Is this the kind ofcapitalism wewant:every provider billing customers highprices thatbear no relation tocosts?

Question

The headline Q is condensed to fit the Q-box from this Q : Is this the kind of capitalism we want: every provider or supplier billing customers high prices for goods and services that bear no relation to the actual costs of producing and delivering them?

See my related Q on price gouging also posted in the economics subcategory.

Answer 1

obviously when price is above costs, there is theft - injustice - theft

'the society based on injustice cannot stand'

scarcity is a crock -

free to choose is a crock - if there are alternatives, they are at some distance [and therefore at some cost] - and some energy, time and cost is needed to find them

voluntariness of transaction is a crock - voluntariness can only be based on full information, which the customer never has

in one transaction, it doesnt matter - but over trillions of transactions, this causes grave injustice

and money is power, so it is theft of power - ie, slavery-tyranny

which leads to violence [war and crime]

overpower/underpower leads to war and crime too - the greater the ratio of power, the greater ease in stealing - the more money the overpowered have, to buy soldiers, and the cheaper the soldiers are, the more war

the simplest way to compensate for this built-in, evergrowing theft/violence/misery/danger/instability is to limit fortunes to the most one person can earn by work [US$2 million], and spread overfortunes equally among everyone

then it doesnt matter what tricks are used to legally steal, all are controlled before they cause violence

the founding fathers understood that a land of the free required prevention of concentration of wealth/power, ie theft

but americans did not understand, nor act

presumably people do not grasp that there are many many wideopen legal ways money tranfers automatically from underpaid to overpaid

so we have war instead of peace, misery instead of happiness, tyranny instead of freedom and democracy, extinction soon instead of a future

but it is okay, because people cannot grasp that we are inevitably headed for extinction if we dont limit fortunes to justice

nor can they grasp that we are miserable

nor can they grasp that they have no democracy or freedom or equality or justice or peace

so everything is fine - we will just be miserable for a few more years, then extinction

i suspect that people can not get out of their reptile-mammal-cortical brains the idea that justice will mean less money for them not more

perhaps they reason thus: we belong to a rich country - we have billionaires - other countries dont - so we are rich - so justice - sharing - must mean less for me not more

it seems that the synapse just hasnt been invented that can grasp that the overpaid 1% get 90% of world income - US$70 trillion a year - and that if people limit fortunes to justice [what a person can put into the pool of wealth by making, not just raking] this US$70 trillion a year will come pouring down on their heads - US$70,000 a year per family

and destroying tyranny and slavery and violence [war and crime]

people's cranial computers just crash at this point

Answer 2

Well, as a simple answer, yes. Price isn't simply a reflection of production costs, it is also a reflection of demand. This makes the capitalist price system a means of efficiently allocating resources.

For an example: Suppose the world can only produce 5 apples a year. It doesn't cost that much to produce them, but for some reason, no matter how hard we try, we can only grow 5 a year.

We have to figure out some way to distribute these apples. There are several ways to do this, each with their respective strengths and weaknesses.

We could, for example, charge only the small amount it took to create the apples. This price would be so small that practically anyone could afford the apple. This means that the people who would likely get the apples would be the ones living closest to where they are grown...these lucky people are the first ones to show up with the pocket change needed to get one of the rare apples.

Would this be the most just distribution of apples, or the most efficient (the greatest benefit to society)? Probably not. The first 5 people to buy might just use the apples as paperweights, since they don't like the taste but it's cheaper than most other paperweights. That would be inefficient. Also, people who might have had a much greater need for the apples won't get them, because they live too far away; that may not be very just. Of course, those 5 people MIGHT be the ones most needing the apples, or the ones to put the apples to the best use. But it seems very unlikely that they would be chosen more or less randomly by living the closest.

Suppose we let demand determine the price, and thus the allocation, of the apple. The ones to get the apples would be the highest bidders. This would make the price much higher than the cost, but it would have the benefit of being a more efficient and arguably more just allocation of apples. The highest bidder is willing to sacrifice most for the apple, so they presumably have a great need for it. The high bidder is also likely to get the most use from the apple, since it would be silly to spend so much and then not use the apple to it's greatest benefit.

In my opinion, this solution is more efficient and more just than the price-reflecting-cost solution. There are other possible solutions, but for a variety of reasons I think the supply-demand solution is the best overall.

This isn't just a hypothetical example. Almost all goods are scarce, in that there is only some fixed amount we can produce in any given time. All goods have the same problem of deciding how they should be distributed, and the capitalist supply-demand pricing system seems to work the best for most of them.

Answer 3

To Timm1776: Prices are determined by quantity and practical utility of that product or service (demand). Never by cost. For an example, oxygen has a very practical utility, but it´s so abundant that´s free. Diamonds, I have never heard of someone who died for not having a diamond, but are so few diamonds in the world (compared with almost anything else) that they are very expensive. And it´s not a matter of justice either. For justice there´s laws, courts and lawyers. This is economy. Do not confuse bacon with speed.

Humans are selfish, and if those 5 apples where mine, I, as a selfish being, would sell them to the best offer on a bid, as you suggested, but it´s because I´m selfish, as you are.

To heeltap; you can´t choose "the kind" of capitalism you want. There´s only one. If something it´s too expensive, don´t buy it. End of the problem. You, as a consumer can choose.

Have you ever thought the problem could be different and may be, just may be, that you are not earning enough money?

To "The Bulletproof Monk´s Q & A"; I tottaly agree with everything you say, but would add, that you are right again and capitalism is not perfect, but it´s the only way known by man to achieve richness.

Answer 4

Besides being founded on capitalism, this country also boasts a successful market economy. As such, we as consumers are obligated not to buy goods and services that are too high a price, thus driving the price down. But as long as people continue to purchase goods and services at outrageous prices, there's no incentive for providers to lower them. That's how Abercrombie and Fitch can get away with charging so much for their clothing. The clothing is popular (or was) and people are going to buy it no matter what cost it comes at.

However, where we get into trouble is when there are only a few providers of a good or service, or worse, only one provider. If I don't want to pay $80 for a pair of jeans at A&F, I can just mosey on over to Target and get some for $20 no problem. But what if A&F were the only provider of jeans? There would be no competitor for me to purchase jeans from at a lower price, but I need jeans, so A&F can charge whatever they want. It's the same with gas, for instance.

So in the first case, where there's competition for my business and I am able to make educated decisions about where I want my money to go, I don't have a problem with retailers or producers setting prices that exceed their cost of production by a lot. It's smart business. But in the second case, where I am obligated to consume products at a price I have no control over, I think you are right to suggest that it is inopportune capitalism.

Answer 5

Yes it is the kind of economy we want. Marxist refer to it as capitalism but what it's really a free market, as in freedom. You can demand any price you want but the only price that matters is the one people are willing to pay.

If instead we set prices based on how much it cost to produce an item there would be no incentive for being efficient the use of resources, labor or energy.

Answer 6

both the mummy or the daddy - or worse both - stay in concern of each and every thing (possibly by using information, or PTA thoughts of poor human beings, crime, drugs, etc.) So the toddlers are secure by using secure practices 24/7. i imagine once a million undesirable apple no rely if it is in yet another united states of america or no longer scares some moms and dads into action then this tale spreads to electrify different moms and dads, and ruin the lives of harmless human beings. The in route of homestead the more effective scared they develop into. the options with todays quickly paced acquaintances is ignore them, get to understand them earlier they pass lower back as your shifting too. in case you do pass to suburbia - the position you comprehend each and every person will be for awhile you fairly can meet your human beings and function friendships that very last. won't be able to peg down united states of america because it truly is so huge, it truly is referenced from San Francisco bay section element of view. There are huge numbers of human beings on the pass in California, ties variety right now, yet human beings pass often. Relationships are not easy to start up, in case you comprehend you both will be shifting quickly. As for the treatment of gays and minorities - in fields that contain toddlers - you may under no circumstances wager how human beings will react, yet I often plan for the worst, if the Alpha ensure of the faculty, or PTA, is chuffed then the flock will be too. unhappy psychological image yet I view human beings more effective as followers than persons or leaders in those situations. you should understand the man earlier condemning them.

Answer 7

See my answers to your other questions. In your "costs" you are not considering opportunity costs.