3 ms·

I don't think "externalizing their costs to the consumers" really makes sense. In an idealized market, costs should be passed onto the consumer. From what I ca

I don't think "externalizing their costs to the consumers" really makes sense. In an idealized market, costs should be passed onto the consumer. From what I can tell, the book you reference is just complaining that this cost changed from money to labor. It is also worth noting that, in many cases, this results in a net win for the consumer. Eg, whwn I buy from a full service gas station, I am paying someone to pump my gas, and paying the to sit idle waiting for customers, and paying (in time) to wait for them to finish. In contrast, in self service, the only cost from above I have is 1 person pumping gas (which switched from being paid with money, to being paid with labor)

infogulch 8y ago
An idealized market requires full awareness of all of the costs. A key factor in "externalizing" costs is hiding those external costs from the consumer. E.g. a perfect market would notice the increased quality variance of goods and services and would require the price to go down proportionally so the total cost is the same. But consumers don't all see it at the same time, so every company has a chance to hoodwink every consumer by pushing additional costs onto them without their initial knowledge. The key innovation of money is the ability to accurately evaluate the value of goods and services; by pushing all of these extra external costs onto the consumer we're basically going back to bartering. Every additional variable that the consumer is required to consider during a purchase decision is additional cognitive load. That's why people pay so much for free/fixed shipping costs: it reduces the number of variables you have to keep in your head by 1. It's also why I think that adding tax after the listed price (like the US does it) is terrible: it puts more cognitive load on the consumer. Consumers today are attacked with dozens of potential hidden external costs around every corner, it's like a DOS attack on the consumer's brain and inhibits their decision making ability.
decebalus1 8y ago
The book is arguing about using a service which costs X. The business then makes the service more efficient by reducing labor costs for itself and not passing the savings back to the consumer but instead keeping the same price while making the service shittier by having the consumer do more work. So for the same price, you get less service, need to do more work while the business hoards the money.

infogulch 8y ago

An idealized market requires full awareness of all of the costs. A key factor in "externalizing" costs is hiding those external costs from the consumer. E.g. a perfect market would notice the increased quality variance of goods and services and would require the price to go down proportionally so the total cost is the same. But consumers don't all see it at the same time, so every company has a chance to hoodwink every consumer by pushing additional costs onto them without their initial knowledge. The key innovation of money is the ability to accurately evaluate the value of goods and services; by pushing all of these extra external costs onto the consumer we're basically going back to bartering. Every additional variable that the consumer is required to consider during a purchase decision is additional cognitive load. That's why people pay so much for free/fixed shipping costs: it reduces the number of variables you have to keep in your head by 1. It's also why I think that adding tax after the listed price (like the US does it) is terrible: it puts more cognitive load on the consumer. Consumers today are attacked with dozens of potential hidden external costs around every corner, it's like a DOS attack on the consumer's brain and inhibits their decision making ability.

decebalus1 8y ago

The book is arguing about using a service which costs X. The business then makes the service more efficient by reducing labor costs for itself and not passing the savings back to the consumer but instead keeping the same price while making the service shittier by having the consumer do more work. So for the same price, you get less service, need to do more work while the business hoards the money.