Saturday, February 16, 2019

Got To Get This Off My Chest Right Away

     Peter Grant is normally a sensible fellow. All right, he’s got a couple of stupid notions, but then, most people do. To be fair, I once thought opening the borders was a good idea. But there’s stupid, and then there’s are you BLEEP!ing kidding me?

     Let's be honest: most companies are out to separate you from as much of your money as possible, as painlessly as possible. It's only because we aren't vigilant, and don't pay enough attention to what's going on, that we continue to tolerate this.

     What's more, many of the prices charged for goods bear no relation whatsoever to the actual cost of production of those goods - another con game.

     I emphasized the arrant idiocy.

     The notion that the “cost of production” should help to determine the price of a good is a Marxist idea. It cannot be found anywhere in reality. The sole participation of the cost of production, however a maker might arrive at it -- and that's a lot harder than you might imagine, Gentle Reader -- is to determine the bottom of the price range for the good: i.e., the lowest imaginable price at which he could continue to make and sell the good without going swiftly bankrupt. Even this relation has exceptions, as some manufacturers deliberately make and sell “loss leaders” to make the other goods in their lines more attractive.

     Just in case you never took high school economics, the price of a good offered in a reasonably free market is set by two factors:

  1. Supply: The immediate and / or projected availability of the good at some proposed price.
  2. Demand: The number of immediate and / or projected persons ready, willing, and able to purchase the good at that price.

     Except for governmental intrusions upon the marketplace, nothing else matters.

     I begin to wonder whether the rampant socialist idiocy being offered us by such...persons as Alexandria Ocasio-Cortez and Kamala Harris – say, what a presidential ticket that would make, eh? With maybe Ilhan Omar as our Secretary of State and Rashida Tlaib as Ambassador to the U.N.? — has become contagious. A mind virus, slowly taking over all our brains through the agency of the Left’s political luminaries and their handmaidens in the major media!

     Stranger things have happened. As I’m stuck here in New York, in uncomfortable proximity with Ocasio-Cortez, Bill de Blasio, and Andrew Cuomo, perhaps I should start to worry.

4 comments:

John C. said...

Supply and demand determines the price of a commodity only insofar as the point of equilibrium allows for a profit. Without profit, the difference between the cost of goods sold and the sale price for said goods, the item will not be produced (except by a socialist government). If the point of equilibrium is below the cost to manufacture then there will be zero production. That's why it's important for a businessman to know the costs of goods sold as well as if there is a demand for his product. BTW, demand an be created, see: Pet Rock.

Linda Fox said...

To me, this is one of those idiocies that comes from kids never having a paper route, shoveling snow/mowing lawns, babysitting, or other means of entrepreneurial experience-gathering.

I worked early at those, and other, occupations during the years I was too young to get a work permit. I had a clear sense of what was involved in the process. That experience has been useful, both in college (initially, business major), and after, as a worker.

Too many youngsters (not by age, by cluelessness) are incapable of framing their learning, except in exploited worker/evil capitalist terms. Like Sandy (AOC), they seem to have completely bypassed the knowledge of owning a business, however small.

Pity. It would have been a good thing for them to have some real-world experience. Still not too late, except - would they LEARN from starting a business? Or, would they simply see themselves as a downtrodden "little guy", exploited by "big business"? I think the later is more likely.

Some lessons do have to be learned early. Preferably with some guidance from a mentor/advisor.

Shell said...

I'm a firm believer in and supporter of capitalism and the concept "Whatever the market will bear". Yet sometimes I see a product and its price and think, "Christ, you guys are screwing people *hard*." But if people are willing to pay it, selah.

Sometimes they customers demand higher prices. Nearly fifty years ago two of my father's uncles moved to NE Florida and opened a furniture store. They had experience in the business, researched the area, bought good, well-made items, and set what they considered a fair price that was well under what their competitors were charging. The business nearly tanked until they learned that their potential customers thought that because the prices were low the product was junk. They had to raise prices, sometimes drastically, to just under or equal with their competitors' to get people to buy.

Reg T said...

Years ago, when Glocks were reasonably new to many of us Americans, I got on one of the first Glock lists on the Internet. I remember a discussion we had where a number of the members were ranting about the outrageous prices Glock was charging, when the cost of materials was perhaps a quarter of what they sold for, let alone the MSRP.

Others claimed to understand the notion of the "cost of production", but they envisioned only the cost of the materials, machinery, and the wages paid to the workers. They didn't include the cost of the property, through purchase or lease, the cost of insurance for the property and the necessary structures, utilities, unemployment insurance and medical insurance for the workers, payments into a 401k program, and a host of other expenses I have forgotten or of which I was unaware.

Few thought at all about supply and demand, and the loudest - perhaps schooled at BU, along with Occasional-Cortex - assumed that Glock was "ripping them off". Several of us tried to point out the facts to them, but I don't recall any of us experiencing success at our efforts to help them begin to question their assumptions.