5 ms·

In the real world, there is more than one sandwich seller and they compete with each other. When was the last time you non-consensually bought a sandwich? Even

by imgabe 4y ago

In the real world, there is more than one sandwich seller and they compete with each other. When was the last time you non-consensually bought a sandwich? Even homeless people on the street will sometimes refuse free food, so the idea that sandwich-sellers can set any arbitrary price they want or people will starve is just not something that happens in practice. Indeed, sandwiches are abundant and affordable.

chii 4y ago
Switch sandwiches out with internet service provider, and do you get the same story?
- imgabe 4y ago
  Yes? The vast majority of people are able to buy Internet service and it is not a significant percentage of income, even for people with a low income. Do you know of people taking out second mortgages on their house or drowning in debt to afford Internet service? The flip side of the equation is that if a business is to exist, it has to set a price that people are capable of paying. Yes, sometimes with supply constraints they can charge more, but charge too much and nobody will be able to buy, which means $0 revenue for the business.
  - chii 4y ago
    > The vast majority of people are able to buy Internet service and it is not a significant percentage of income how did you know that the cost of such a service is not way overpriced compared to the cost of production? Are there really many ~sandwich providers~ISP that you can compare it to? Or are the prices just taken because there's no alternative, and that ~sandwiches~internet access is needed for living?
    - imgabe 4y ago
      The cost of production is irrelevant. The sale price is determined by the supply and demand on both sides (supply of the product, and supply of money available to pay for it). A market like ISPs is subject to natural monopoly because of the physical nature of running wires to houses. A true free market would see any competitor free to run their own wires and offer a service, but we don't allow that. We kind of did in the early days of electricity when people just strung up wires wherever they liked. It led to a lot of people getting electrocuted. If there is really a large margin available for a competitor to undercut, someone will find a way to do it. And, as predicted, people are with options like Starlink and 5G hotspots becoming viable.
orzig 4y ago
People tend to think about monopolies in terms of single companies, but they're more commonly a systemic thing. Housing: Most voters are homeowners, with the shared incentive to increase the price of housing in their town through restrictive policies. This ignores the interesting conversation about whether NIMBY actually increases property values, but most people believe they do. They don't even have to be explicit about it, nor get 100% cooperation, but the emergent property is clear and shockingly consistent across US Healthcare: There are many systems at play here, as an example: The AMA restricts the number of doctors who can enter the profession: https://skeptics.stackexchange.com/questions/4561/does-the-ama-limit-the-number-of-doctors-to-increase-current-doctors-salaries https://skeptics.stackexchange.com/questions/4561/does-the-a... Education: Prestige de-facto limits the number of 'desirable' schools in the marketplace, and the high-prestige schools haven't grown nearly as much as overall enrollment. There's no single top hat wearing, cigar chomping fat cat. Or even a smoke filled back room. But a variety of cultural and regulatory norms keep the dynamics entrenched. Which isn't to say that they can't be changed! But it won't be just the subtle nudge of Adam Smith's invisible hand.
- imgabe 4y ago
  Those are all industries that are heavily regulated and/or subsidized by the government. I’m not saying the free market is the perfect answer to everything, but none of those are a free market.
  - piva00 4y ago
    That's a No True Scotsman, by that definition there simply isn't free market at all in the world. Every product and service has regulations on how/what can be sold...
    - imgabe 4y ago
      That’s not the point. If this post is trying to argue that high prices are all just caused by greedy capitalists, then pointing out the three most heavily government-manipulated markets does not exactly support the hypothesis.
gjulianm 4y ago
> In the real world, there is more than one sandwich seller and they compete with each other. When was the last time you non-consensually bought a sandwich? But that competition isn't perfect. Right now, for example, there are very clear indications of price gouging with the excuse of inflation. And it isn't even just with food. See the renting market for an example. People who had enough money to buy a house to rent it earn more money, and people who didn't spend more money because they need a house to live (and moving is a very high barrier for a lot of people). But I think the most important example is jobs, mainly jobs with a low barrier of entry, which are mostly taken by poor people. People that don't have enough savings/time to get better education or to find for better jobs have to get whatever they can, so their employers have a lot of power to set low salaries: the employer can deal with an employee leaving or taking more time to fill a position, the employee probably needs a job quickly to pay the bills.

by imgabe 4y ago

chii 4y ago

Switch sandwiches out with internet service provider, and do you get the same story?

imgabe 4y ago
Yes? The vast majority of people are able to buy Internet service and it is not a significant percentage of income, even for people with a low income. Do you know of people taking out second mortgages on their house or drowning in debt to afford Internet service? The flip side of the equation is that if a business is to exist, it has to set a price that people are capable of paying. Yes, sometimes with supply constraints they can charge more, but charge too much and nobody will be able to buy, which means $0 revenue for the business.
- chii 4y ago
  > The vast majority of people are able to buy Internet service and it is not a significant percentage of income how did you know that the cost of such a service is not way overpriced compared to the cost of production? Are there really many ~sandwich providers~ISP that you can compare it to? Or are the prices just taken because there's no alternative, and that ~sandwiches~internet access is needed for living?
  - imgabe 4y ago
    The cost of production is irrelevant. The sale price is determined by the supply and demand on both sides (supply of the product, and supply of money available to pay for it). A market like ISPs is subject to natural monopoly because of the physical nature of running wires to houses. A true free market would see any competitor free to run their own wires and offer a service, but we don't allow that. We kind of did in the early days of electricity when people just strung up wires wherever they liked. It led to a lot of people getting electrocuted. If there is really a large margin available for a competitor to undercut, someone will find a way to do it. And, as predicted, people are with options like Starlink and 5G hotspots becoming viable.

orzig 4y ago

People tend to think about monopolies in terms of single companies, but they're more commonly a systemic thing. Housing: Most voters are homeowners, with the shared incentive to increase the price of housing in their town through restrictive policies. This ignores the interesting conversation about whether NIMBY actually increases property values, but most people believe they do. They don't even have to be explicit about it, nor get 100% cooperation, but the emergent property is clear and shockingly consistent across US Healthcare: There are many systems at play here, as an example: The AMA restricts the number of doctors who can enter the profession: https://skeptics.stackexchange.com/questions/4561/does-the-ama-limit-the-number-of-doctors-to-increase-current-doctors-salaries https://skeptics.stackexchange.com/questions/4561/does-the-a... Education: Prestige de-facto limits the number of 'desirable' schools in the marketplace, and the high-prestige schools haven't grown nearly as much as overall enrollment. There's no single top hat wearing, cigar chomping fat cat. Or even a smoke filled back room. But a variety of cultural and regulatory norms keep the dynamics entrenched. Which isn't to say that they can't be changed! But it won't be just the subtle nudge of Adam Smith's invisible hand.

imgabe 4y ago
Those are all industries that are heavily regulated and/or subsidized by the government. I’m not saying the free market is the perfect answer to everything, but none of those are a free market.
- piva00 4y ago
  That's a No True Scotsman, by that definition there simply isn't free market at all in the world. Every product and service has regulations on how/what can be sold...
  - imgabe 4y ago
    That’s not the point. If this post is trying to argue that high prices are all just caused by greedy capitalists, then pointing out the three most heavily government-manipulated markets does not exactly support the hypothesis.

gjulianm 4y ago

> In the real world, there is more than one sandwich seller and they compete with each other. When was the last time you non-consensually bought a sandwich? But that competition isn't perfect. Right now, for example, there are very clear indications of price gouging with the excuse of inflation. And it isn't even just with food. See the renting market for an example. People who had enough money to buy a house to rent it earn more money, and people who didn't spend more money because they need a house to live (and moving is a very high barrier for a lot of people). But I think the most important example is jobs, mainly jobs with a low barrier of entry, which are mostly taken by poor people. People that don't have enough savings/time to get better education or to find for better jobs have to get whatever they can, so their employers have a lot of power to set low salaries: the employer can deal with an employee leaving or taking more time to fill a position, the employee probably needs a job quickly to pay the bills.