4 ms·

> how much would you pay for a big mac that happens to be located a hundred miles away from you? You just showed that proximity to the buyer matters, not locat

by ebg13 6y ago

> how much would you pay for a big mac that happens to be located a hundred miles away from you? You just showed that proximity to the buyer matters, not location, because _delivery_ is an additional cost in both money and time. If you want an apt comparison, you need to not bundle unrelated expenses. Whichever McDonalds I'm at, proximity to me is the same at time of purchasing identical Quarter Pounders, and the price is not.

leetcrew 6y ago
we seem to be talking past each other, but I'm curious to see exactly where our positions diverge. I think you already agreed that waterfront property is more valuable in real terms than a similar inland property because being close to the water is a desirable feature to some people. do you also agree that a retail space in NYC is more valuable than a similar space in peoria, in the same real sense, with the vast social and business network of NYC being the value add? if you agree that the real value of property in NYC is higher (due to proximity to lots of other desirable stuff), then you should agree that it makes sense that property commands a higher rent here. because the rent is higher, so too is the cost of labor and storage. if you follow the chain of reasoning thus far, you should agree that the real value of a quarter pounder in NYC is simply higher due to the higher input costs. I don't think there is an absolute "correct" answer here. we are arguing for competing models, and a model is only good insofar as it explains/predicts reality. if I squint hard enough, I can see why yours might make sense. but it seems to raise a lot more questions than answers. if a dollar in NYC is truly worth less than a dollar in peoria, why is this only reflected in the price of local goods and services (ie, stuff where local rent is a major input)? why does stuff from amazon have the same nominal cost everywhere in the US? it seems much simpler to just accept that NYC property has a higher real value and let everything else follow from that.
- ebg13 6y ago
  > you should agree that the real value of a quarter pounder in NYC is simply higher The real value of the quarter pounder is the same, because the quarter pounders are identical. The real cost is higher because each dollar buys less. The properties' real values are not the same, because the properties are not identical. > the real value of a quarter pounder in NYC is simply higher due to the higher input costs Cost is not value. Cost doesn't even create or drive value. Cost is the counterpoint to value in a trade equation. This holds true for both production and consumption. Consumption side: Given two identical products at two different merchants with two different prices, I will choose the cheaper one, NOT because one of the identical products has greater value, but because the difference between the product's value and its price is greater, which means that I get to keep some of the money. Production side: If the value of a thing is not more than it costs me to make, I will not spend resources to make that thing (unless I'm Softbank, har har). Here are two thought experiments: 1. Say that NYC imposes a 500% sales tax on fast food tomorrow. Has the value of a Quarter Pounder gone up, or will McDonalds just close their NYC locations because nobody wants to pay that much for fast food? 2. Say I buy Quarter Pounder ingredients at some point equidistant from NYC and Buffalo, and then I teleport myself and the ingredients to NYC/Buffalo, and then I assemble the Quarter Pounder in NYC/Buffalo and eat it there. I am enriched (I assume) equally by the same ingredients composed into the same delicious (I assume) product. So what is different about the two scenarios? If I want to buy more, my dollars don't buy as much in the two places. But I have not changed, the Quarter Pounders have not changed, the ingredients have not changed, the labor has not changed, the storage has not changed. Those are all still identical to the ones I brought in. The difference is my dollars.

by ebg13 6y ago

leetcrew 6y ago

we seem to be talking past each other, but I'm curious to see exactly where our positions diverge. I think you already agreed that waterfront property is more valuable in real terms than a similar inland property because being close to the water is a desirable feature to some people. do you also agree that a retail space in NYC is more valuable than a similar space in peoria, in the same real sense, with the vast social and business network of NYC being the value add? if you agree that the real value of property in NYC is higher (due to proximity to lots of other desirable stuff), then you should agree that it makes sense that property commands a higher rent here. because the rent is higher, so too is the cost of labor and storage. if you follow the chain of reasoning thus far, you should agree that the real value of a quarter pounder in NYC is simply higher due to the higher input costs. I don't think there is an absolute "correct" answer here. we are arguing for competing models, and a model is only good insofar as it explains/predicts reality. if I squint hard enough, I can see why yours might make sense. but it seems to raise a lot more questions than answers. if a dollar in NYC is truly worth less than a dollar in peoria, why is this only reflected in the price of local goods and services (ie, stuff where local rent is a major input)? why does stuff from amazon have the same nominal cost everywhere in the US? it seems much simpler to just accept that NYC property has a higher real value and let everything else follow from that.

ebg13 6y ago
> you should agree that the real value of a quarter pounder in NYC is simply higher The real value of the quarter pounder is the same, because the quarter pounders are identical. The real cost is higher because each dollar buys less. The properties' real values are not the same, because the properties are not identical. > the real value of a quarter pounder in NYC is simply higher due to the higher input costs Cost is not value. Cost doesn't even create or drive value. Cost is the counterpoint to value in a trade equation. This holds true for both production and consumption. Consumption side: Given two identical products at two different merchants with two different prices, I will choose the cheaper one, NOT because one of the identical products has greater value, but because the difference between the product's value and its price is greater, which means that I get to keep some of the money. Production side: If the value of a thing is not more than it costs me to make, I will not spend resources to make that thing (unless I'm Softbank, har har). Here are two thought experiments: 1. Say that NYC imposes a 500% sales tax on fast food tomorrow. Has the value of a Quarter Pounder gone up, or will McDonalds just close their NYC locations because nobody wants to pay that much for fast food? 2. Say I buy Quarter Pounder ingredients at some point equidistant from NYC and Buffalo, and then I teleport myself and the ingredients to NYC/Buffalo, and then I assemble the Quarter Pounder in NYC/Buffalo and eat it there. I am enriched (I assume) equally by the same ingredients composed into the same delicious (I assume) product. So what is different about the two scenarios? If I want to buy more, my dollars don't buy as much in the two places. But I have not changed, the Quarter Pounders have not changed, the ingredients have not changed, the labor has not changed, the storage has not changed. Those are all still identical to the ones I brought in. The difference is my dollars.