5 ms·

That means a landlord can extract money well above a true market rate. The market rate IS what the landlord extracts from it, which is what the market, you, is

That means a landlord can extract money well above a true market rate. The market rate IS what the landlord extracts from it, which is what the market, you, is willing to pay.

lukejduncan 7y ago
Why is this being downvoted?
- justapassenger 7y ago
  Because a lot of people lack basic financial education
- wpietri 7y ago
  Because it's too simple. Market distortions shift the price people pay away from what the true market price would be in a competitive market. As an example, I live in one of the US's few competitive ISP markets. I pay $40/month for gigabit fiber, no limits. Comcast, which is often a monopoly or a duopoly, charges $90-140/month [1] for gigabit service, and they have assorted restrictions that I don't have to deal with, like data caps and limited upload speeds. So what's the true market price for full gigabit? The person you're responding to, bassman9000 would apparently say it's $140, because tautologically that's what people pay. I'd say it's much lower. Further evidence to support my position is that when you measure actual speeds delivered on gigabit, many of the ISPs are local providers, not the big nationals. [2] Customer satisfaction with my ISP is hugely higher than Comcast as well [3], with Comcast's Net Promoter Score actually being negative. [4] Those are not signs of a competitive market, and if the market isn't competitive, I think it's a 101-level mistake to say that the price people pay is the true market price. [1] https://www.cnet.com/news/comcast-offering-1-gigabit-per-second-service-to-its-entire-territory/ https://www.cnet.com/news/comcast-offering-1-gigabit-per-sec... [2] https://www.vice.com/en_us/article/7xgne9/locally-run-isps-offer-the-fastest-broadband-in-america https://www.vice.com/en_us/article/7xgne9/locally-run-isps-o... [3] https://www.sonic.com/care https://www.sonic.com/care [4] https://npsbenchmarks.com/blog/best-internet-service-providers-by-net-promoter-score https://npsbenchmarks.com/blog/best-internet-service-provide...
jbay808 7y ago
I assume the GP is referring to something like this: https://equilibriabook.com/an-equilibrium-of-no-free-energy/ https://equilibriabook.com/an-equilibrium-of-no-free-energy/ > What about houses? Millions of residential houses change hands every year, and they cost more than stock shares. If we expect the stock market to be well-priced, shouldn’t we expect the same of houses? > The answer is “no,” because you can’t short-sell a house. Sure, there are some ways to bet against aggregate housing markets, like shorting real estate investment trusts or home manufacturers. But in the end, hedge fund managers can’t make a synthetic financial instrument that behaves just like the house on 6702 West St. and sell it into the same housing market frequented by consumers like you. Which is why you might do very well to think for yourself about whether the price seems sensible to you before buying a house: because you might know better than the market price, even as a non-specialist relying only on publicly available information. In this case, since the GP is referring to rent increases, the only members of the market are you and the landlord, and the landlord can leverage the large burden of moving to increase rent to a higher price than one that would be competitive on the broader market. If you were a perfect rational decisionmaker you could perhaps have priced this risk in at the start and said "$1000/month is too expensive because I know the landlord will increase it 25% as soon as I finish unpacking". But in practice, people budget according to the price they're advertised.
- bassman9000 7y ago
  * the only members of the market are you and the landlord* But that's not true. The landlord can increase the price of the rent, knowing that, as some point, you'll leave, because you, the buyer, consider it too high. The market around you, other possible renters, may not, and so the price the landlord sets will still be the market price. Now, the landlord knows you're a good customer: no pets, no parties, always clean. He has an incentive to keep you as such: you're predictable, no unforeseen costs, and knowing that, there may not be many possible renters willing to pay more, according to his estimations, and so it keeps the price stable (+CPI). That's still the market price. I can't understand why in HN, out of all places, people dismiss the superiority of a fully decentralized, uncoordinated, resilient information distribution system (free market prices), in favor of a centralized, brittle, obscure, arbitrary ruled one.

That means a landlord can extract money well above a true market rate. The market rate IS what the landlord extracts from it, which is what the market, you, is willing to pay.

lukejduncan 7y ago

Why is this being downvoted?

justapassenger 7y ago
Because a lot of people lack basic financial education
wpietri 7y ago
Because it's too simple. Market distortions shift the price people pay away from what the true market price would be in a competitive market. As an example, I live in one of the US's few competitive ISP markets. I pay $40/month for gigabit fiber, no limits. Comcast, which is often a monopoly or a duopoly, charges $90-140/month [1] for gigabit service, and they have assorted restrictions that I don't have to deal with, like data caps and limited upload speeds. So what's the true market price for full gigabit? The person you're responding to, bassman9000 would apparently say it's $140, because tautologically that's what people pay. I'd say it's much lower. Further evidence to support my position is that when you measure actual speeds delivered on gigabit, many of the ISPs are local providers, not the big nationals. [2] Customer satisfaction with my ISP is hugely higher than Comcast as well [3], with Comcast's Net Promoter Score actually being negative. [4] Those are not signs of a competitive market, and if the market isn't competitive, I think it's a 101-level mistake to say that the price people pay is the true market price. [1] https://www.cnet.com/news/comcast-offering-1-gigabit-per-second-service-to-its-entire-territory/ https://www.cnet.com/news/comcast-offering-1-gigabit-per-sec... [2] https://www.vice.com/en_us/article/7xgne9/locally-run-isps-offer-the-fastest-broadband-in-america https://www.vice.com/en_us/article/7xgne9/locally-run-isps-o... [3] https://www.sonic.com/care https://www.sonic.com/care [4] https://npsbenchmarks.com/blog/best-internet-service-providers-by-net-promoter-score https://npsbenchmarks.com/blog/best-internet-service-provide...

jbay808 7y ago

I assume the GP is referring to something like this: https://equilibriabook.com/an-equilibrium-of-no-free-energy/ https://equilibriabook.com/an-equilibrium-of-no-free-energy/ > What about houses? Millions of residential houses change hands every year, and they cost more than stock shares. If we expect the stock market to be well-priced, shouldn’t we expect the same of houses? > The answer is “no,” because you can’t short-sell a house. Sure, there are some ways to bet against aggregate housing markets, like shorting real estate investment trusts or home manufacturers. But in the end, hedge fund managers can’t make a synthetic financial instrument that behaves just like the house on 6702 West St. and sell it into the same housing market frequented by consumers like you. Which is why you might do very well to think for yourself about whether the price seems sensible to you before buying a house: because you might know better than the market price, even as a non-specialist relying only on publicly available information. In this case, since the GP is referring to rent increases, the only members of the market are you and the landlord, and the landlord can leverage the large burden of moving to increase rent to a higher price than one that would be competitive on the broader market. If you were a perfect rational decisionmaker you could perhaps have priced this risk in at the start and said "$1000/month is too expensive because I know the landlord will increase it 25% as soon as I finish unpacking". But in practice, people budget according to the price they're advertised.

bassman9000 7y ago
* the only members of the market are you and the landlord* But that's not true. The landlord can increase the price of the rent, knowing that, as some point, you'll leave, because you, the buyer, consider it too high. The market around you, other possible renters, may not, and so the price the landlord sets will still be the market price. Now, the landlord knows you're a good customer: no pets, no parties, always clean. He has an incentive to keep you as such: you're predictable, no unforeseen costs, and knowing that, there may not be many possible renters willing to pay more, according to his estimations, and so it keeps the price stable (+CPI). That's still the market price. I can't understand why in HN, out of all places, people dismiss the superiority of a fully decentralized, uncoordinated, resilient information distribution system (free market prices), in favor of a centralized, brittle, obscure, arbitrary ruled one.