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The "more expensive" goods and services are not relocatable, or otherwise have special limitations on supply. College textbooks, for example, are priced monopol

by johbjo 6y ago

The "more expensive" goods and services are not relocatable, or otherwise have special limitations on supply. College textbooks, for example, are priced monopolistically to maximize revenue as opposed to quantity. Housing is priced based on mortgage rates. Improved manufacturing and (essentially) cheap Chinese labour is responsible for the cheaper goods. The connection here is that "inflation" as it is measured by central banks is artificially lowered by improved and cheap manufacturing. This allows them to keep very low interest rates while being congruent with their "charter" of keeping stable average prices. Artificially low interest rates can be seen as the cause of the most of the "more expensive" goods. It inflates the price of assets relative to income. And there are many stake holders in asset inflation.

throwawaygh 6y ago
> College textbooks, for example, are priced monopolistically to maximize revenue as opposed to quantity. College textbooks are such an odd case because the incentives make no god damn sense. Obviously they aren't Veblen; the actual owner (students) would always rather pay less. But colleges and universities also don't make a ton of money on books. Two of the colleges I'm familiar with would lose money on their bookstore if they didn't have a monopoly on college-branded merchandise. It'd be better for them to just stop selling books and only sell clothes + electronics + price-gauged office supplies for the captive market ("I need some pens/paper/etc. but don't want to leave campus tonight"). Books lose money -- they're heavy, require a ton of extra labor, have thin margins, and you have to do all of that work twice so you can capture a few extra pennies in the used market. The best you can say is that they're pretty cheap loss leaders for selling hoodies and hats. Instructors/professors don't really have an incentive to insist on expensive textbooks either. People always share anecdotes about being required to use the professor's super expensive book. But even if the prof wrote the book: 1. publishing just isn't very profitable (for me, 10 hours of consulting can make as much as about 30K book sales... maybe that goes up to 40 or even 80 hours for an expensive textbook. Maybe even a whole month of consulting for a super expensive hardback! But writing a book takes years of labor, so even on the upper bound it's just a horrendously bad way to make money as an author), and 2. this is rare enough to not explain systematic behavior -- remember that the US has 5000+ colleges and hundreds of thousands of professors. In most subjects there are fewer than 10 widely used textbooks. One of the best Linear Algebra textbooks available is completely open source (I think the author is even on HN sometimes). For some reason, small colleges and local branch campuses of state university systems still insist on using $100+ Linear Algebra textbooks that are... quite bad. This is true in lots of other subjects, too. It's like non-open-access academic publishing. Why do colleges/universities/professors keep going along with generating profit for the publishing industry? It makes no sense.
- unchocked 6y ago
  Yeah, it's weird. I suspect that while books and academic papers aren't Veblen, the fact that the purchaser and the decision maker are separate drives prices higher, price signals being replaced by marketing or something.
- mywittyname 6y ago
  > Why do colleges/universities/professors keep going along with generating profit for the publishing industry? It makes no sense. My higher-level college professors were really mindful of textbook prices and generally eschewed or at least minimized dependency on textbooks unless absolutely required. I think professors teaching lower-level courses have no say in textbook selection. The books are sold to department chairs, who require the book for all the courses. Then the professors get the carrot of having some software or other material that helps them teach the course. If I were an Adjunct making $3000 to teach a calculus class to 30 students, I'd feel bad that they are paying $180 for a text book, but I'd also appreciate having standardized test/homework materials with answer keys. I do think the future is college students all using some Khan Academy-like program with standardized tests, homework, lectures, and reading materials.
- tzs 6y ago
  > Two of the colleges I'm familiar with would lose money on their bookstore if they didn't have a monopoly on college-branded merchandise. It'd be better for them to just stop selling books and only sell clothes + electronics + price-gauged office supplies for the captive market ("I need some pens/paper/etc. but don't want to leave campus tonight"). Caltech did that years ago, I'm told, except for books with some obvious Caltech connection (e.g., the Feynman lectures, biographies of famous Caltech people, and that sort of thing). If you want textbooks for your classes, they send you to some online place called MBS Direct. I still have trouble imagining this. When I was there ('70-80s) I bought a lot of books on campus that were not textbooks for my classes. They were a good general technical bookstore and decent general interest bookstore (at least when it came to science fiction and fantasy). I think the nearest off campus bookstore with a decent technical books selection was Vroman's, which was about a 3 mile round trip to walk. I wouldn't have wanted to do that every time I felt like browsing technical books.
testfoobar 6y ago
Progressives would do well to understand how the Federal Reserve actively and enthusiastically promotes wealth inequality. Take the response last year to the Coronavirus: quantitative easing and zero interest rates drove the stock market to all time highs in parallel with a massive rise in unemployment. The wealthy got much, much richer. The poor got much, much poorer.

by johbjo 6y ago

throwawaygh 6y ago

> College textbooks, for example, are priced monopolistically to maximize revenue as opposed to quantity. College textbooks are such an odd case because the incentives make no god damn sense. Obviously they aren't Veblen; the actual owner (students) would always rather pay less. But colleges and universities also don't make a ton of money on books. Two of the colleges I'm familiar with would lose money on their bookstore if they didn't have a monopoly on college-branded merchandise. It'd be better for them to just stop selling books and only sell clothes + electronics + price-gauged office supplies for the captive market ("I need some pens/paper/etc. but don't want to leave campus tonight"). Books lose money -- they're heavy, require a ton of extra labor, have thin margins, and you have to do all of that work twice so you can capture a few extra pennies in the used market. The best you can say is that they're pretty cheap loss leaders for selling hoodies and hats. Instructors/professors don't really have an incentive to insist on expensive textbooks either. People always share anecdotes about being required to use the professor's super expensive book. But even if the prof wrote the book: 1. publishing just isn't very profitable (for me, 10 hours of consulting can make as much as about 30K book sales... maybe that goes up to 40 or even 80 hours for an expensive textbook. Maybe even a whole month of consulting for a super expensive hardback! But writing a book takes years of labor, so even on the upper bound it's just a horrendously bad way to make money as an author), and 2. this is rare enough to not explain systematic behavior -- remember that the US has 5000+ colleges and hundreds of thousands of professors. In most subjects there are fewer than 10 widely used textbooks. One of the best Linear Algebra textbooks available is completely open source (I think the author is even on HN sometimes). For some reason, small colleges and local branch campuses of state university systems still insist on using $100+ Linear Algebra textbooks that are... quite bad. This is true in lots of other subjects, too. It's like non-open-access academic publishing. Why do colleges/universities/professors keep going along with generating profit for the publishing industry? It makes no sense.

unchocked 6y ago
Yeah, it's weird. I suspect that while books and academic papers aren't Veblen, the fact that the purchaser and the decision maker are separate drives prices higher, price signals being replaced by marketing or something.
mywittyname 6y ago
> Why do colleges/universities/professors keep going along with generating profit for the publishing industry? It makes no sense. My higher-level college professors were really mindful of textbook prices and generally eschewed or at least minimized dependency on textbooks unless absolutely required. I think professors teaching lower-level courses have no say in textbook selection. The books are sold to department chairs, who require the book for all the courses. Then the professors get the carrot of having some software or other material that helps them teach the course. If I were an Adjunct making $3000 to teach a calculus class to 30 students, I'd feel bad that they are paying $180 for a text book, but I'd also appreciate having standardized test/homework materials with answer keys. I do think the future is college students all using some Khan Academy-like program with standardized tests, homework, lectures, and reading materials.
tzs 6y ago
> Two of the colleges I'm familiar with would lose money on their bookstore if they didn't have a monopoly on college-branded merchandise. It'd be better for them to just stop selling books and only sell clothes + electronics + price-gauged office supplies for the captive market ("I need some pens/paper/etc. but don't want to leave campus tonight"). Caltech did that years ago, I'm told, except for books with some obvious Caltech connection (e.g., the Feynman lectures, biographies of famous Caltech people, and that sort of thing). If you want textbooks for your classes, they send you to some online place called MBS Direct. I still have trouble imagining this. When I was there ('70-80s) I bought a lot of books on campus that were not textbooks for my classes. They were a good general technical bookstore and decent general interest bookstore (at least when it came to science fiction and fantasy). I think the nearest off campus bookstore with a decent technical books selection was Vroman's, which was about a 3 mile round trip to walk. I wouldn't have wanted to do that every time I felt like browsing technical books.

testfoobar 6y ago

Progressives would do well to understand how the Federal Reserve actively and enthusiastically promotes wealth inequality. Take the response last year to the Coronavirus: quantitative easing and zero interest rates drove the stock market to all time highs in parallel with a massive rise in unemployment. The wealthy got much, much richer. The poor got much, much poorer.