a given individual knows the optimal way to distribute their resources.  

When an individual allocates resources, they usually lack the knowledge to make the optimal choice and will instead base their decision on other factors.

Then I take it you're advocating education, since that is the factor that determines whether or not someone uses a resource correctly?

No actually.  I'm not.  The level of education required for someone to allocate resources in an optimal way is beyond the ability of most people.

Given two purchasing choices, I as a consumer know next to nothing about the supply chain leading up to the point of sale.  And that's assuming that I want to make the optimal choice and not the most convenient choice or the most economical one.

[Plu]

I think it would be important to keep in mind that these models of capitalism are pretty old and were never made to deal with a whole bunch of situations that occur in modern day but that were never even thought of back when they were built.

[Xerographica]

The non-profit economy wouldn't work because there is a complete lack of certainty.  Bakers don't know how much bread they're going to be able to buy next time.  How do the employees know they're going to get paid?  How does the manager know he's going to be able to pay them?  If it's voluntary work, where do these people get their money to live?

It's a nice thought, but in reality a market based on non-profit organizations seeking donations for their contribution to society is not going to do very well.

A. Some uses of society's limited resources are more valuable than other uses
B. A valuable use to one person might be a valueless use to another person
C. The goal is to maximize the value we derive from society's limited resources
D. Therefore, people have to be free to choose for themselves who they give their positive feedback (money) to.  

The goal is not certainty for producers...or for employees...the goal is to provide the most value for consumers.  If an entrepreneur starts a bakery that produces bread that's far better than anything available on the market...then consumers will shift their financial support from the old bakeries to the new bakery.  This is creative destruction.  Resources are freed up for more valuable uses....simply because consumers are free to choose which uses of their limited resources they value most.

[surly74]

The goal is not certainty for producers...or for employees...the goal is to provide the most value for consumers.  If an entrepreneur starts a bakery that produces bread that's far better than anything available on the market...then consumers will shift their financial support from the old bakeries to the new bakery.  This is creative destruction.  Resources are freed up for more valuable uses....simply because consumers are free to choose which uses of their limited resources they value most.

what if that bread is 10 times the price of one from an older bakery?

This assumes people will buy the highest quality regardless of price. Is that what you are saying?

Also the goal for employees, in most cases, is different then the goal of producers.

[The Whit]

It's all cool in theory (just like all the other systems of government and economics)

No.  Marxism is doomed to ultimate failure by a flaw in it's basic philosophy.  It turns the entire society into the tragedy of the commons.

but this is not how it would go in practice.

Your evidence for this?

In practice, when you are supplying a vital good that is very expensive to produce, it is in your interest to find all the other people who are rich enough to produce that good and then set the price together. Because it's a vital good, people have little choice but to buy anyway, and because it's expensive to produce new businesses cannot really pop up to compete with you.

That's a cool hypothesis (I won't say theory, because that's not backed by any facts).  In reality that doesn't work that way.  I'll give you an example.  I remember when flat screen TVs first came out and 60" TVs were selling for over $5,000 a unit.  Care to take a guess as to why?  Because there's two ways to maximize profit, increasing profit margins or increasing product sold.  This is why places like Costco thrive.  Even if they lower prices, more people will be able to buy it, and your profits go up.  So, now I can buy a flat screen 60" for $900.  Better still, the TVs on the market today use less than half the electricity and have MUCH improved picture clarity.  So, not only has the price gone down, but quality has improved.  So, suck it.  Capitalism, bitch.

In addition, the drive for ingenuity and problem solving skills no longer translates into more jobs. It translates into more jobs for highly trained, skill and intelligent people but it decreases the overall number of jobs, because ingenuity means replacing people with machines.

I'm drowning in a sea of non-though.  Just because one job is "lost" to a machine doesn't mean that person gets kicked out to the street where they starve to death because all they can do is stamp sheet metal.  If your job could be done faster, safer, and more accurately by a machine why the hell wouldn't you want a machine doing it?  That frees human capital available to expand the economy.  In order for that to happen there needs to be jobs readily available, and government regulations, wage controls, and high taxes are preventing that.

And finally, in their competition to drive down production, people will be paid less and less. Even with a minimum wage system in place, big companies find loopholes in the law to still pay people so little they cannot subsist on a full-time salary. Without government, that too will only get worse.

I don't know who's ass you pulled this shit out of but you need to put it back.  

https://www.youtube.com/watch?v=siW0YAAfX6I


Capitalism is great when everyone plays by the rules, but nobody ever plays by the rules. There is much more money to be made in cheating the system and circumventing the supply/demand chain.

[ Image ]


Artificial demand, researching breakthroughs and then locking them away from the public, vendor locking, price gouging, monopoly positions, all these things will happen in an attempt to abuse the market and make more money. And they are not in favor of the consumer at all.

Y'all motherfuckers need Friedman.

https://www.youtube.com/watch?v=xNc-xhH8kkk

But the system you propose, where the government doesn't get involved and pure capitalism is allowed to do its thing has actually been used a lot. Read up on the European Industrial Revolution. It was not a good time to be a worker, and with the advances in machinery and computers it would go over even worse today, considering how many people there are and how few you need anymore.

I don't think anyone would argue that the industrial jobs were pretty shitty back then, but there were no better industrial jobs at that time.  Industrialism was in it's infancy, and of course it's not going to be optimal.  When you were young and just learning how to talk you made a shit ton of mistakes.  Did your parents drown you just because you couldn't form complete sentences when you were 6 months old?  Obviously not.  We didn't have child labor laws back then, but those kids would have still been working on farms for 10+ hours a day helping their family put food on the table.  Yes the beginning was dirty and foul but no more than you when you were crawling around the house shitting yourself and drooling on everything.  You've out grown that and so has industrialism.  The newly industrializing countries need our help so they don't have to go through that like Europe and America did.  Just because it was our past doesn't mean it's our future.

Then I take it you're advocating education, since that is the factor that determines whether or not someone uses a resource correctly?

No actually.  I'm not.  The level of education required for someone to allocate resources in an optimal way is beyond the ability of most people.

Given two purchasing choices, I as a consumer know next to nothing about the supply chain leading up to the point of sale.

You don't HAVE to for the system to work!

And that's assuming that I want to make the optimal choice and not the most convenient choice or the most economical one.

Whats the difference?

I think it would be important to keep in mind that these models of capitalism are pretty old and were never made to deal with a whole bunch of situations that occur in modern day but that were never even thought of back when they were built.
It still works.  In fact, we have what we have today because it works.  Evolution has been working for some 3 billion years and never could have for-seen the kind of complexity life we have around today.  So I guess we need the government to control what genes get passed on because evolution can't possibly work in today's environment.  AM-I-RIGHT?

The goal is not certainty for producers...or for employees...the goal is to provide the most value for consumers.  If an entrepreneur starts a bakery that produces bread that's far better than anything available on the market...then consumers will shift their financial support from the old bakeries to the new bakery.  This is creative destruction.  Resources are freed up for more valuable uses....simply because consumers are free to choose which uses of their limited resources they value most.

What you've described here is what the price system in a free market does.  What you're arguing for in a no-price economy is akin to saying my car will be more fuel efficient if I remove the motor.  It's true, but unless you plan on strapping some horses or oxen to it Oregon Trail style that car ain't taking you very far very fast.

[Plu]

Your evidence for this?

Comparing the quality of life in the US with the quality of life in other countries. All the ones at the top (and I mean all of them) are a strong mix of socialism and capitalism. The US with its heavy capitalism scores much lower.

I'm drowning in a sea of non-though. Just because one job is "lost" to a machine doesn't mean that person gets kicked out to the street where they starve to death because all they can do is stamp sheet metal. If your job could be done faster, safer, and more accurately by a machine why the hell wouldn't you want a machine doing it? That frees human capital available to expand the economy. In order for that to happen there needs to be jobs readily available, and government regulations, wage controls, and high taxes are preventing that.

Jobs doing what? You seem to think that there's an infinite supply of jobs, but that's simply not the case. At some point, there is simply nothing left to do, and what needs to be done is done by machines more and more.

It still works. In fact, we have what we have today because it works. Evolution has been working for some 3 billion years and never could have for-seen the kind of complexity life we have around today. So I guess we need the government to control what genes get passed on because evolution can't possibly work in today's environment. AM-I-RIGHT?

The human genome is being polluted like crazy, actually. But it's not nice to talk about that, I guess. Some sort of political taboo.

[The Whit]

Comparing the quality of life in the US with the quality of life in other countries. All the ones at the top (and I mean all of them) are a strong mix of socialism and capitalism. The US with its heavy capitalism scores much lower.

If you think America has "heavy capitalism" you either don't know capitalism or you don't know America.  What we have here is a mutant form of capitalism called "crony capitalism" where the government has too much power and all the greedy rich fucks steal from everyone with their votes.  Free-market capitalism, what you would refer to as "heavy capitalism" requires a government that is incapable of dicking around with the price mechanism.

Jobs doing what? You seem to think that there's an infinite supply of jobs, but that's simply not the case. At some point, there is simply nothing left to do, and what needs to be done is done by machines more and more.

There aren't an infinite amount of jobs, yes, but there are jobs that will exist in the future that do not today just like there are jobs today that there were not around in the past.


The human genome is being polluted like crazy, actually. But it's not nice to talk about that, I guess. Some sort of political taboo.

It's being polluted because of ignorance.  Evolution only gave us a brain, it's up to us to put it to use.

[Xerographica]

The goal is not certainty for producers...or for employees...the goal is to provide the most value for consumers.  If an entrepreneur starts a bakery that produces bread that's far better than anything available on the market...then consumers will shift their financial support from the old bakeries to the new bakery.  This is creative destruction.  Resources are freed up for more valuable uses....simply because consumers are free to choose which uses of their limited resources they value most.

what if that bread is 10 times the price of one from an older bakery?

This assumes people will buy the highest quality regardless of price. Is that what you are saying?

Let's say that the innovative baker added saffron to his recipe.  Let's also say that there's a relatively small supply of saffron but a relatively large demand for it.  So in the current system the innovative baker would have to charge a high price for his bread because one of the inputs was expensive.  But in the non-profit system there would simply be a small supply of better bread.  And given that it's better...more people would give their money to the innovative baker...and the innovative baker would give more money to the saffron farmers...which would allow them to get more land to grow more saffron.  This would increase the supply of saffron which would increase the supply of better bread.  More better bread increases the amount of value that we, as a society, derive from our limited resources.  

Therefore, we don't need prices to determine the efficient allocation of scarce resources.  All that's needed is consumer sovereignty.  Consumers have to have the freedom to decide for themselves who they give their money to.

[Xerographica]

What you've described here is what the price system in a free market does.  What you're arguing for in a no-price economy is akin to saying my car will be more fuel efficient if I remove the motor.  It's true, but unless you plan on strapping some horses or oxen to it Oregon Trail style that car ain't taking you very far very fast.

How are prices the motor of the economy?  The economy would simply stop if we got rid of price tags?  I'm pretty sure that's not true.

As long as there's scarcity...and as long as there's consumer sovereignty...then the economy would run.  

In order for the economy to stop...or breakdown...there has to be wholesale misallocation of society's limited resources.  This is what happens with command/planned economies.  But it's logically impossible for this to happen with consumer sovereignty because consumers will always want the most bang for their buck.  They wouldn't give their money to producers that waste/squander society's limited resources.  They wouldn't give their money to producers that use society's limited resources to produce things that they don't need/want/value.  They'd give their money to the people who were using society's limited resources to produce the most value.  

Better bakers would end up with more influence over how society's limited resources were used...same thing with better engineers, authors, doctors, scientists and so on.

[Plu]

There aren't an infinite amount of jobs, yes, but there are jobs that will exist in the future that do not today just like there are jobs today that there were not around in the past.

But not enough of them to put everyone to work. There will always be some jobs, but there won't be enough. And especially in the "not very complicated" category are we losing them, which leaves us with millions of people who aren't smart enough for the jobs that we have left.

And it's in the interest of capitalism to keep other people dumb, too. So that's not going to help either.

[Colanth]

A few nice people don't define the 3 million

The opposite is true as well.

The vast majority of large businesses cheat the system as far and as long as they can get away with it.