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Hello, so another blog from me. I suppose I complain a lot of things, and now that Christmas is over I can do it guilt free. Now the topic is sales. Sales (as in something costs a $100 but is 50% off for $50) are the most poisonous strategy to limit consumer choice as well as consumer knowledge in today's economy.
Sales are a little bit less evident in things that operate in monopolistic markets (natural or not)... Which if you notice gaming, most things sold operator in markets with economies of scale, therefore there a few providers for one service. How many CPU manufacturers are there, how many GPU manufacturers are there, how many monitor manufacturers, etc. Like iPod's and most other electronics, if we live on the same part of the planet we will likely buy our electronics for about the same price.
An i5 2500k will likely never go below $180 or above $250 in price (yes, using an old processor, bear with me). We have knowledge of what the good does, and what it usually sells for so we can create an educated decision whether to purchase it or not. For example, if you bought this processor, you can go tell me, "Oh yes, this is a good processor, go buy it!".
The issue starts here. You go to a mall, and you see a pair of jeans for $300. Your friend bought these for $100 dollars when they were on sale, and said for that price they are a "good bang for buck". Now they are $300 dollars, what do you do? You have a few options:
1) You can buy the jeans for $300 and hope they justify the cost. 2) You can go spend hours looking in other stores or the internet to find similar jeans elsewhere that are cheaper because they are currently on sale. 3) You can buy cheaper pants that you have no knowledge of but they are $100 instead of $300.
It's almost hard to explain why it's so stupid... But do you see how a simple example like this makes it extremely difficult for a consumer to purchase his good? Wasn't initially the goal of democracy to create like a free-market with no barriers to trading... Instead all of this bullshit to consumers?
We understand there are different markets: Natural monopolies, oligopolies, monopsonies/oligopsony, workably competitive, and perfectly competitive markets. We know that the "best" markets in terms of benefit to consumers (which is the goal), are perfectly competitive markets... Why are we allowing sales to against what a perfectly competitive market strives to achieve. Sales should be banned.
If every manufacturer of a good had a legal obligation to say periodically how much he wanted his good sold for, and it had to be that way, there would be much more knowledge about the good's within the market. Because prices fluctuate so widly with everything (home renovations, clothes, jewelry, body-care products, sport equipment) people can never decide on what is the best (two graphics cards with the same specs, but each week one is cheaper than the other, which one do you go buy if you ask someone)... And it is not only that. It is also important to take into account that by doing this it is also a lot easier to consumer discriminate. I could get into price discrimination, but I assume people who have any arguments against me already know what it means, and not the mention it could start a long topic in its own regard as well.
So I did quickly explained why sales are bad for consumers. And now simple logic states this: The consumers elect the government, and the government is there to make the lives of consumers better. Disagree with me if you will, but what I say is true. In a democracy you will generally vote for the party that shares your interests and represents your views on what you wish your country to become. So why don't consumers just say, hey, no more sales. "No store is allowed to put any discounts on goods ever. There will be prices set monthly or set once every two months, these will remain constant... And they will be clearly labelled for all customers to see." Obviously the regulation isn't as easy as that to put into place, and I know there are a lot of factors take into account... But all of these factors seem workable, and overall this will yield in the long-term a benefit to society.
So I am wondering what you guys think about why sales have not yet been illegalized, as well as what complications are preventing them from even being considered illegalized. This is such a broad topic and I don't feel like I got to cover it like I wanted to, but I would love if some people offered some inputs and we could have a discussion/debate going - it would also allow us to centralize thought on more specific points.
Cheers!
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Try buying a car, that'll really flip your lid.
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On December 28 2013 11:05 Burrfoot wrote: Try buying a car, that'll really flip your lid.
Haha I am quite aware. It's just weird you know. Back home in Slovakia, if something is listed at a store as 3 euro, it actually costs 3 euro. As a customer I should know exactly how much it's going to cost... Not the:
1) Let's add GST (wtf why is this not included in price) 2) How about some PST (luckily living in Alberta) 3) Shipping and Handling - sure why not? 4) Custom fees - okay 5) Carbon Emission Tax - more the marrier? 6) Administration charge - cool cool 7) Convience charge - .... -.- 8) OH YOU WANT TIP TOO? WELL FUCK YOU ASSHOOOO
Why don't they just tell me how much I'm going to pay at the end instead of doing this. I know obviously it's to make more money by making whatever I'm buying appear less expensive than it really is... But why is that allowed? Boggles my mind really.
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For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world.
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On December 28 2013 11:17 cravin74 wrote: For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world.
But see that's silly. Why should you only be able to buy these jeans for 1/3 of the price 3 times a year when it costs the manufacturer the exact same amount to produce a pair - regardless what time of year it is. And you completely missed the point of this thread if you're bringing up an example I addressed opposed to what I am arguing (which is not how you should proceed if the pants you want aren't on sale).
You are correct that the perfectly competitive market has assumptions, and realistically a perfectly competitive market is unattainable... But the closer we get to it the better, would you not agree? And certainly price discrimination and concealment of information are a detriment to becoming closer to a perfectly competitive market.
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On December 28 2013 11:22 FiWiFaKi wrote:Show nested quote +On December 28 2013 11:17 cravin74 wrote: For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world. But see that's silly. Why should you only be able to buy these jeans for 1/3 of the price 3 times a year when it costs the manufacturer the exact same amount to produce a pair - regardless what time of year it is. And you completely missed the point of this thread if you're bringing up an example I addressed opposed to what I am arguing (which is not how you should proceed if the pants you want aren't on sale). You are correct that the perfectly competitive market has assumptions, and realistically a perfectly competitive market is unattainable... But the closer we get to it the better, would you not agree? And certainly price discrimination and concealment of information are a detriment to becoming closer to a perfectly competitive market.
You make some assumptions, why is perfect competition good? why is price discrimination bad? Perfect competition can only occur if goods sold are the same. So instead of a many different styles/brands of jeans, you can now only choose one. Ya price discrimination will charge more to those who are willing to pay, but it also allows people who previously were unable to buy access to lower prices.
Also didn't J.C. penny try the no sales thing? instead of low and high prices they made theirs average. Turns out consumers didn't like that and they lost a whole bunch of money. Turns out consumers like sales, like they idea that they found something good.
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On December 28 2013 11:30 DeltaSigmaL wrote:Show nested quote +On December 28 2013 11:22 FiWiFaKi wrote:On December 28 2013 11:17 cravin74 wrote: For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world. But see that's silly. Why should you only be able to buy these jeans for 1/3 of the price 3 times a year when it costs the manufacturer the exact same amount to produce a pair - regardless what time of year it is. And you completely missed the point of this thread if you're bringing up an example I addressed opposed to what I am arguing (which is not how you should proceed if the pants you want aren't on sale). You are correct that the perfectly competitive market has assumptions, and realistically a perfectly competitive market is unattainable... But the closer we get to it the better, would you not agree? And certainly price discrimination and concealment of information are a detriment to becoming closer to a perfectly competitive market. You make some assumptions, why is perfect competition good? why is price discrimination bad? Perfect competition can only occur if goods sold are the same. So instead of a many different styles/brands of jeans, you can now only choose one. Ya price discrimination will charge more to those who are willing to pay, but it also allows people who previously were unable to buy access to lower prices. Also didn't J.C. penny try the no sales thing? instead of low and high prices they made theirs average. Turns out consumers didn't like that and they lost a whole bunch of money. Turns out consumers like sales, like they idea that they found something good.
This is really the most basic modern microeconomics theory there is. I am assuming the reader has some economic background as these are points that are not really negotiable.
Saying price discrimination is not bad in economics is as bad thing is like saying atoms don't exist in physics. Not really interested in explaining these concepts, sorry.
1) You can't make prices average. It's not like a firm will sell above cost to one consumer, and below cost to the other consumer. Instead, it will just sell above to some of the consumers and not to the other consumers to maximize profit.
2) Well no, technically you'd have perfect competition for every good... which obviously is not possible, but we still want to get as close to it as possible for each individual good and as far away as possible from monopolies. The closer you get to perfect competition the less allocative and productive inefficiencies you have. (Good thing).
There, quick explanation to why you are not correct.
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Seems like a minor problem. I think you're right that messing with the information pipeline hurts the consumer (and benefits the producer and the distributor) but ultimately it's not that bad.
You say that the government is supposed to make the life of the consumer (I'm guessing you meant voter or citizen) better.
But IMO democracy is better seen as the struggle between an uninformed majority and an informed minority. It is crucially important for the uninformed majority to keep the number of issues at a minimum, since its attention is limited. Challenging an informed and powerful group for a small payoff is a strategic mistake.
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On December 28 2013 11:44 hypercube wrote: Seems like a minor problem. I think you're right that messing with the information pipeline hurts the consumer (and benefits the producer and the distributor) but ultimately it's not that bad.
You say that the government is supposed to make the life of the consumer (I'm guessing you meant voter or citizen) better.
But IMO democracy is better seen as the struggle between an uninformed majority and an informed minority. It is crucially important for the uninformed majority to keep the number of issues at a minimum, since its attention is limited. Challenging an informed and powerful group for a small payoff is a strategic mistake.
Thank you for the correction, that is indeed what I meant.
Two questions if I may. Why do you believe that messing with the information pipeline is not that bad? Definitely not saying you're wrong, but it seems to pose many problems to me. If people don't accurately know the cost of a good, how can they make a logical economical decision when making a purchase?
My other question was if you'd mind expanding on your last paragraph. I found it quite interesting but I not enough detail for me to understand exactly where you were going. Thanks!
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So you took to arguing against sales, but failed to read up on the largest case of a company going against sales? It made a pretty big splash and is a pretty good indication of what misguided intentions will do. Oftentimes sales are the reason for consumers coming to buy in the first place. Some firms will put out loss leaders in hopes people will come in and buy other goods as well. What is your opinion on this? And honestly, don't compare economics and physics. One is well defined, the other had two Nobel winners, one arguing for efficient markets, the other against, both winning.
random jcpenny article: http://www.forbes.com/sites/barbarathau/2013/05/08/another-reason-j-c-penneys-no-sale-strategy-flopped-digital-deals-are-proliferating/
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Illegal and consumer unfriendly are 2 different things
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On December 28 2013 12:07 thezanursic wrote: Illegal and consumer unfriendly are 2 different things As are "Should be" and "Are". I'm think it's pretty crazy to completelly ban sales, I can't see how that would work, but there's nothing conceptually wrong with the way he said it.
What I do find very annoying and I'm glad it's not allowed here is adding all those extras and taxes. It's so much easier when you pay what's listed. I'm also very annoyed by places that don't list prices and you have to find a machine to read the code to find out how much something costs.
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On December 28 2013 12:06 DeltaSigmaL wrote:So you took to arguing against sales, but failed to read up on the largest case of a company going against sales? It made a pretty big splash and is a pretty good indication of what misguided intentions will do. Oftentimes sales are the reason for consumers coming to buy in the first place. Some firms will put out loss leaders in hopes people will come in and buy other goods as well. What is your opinion on this? And honestly, don't compare economics and physics. One is well defined, the other had two Nobel winners, one arguing for efficient markets, the other against, both winning. random jcpenny article: http://www.forbes.com/sites/barbarathau/2013/05/08/another-reason-j-c-penneys-no-sale-strategy-flopped-digital-deals-are-proliferating/
Well here's the deal. If one firm has sales, and the other has no sales, more people will come to the firm that has sales. Hence regardless of what the other firm chooses... It will be beneficial for any firm to choose to have sales. See Game Theory on more of that.
So this tells us that if the market is allowed to act on its own, it will not yield an efficient outcome. When there is a market failure, as I understand, we should attempt to correct the failure as long as the cost to fix the failure is less than the benefit received from the fixing the failure.
In this case, I'd think that sales create a fairly large market failure because it creates allocative and static inefficiencies based on the fact that people are not given full information - and information is very rapidly changing due to occurrence of sales. And I believe that the cost to regulate a no-sales policy would be less than the benefit received to the economy.
Now that is my argument, and its likely its flawed as no-sales are still not implemented, however I am looking for a flaw in my thinking, and as to why sales are a good thing for the society as a whole.
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On December 28 2013 12:17 SKC wrote:Show nested quote +On December 28 2013 12:07 thezanursic wrote: Illegal and consumer unfriendly are 2 different things As are "Should be" and "Are". I'm think it's pretty crazy to completelly ban sales, I can't see how that would work, but there's nothing conceptually wrong with the way he said it. What I do find very annoying and I'm glad it's not allowed here is adding all those extras and taxes. It's so much easier when you pay what's listed. I'm also very annoyed by places that don't list prices and you have to find a machine to read the code to find out how much something costs.
See, you like many others hate when prices are not listed. Some places don't even have the scanners and you physically have to go up to a cashier and ask them to scan it for you (I've had this happen, and sometimes the line is too long, so you say fuck it, and buy it anyway, and be surprised at the price after), why is that legal? What complications would be created by making this practice illegal?
And by the same extention, why can't we illegalize all the added extras to prices, as well as sales... This will give us a price that doesn't arbitrarily change, and the price better reflects the cost to produce the good.
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the fewer things you buy, the less you have to worry about this
who the fuck in their right mind would spend 300 on some jeans anyway
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On December 28 2013 11:51 FiWiFaKi wrote:Show nested quote +On December 28 2013 11:44 hypercube wrote: Seems like a minor problem. I think you're right that messing with the information pipeline hurts the consumer (and benefits the producer and the distributor) but ultimately it's not that bad.
You say that the government is supposed to make the life of the consumer (I'm guessing you meant voter or citizen) better.
But IMO democracy is better seen as the struggle between an uninformed majority and an informed minority. It is crucially important for the uninformed majority to keep the number of issues at a minimum, since its attention is limited. Challenging an informed and powerful group for a small payoff is a strategic mistake.
Thank you for the correction, that is indeed what I meant. Two questions if I may. Why do you believe that messing with the information pipeline is not that bad? Definitely not saying you're wrong, but it seems to pose many problems to me. If people don't accurately know the cost of a good, how can they make a logical economical decision when making a purchase?
They can't, at least not as well as they would with more stable prices. I actually agree that it hurts buyers. But compared to some other business practices this is a very unimportant problem.
My other question was if you'd mind expanding on your last paragraph. I found it quite interesting but I not enough detail for me to understand exactly where you were going. Thanks!
I think the Stop SOPA campaign illustrates the idea quite well. There's a piece of legislation that was universally unpopular but almost passed because it served the interests of a small, well-connected minority.
If you want to create the kind of public campaign that killed SOPA you need to inform people on why the current system hurts their interests. It costs you time and it takes the wider public's attention. There are plenty of issues where the interests of a small minority are pitted against that of the majority. Some of the major ones would be food safety, mass surveillance, IP rights, drug development (and advertising) or global warming. It is in this context that sales or price discrimination are not that bad.
You could say that just because there are worse problems it doesn't mean we should let this one go. But the point you can't fight all battles in politics. It takes time to explain exactly why the minority's position hurts the majority. It takes sustained effort from the majority to make sure some legislation isn't reversed at the last moment. Or as in the case of IP protection brought back through different means after the public outcry has died down.
I mean, I guess if it was up for a vote I be for banning sales, although I'd have to think about it a bit. But if I was the president of a recording company, or say the CEO of a tobacco company in the early 90s, I would be really, really happy if the public was preoccupied with banning sales instead of looking at what I was doing.
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On December 28 2013 12:32 sam!zdat wrote: the fewer things you buy, the less you have to worry about this
who the fuck in their right mind would spend 300 on some jeans anyway
1) Not the point of this thread T__T 2) More people than you'd think. 3) The more knowledge you have, the quicker you can made decisions on what you buy, the less you need to worry.
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the knowledge you need is that consumerism is the orgiastic cult of false idols and that you can better achieve happiness by getting away from all that bullshit so you can stop worrying about whether or not you are being 'cheated' by 'imperfect information' because of course you are, that's the point. What a strange game, the only winning move is not to play
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Hong Kong9135 Posts
having perfect information that 300 dollar jeans are the same as 20 dollar jeans won't prevent people from buying the 300 dollar jeans. not everyone has the same perceived form of rationality that you may think is optimal.
and if people are going to be dumb with their money, so be it.
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On December 28 2013 12:46 sam!zdat wrote: the knowledge you need is that consumerism is the orgiastic cult of false idols and that you can better achieve happiness by getting away from all that bullshit so you can stop worrying about whether or not you are being 'cheated' by 'imperfect information' because of course you are, that's the point. What a strange game, the only winning move is not to play
If we took the philosophical approach to this problem, we would never arrive at a solution. At least that's what I found out from every philosophical debate I've ever had in my life... It depends how you look at it, and what your goal... And since the goal for you in your life can be anything, there is never a right answer. So I suppose the underlying assumption I am making is that we are going to assume the system where people want the most things, and the most utility out of their things.
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lol that's one of the dumber things I've heard this week
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Hong Kong9135 Posts
use-value is a funny concept
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oh! Here's a topic I like! What's funny about it?
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On December 28 2013 12:51 itsjustatank wrote: having perfect information that 300 dollar jeans are the same as 20 dollar jeans won't prevent people from buying the 300 dollar jeans. not everyone has the same perceived form of rationality that you may think is optimal.
and if people are going to be dumb with their money, so be it.
Two cars, completely alike. At one dealership it costs $20,000 after all the extra fee's, and at one it costs $25,000 before fees but there's a sale on it right now so it costs $18,000 before fees. Which one do you buy? The answer is, you don't know.
I agree that having perfect information will solve every problem, but it will solve many, and I would argue most.
In my opinion, people buy 300 jeans because they don't think it's the same. The Diesel jeans supposedly last longer, because they are better raw denim or whatever they last longer, they fit your body better through continuous wear, not to mention you wear a brand that adds value to a good for some people that way. I'm not saying this is true, but these are the reasons that lead people to buying expensive jeans - whether you think its stupid or not.
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On December 28 2013 12:56 sam!zdat wrote: lol that's one of the dumber things I've heard this week
You haven't really provided much of a counter argument to anything provided so it's not easy to have a discussion with you.
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And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me.
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Hong Kong9135 Posts
no, they derive more value out of the brand and feeling cool about the brand, and perhaps even about flaunting their money because of how much money they spent. use-value is funny in that in the way our system works, one can be divorced from merely considering goods valuable based on what you get out of them, but also on the intangibles.
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Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh.
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So you want two things: 1) no sales 2) one price
1) you argue that sales create inefficiency, and that this inefficiency is caused by a lack of consumer info. To begin with, if information can create "inefficiency" you could say that about any type of product info. Right now you are referring to price, as in "what is the price of x". With no sales you hope that this question will be removed, increasing "efficiency". However a product has many aspects beyond price. Brand image, product quality, attributes etc. all need to be evaluated. A case could be made that products with too much info "#1 in town vs best around" decrease efficiency as well. If your argument is against inefficiency, then you sales are just a small part of your target
If you are against sales entirely, then take the case of a new store opening on the block. To promote itself it has a sale. Sale attracts customers, informing them of stores existence, maybe existence of new goods. Perhaps a company would like customers to try a product, so it has a sale. Both cases only see to create consumer awareness where none existed before. Also consider a firesale. Maybe a company has had a huge flop, hp touch, and needs to liquidate asap. The only way is through a sale, since the value of these things sink as they sit in inventory and no one will touch them at market rates. This is efficient as well, the company takes less of a hit, and consumers buy goods whose benefit to them was less than the market price, but more than the firesale price.
oneprice: this is probably bad because it'll hide things like taxes. Price can be jacked up, and instead of blaming associated tax, you'll blame evil corporation. Happens on airline tickets (i think)
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On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me.
A regulating body created by the government.
The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today.
It really is not as foreign of a concept as it appears.
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hilltop: yes, good! What you are getting at is the conflict between merchant capital and industrial capital, you can learn a lot about some period in the history of capitalism by considering which faction of capital has more power, in many ways we are now in a period in which merchant capital has been on the ascendant and that is really shaking things up :D
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Hong Kong9135 Posts
On December 28 2013 13:04 FiWiFaKi wrote:Show nested quote +On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears.
so. more government. in fact, central planning.
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you're right that the concept isn't entirely foreign. For example, it's illegal to take a 100$ good, raise the price to 200$, then cut it back to 100$ and claim 50% off.
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On December 28 2013 13:02 itsjustatank wrote: no, they derive more value out of the brand and feeling cool about the brand, and perhaps even about flaunting their money because of how much money they spent. use-value is funny in that in the way our system works, one can be divorced from merely considering goods valuable based on what you get out of them, but also on the intangibles.
Exactly, but that feel good feeling of looking rich to other people is worth the $300 to them. So yes, they are paying more, but they are getting extra. (You or I may not get extra from buying $300 jeans, but they would, so whatever)
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Call me a nihilist, but I'd rather see the problem solved by the Cult of Consumerism being destroyed in a systemic implosion than have my small business living under the thumb of a Price Commissar.
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On December 28 2013 13:06 DeltaSigmaL wrote: you're right that the concept isn't entirely foreign. For example, it's illegal to take a 100$ good, raise the price to 200$, then cut it back to 100$ and claim 50% off.
lol how do you establish the exchange value of the thing? People do this all the time. Ever gotten a guitar center catalog?
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On December 28 2013 13:06 DeltaSigmaL wrote: you're right that the concept isn't entirely foreign. For example, it's illegal to take a 100$ good, raise the price to 200$, then cut it back to 100$ and claim 50% off.
However this is what sales practically do. Mall clothing stores have a sale practically every weekend (friday-sunday)... And is that not essentially the same thing as what you just mentioned?
On December 28 2013 13:06 itsjustatank wrote:Show nested quote +On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. so. more government. in fact, central planning.
Yes, more government.
I guess more government just means more bad to most people. I suppose I can't what you will think about that... But the government does good too.
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On December 28 2013 13:08 sam!zdat wrote:Show nested quote +On December 28 2013 13:06 DeltaSigmaL wrote: you're right that the concept isn't entirely foreign. For example, it's illegal to take a 100$ good, raise the price to 200$, then cut it back to 100$ and claim 50% off. lol how do you establish the exchange value of the thing? People do this all the time. Ever gotten a guitar center catalog?
its a process, but usually it involves reporting such action to consumer affairs, then they send somebody. paperwork.... and ya. I mean, probably doesnt happen for collectors goods, but if you're doing that on a can of tomato soup, ya that's a fine.
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Hong Kong9135 Posts
relying on a (nominally) liberal-democratic capitalist consensus government to regulate capitalism via the creation of complex structures of control with the feeling that you are acting to solve a problem is the height of interpassivity.
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On December 28 2013 13:11 FiWiFaKi wrote:Show nested quote +On December 28 2013 13:06 DeltaSigmaL wrote: you're right that the concept isn't entirely foreign. For example, it's illegal to take a 100$ good, raise the price to 200$, then cut it back to 100$ and claim 50% off. + Show Spoiler +However this is what sales practically do. Mall clothing stores have a sale practically every weekend (friday-sunday)... And is that not essentially the same thing as what you just mentioned? On December 28 2013 13:06 itsjustatank wrote:Show nested quote +On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. so. more government. in fact, central planning. Yes, more government. I guess more government just means more bad to most people. I suppose I can't what you will think about that... But the government does good too.
That's true, but their "normal" price is inflated, so they can't be nailed like that. Like i said, JC penny went with no inflation "normal" pricing allowing their "normal" to be lower, but not lower than a sale. Items on sale often are sold for loss, with retail simply trying to attract customers to show up, perhaps purchase something else (more expensive). You could even say that those who only buy sales save more money than if no sales were available ever.
edit: infact, you can prove that. JCP prices were lower, but not lower than items on sale, meaning that if all retail gave up sales, JCP pricing is roughly what you'd get, aka prices higher than sales pricing.
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On December 28 2013 13:02 Hilltop_Razorback wrote: Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh.
Sorry there was just a lot of different material covered that I may have been mixing myself up.
Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store.
Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches.
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On December 28 2013 13:04 FiWiFaKi wrote:Show nested quote +On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears.
I just don't get how you can talk about how democracy is supposed to create a free market and shit but in the same breath talk about how the government should regulate pricing on products.
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On December 28 2013 13:15 DeltaSigmaL wrote:Show nested quote +On December 28 2013 13:11 FiWiFaKi wrote:On December 28 2013 13:06 DeltaSigmaL wrote: you're right that the concept isn't entirely foreign. For example, it's illegal to take a 100$ good, raise the price to 200$, then cut it back to 100$ and claim 50% off. + Show Spoiler +However this is what sales practically do. Mall clothing stores have a sale practically every weekend (friday-sunday)... And is that not essentially the same thing as what you just mentioned? On December 28 2013 13:06 itsjustatank wrote:Show nested quote +On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. so. more government. in fact, central planning. Yes, more government. I guess more government just means more bad to most people. I suppose I can't what you will think about that... But the government does good too. That's true, but their "normal" price is inflated, so they can't be nailed like that. Like i said, JC penny went with no inflation "normal" pricing allowing their "normal" to be lower, but not lower than a sale. Items on sale often are sold for loss, with retail simply trying to attract customers to show up, perhaps purchase something else (more expensive). You could even say that those who only buy sales save more money than if no sales were available ever.
But see the problem with the system currently in place is this:
I can spend 10 hours doing research to find a good that is on sale, wait for the right time, go to the right retailer, etc... To buy that good for $90 when it costs $100 to produce. However since everyone is operating on these sales, the average amount someone is spending for this good is $130.
Or I can have a price of $110 everywhere I go. Sure I pay $20 more than if there was a sale, but I spend much less time looking for my good since wherever I go, it will likely be offered for the same prices.
If you had infinite time to find what you want to buy, then your theory works.... But if I want to buy a t-shirt, I'd much rather just buy it than doing research. Even the people that try hard to find sales probably don't find sales for most goods they buy, they only look for the goods that matter a lot to them.
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On December 28 2013 13:18 MichaelDonovan wrote:Show nested quote +On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. I just don't get how you can talk about how democracy is supposed to create a free market and shit but in the same breath talk about how the government should regulate pricing on products.
Alright, apologies. Not create a free market, but create the most efficient market is what I meant to say.
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On December 28 2013 13:21 FiWiFaKi wrote:Show nested quote +On December 28 2013 13:18 MichaelDonovan wrote:On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote: And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. I just don't get how you can talk about how democracy is supposed to create a free market and shit but in the same breath talk about how the government should regulate pricing on products. Alright, apologies. Not create a free market, but create the most efficient market is what I meant to say. Well I think maybe the most efficient market would probably not use artificial currency with fluctuating value. It would be one that uses something with a fixed value like gold. Ron Paul can tell you all about that.
And I don't get why you think democracy specifically should create the most efficient market. I figure democracy -> free market, something else -> your market. I dunno.
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wait, what is wrong with selling at 105 to gain publicity then raising to 200? The good is now worth more because people know about it...
edit: don't take the gold bait, it would peg currency to random mining activity. Its bad and at heart everyone knows its bad.
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Hong Kong9135 Posts
gold doesn't have a fixed value.
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Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (:
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Paper money (or money with a controlled supply) should technically have the most stable prices of any currency.
As long as the government does what it needs to, it is effective. The stability of currency in Canada has been much better compared to something like gold or bitcoin. There needs to be a proper government in place to ensure to issues arise however.
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1001 YEARS KESPAJAIL22271 Posts
I actually do own $300 jeans and like it so whatevs I guess
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On December 28 2013 13:36 lichter wrote: I actually do own $300 jeans and like it so whatevs I guess
Now you probably understand why you lost TLCMAT... ):
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On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote: Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches.
Yeah no worries; this is a blog, not a policy proposal =D
So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance.
This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system.
Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach.
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On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote: Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach.
See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere,
However, I don't believe the fluctuations would be very sharp because:
1) Menu Cost would discourage manufacturers to do this. 2) Companies have stock in the warehouse that they can still expend. 3) Retailers would not respond to price change instantaneously.
So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed.
And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (:
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I completely agree with this. I can't comment much on details as I don't have much idea how the legality would work here, but sales are quite annoying- Steam sales are the death of me, especially after I buy something for full price...
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Keep in mind that I have never formally studied economics.
People like sales. Simply put, that is why they stick around.
Sales makes people feel like they are winning - beating their friends, their neighbors, the other shoppers. People are complex and, in many cases, confusing; that is why we have people looking for sales on items that are used primarily to demonstrate wealth. Advertising and media have created an atmosphere of consumer-insecurity. You have to (silently) beat your friends and you definitely have to beat that bitch over there who is eyeing your boyfriend. You have to beat the person you walk past who has pricier clothes than you, even. The insecurity also probably comes from income and wealth problems - most of the people that I know who seem to care the most about pricey items are those from poorer backgrounds. Take a look at the perpetually impoverished black community and how that juxtaposes with name-brand shoe sales. Ever notice all those social media posts of presents, new phones, new cars, prom night, etc? They are often veiled as complaint, criticism, or discussion, but it's not about that at all. It's a ridiculous rat race.
Racism aside, this all ties back into sales because I'm trying to illustrate my point that consumer culture creates a competition, and sales allow a way to one-up your competitors.
There are practical benefits to sales too, but they are mostly consequences of the system that we run. Companies like to not have a ton of inventory in their shops at the end of their fiscal years. Also, right about now I would imagine that demand is rather low since many people are probably broke after spending a lot of money during Christmas to impress their family and convince their children that they are not poor. With extra supply and lower demand (my gut tells me that gift cards don't make up for everyone being broke, though I have no evidence) prices would logically lower right now, which I assume is the inspiration for your blog. And also remember, as others have pointed out, that sales are also a way to get customers in your store and that supply and demand are not static, and that consumers are dumb and like to think they are getting a steal even when they are not.
I think it's hard for many people to really understand the mindset behind this bizarre culture that nobody in real life (at least that I know) seems to talk about. I like topics like these because infantile basic "issues" like abortion and gay-equality seem to dominate these kinds of discussions and I think this is MUCH more important (as most people worth your time are already on the same side of popularized social issues as you) for society as a whole.
To be honest I think the best way to fix this is to create a whole bunch of radical changes to how we distribute goods and that this wouldn't be a problem under that system, but I don't want to derail the thread with socialism. I do find the idea of sort of fixing costs to be entertaining, but I think it would never get a lot of support among the general people without a lot of other ideas gaining ground, and in my country even touching this topic would instantly be decried as SOSHURLISM.
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Well, if you get ban sales, might as well ban advertising and marketing, keywords etc as well since they also effect consumer behaviour that you mentioned in your premise.
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On December 28 2013 13:53 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote: Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach. See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere, However, I don't believe the fluctuations would be very sharp because: 1) Menu Cost would discourage manufacturers to do this. 2) Companies have stock in the warehouse that they can still expend. 3) Retailers would not respond to price change instantaneously. So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed. And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (:
Whoops, I think I took exception to an argument you weren't even making...
I agree with your points about the inhibition of price fluctuation. The system you describe would control short-term consumer-level changes more effectively than they are today. I then assumed that you were also stating that this system would provide the lowest overall prices for consumers, which I disagree with. It was this notion my arguments were directed towards.
With these controls in place, I feel that consumers would gain a sense of false confidence in the "real" price they are now paying for goods. With all oversight concentrated on the sales-side, it would be simple for this reality to be distorted over time.
Also: sadly, I didn't generate that title spontaneously. Last I read, there were seventeen plus official czars in the Bush-Obama continuum, overseeing everything from car safety & student loans to tobacco & terrorism. If something like this was put into place, it wouldn't take long for the bureaucracy to take on a life of its' own. I'd bet it exceeds equilibrium before industry even finishes adjusting to the new model. =/
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On December 28 2013 14:58 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:53 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote: Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach. See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere, However, I don't believe the fluctuations would be very sharp because: 1) Menu Cost would discourage manufacturers to do this. 2) Companies have stock in the warehouse that they can still expend. 3) Retailers would not respond to price change instantaneously. So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed. And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (: Whoops, I think I took exception to an argument you weren't even making... I agree with your points about the inhibition of price fluctuation. The system you describe would control short-term consumer-level changes more effectively than they are today. I then assumed that you were also stating that this system would provide the lowest overall prices for consumers, which I disagree with. It was this notion my arguments were directed towards. With these controls in place, I feel that consumers would gain a sense of false confidence in the "real" price they are now paying for goods. With all oversight concentrated on the sales-side, it would be simple for this reality to be distorted over time. Also: sadly, I didn't generate that title spontaneously. Last I read, there were seventeen plus official czars in the Bush-Obama continuum, overseeing everything from car safety & student loans to tobacco & terrorism. If something like this was put into place, it wouldn't take long for the bureaucracy to take on a life of its' own. I'd bet it exceeds equilibrium before industry even finishes adjusting to the new model. =/
I am making both arguments actually.
I believe (as does every economics textbook that discusses that I've read) that: The more stability there is in a market, the lower the rate of returns will be. If someone sees a safe industry, they will enter it and drive the profits down in the long-run. Constant prices create stable markets, and stable markets lower prices. That's why I believe that stable prices = long-term lower prices... This might not have been something I stated, just a fundamental assumption I guess.
The reason is... When there are two firms and the prices constantly change to who has the better price, you'll just pick whichever one and go to it. However when the prices are constant and one therefore one firm has a lower price than the other the consumer will rather go to the cheaper one. This will put pressure on the higher price firm to lower price. This cycle will drive down prices and will occur until the price either goes low enough that one of the firms can't compete or it'd lose money, or two, they'd have very similar costs with slight deviations in product/service, and so customers would be split between where they went. This is what happens in most markets. For example Apple vs Android. Android has definitely driven the price of Apple down, and there is pressure on Apple to either make new innovations or lower prices, some people will still remaing with Apple, but Samsung is increasing its market share. Anyway, I think you get the idea.
So to summarize: Illegalizing sales will create less fluctuations in pricing, which will be easier for consumers to handle, which thereby will lower retailing profit, and lower cost of goods for consumers.
I suppose above is exactly what my argument is. There is a lot and a lot of back-up needed to back-up this claim, and not to mention the necessity to consider every counter-example people will come up with.
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On December 28 2013 14:58 vthree wrote: Well, if you get ban sales, might as well ban advertising and marketing, keywords etc as well since they also effect consumer behaviour that you mentioned in your premise.
I think that some forms of advertising should not be allowed, and that's for another topic, however I don't think currently this is feasible. The resources required for such a project don't outweigh the benefits received. I wont go into detailed explanation of why and provide references and verified readings... I just think it's a lot more manageable and realistic to remove sales before trying to approach aspects of advertising.
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On December 28 2013 14:30 Chocolate wrote: Keep in mind that I have never formally studied economics.
People like sales. Simply put, that is why they stick around.
Sales makes people feel like they are winning - beating their friends, their neighbors, the other shoppers. People are complex and, in many cases, confusing; that is why we have people looking for sales on items that are used primarily to demonstrate wealth. Advertising and media have created an atmosphere of consumer-insecurity. You have to (silently) beat your friends and you definitely have to beat that bitch over there who is eyeing your boyfriend. You have to beat the person you walk past who has pricier clothes than you, even. The insecurity also probably comes from income and wealth problems - most of the people that I know who seem to care the most about pricey items are those from poorer backgrounds. Take a look at the perpetually impoverished black community and how that juxtaposes with name-brand shoe sales. Ever notice all those social media posts of presents, new phones, new cars, prom night, etc? They are often veiled as complaint, criticism, or discussion, but it's not about that at all. It's a ridiculous rat race.
Racism aside, this all ties back into sales because I'm trying to illustrate my point that consumer culture creates a competition, and sales allow a way to one-up your competitors.
There are practical benefits to sales too, but they are mostly consequences of the system that we run. Companies like to not have a ton of inventory in their shops at the end of their fiscal years. Also, right about now I would imagine that demand is rather low since many people are probably broke after spending a lot of money during Christmas to impress their family and convince their children that they are not poor. With extra supply and lower demand (my gut tells me that gift cards don't make up for everyone being broke, though I have no evidence) prices would logically lower right now, which I assume is the inspiration for your blog. And also remember, as others have pointed out, that sales are also a way to get customers in your store and that supply and demand are not static, and that consumers are dumb and like to think they are getting a steal even when they are not.
I think it's hard for many people to really understand the mindset behind this bizarre culture that nobody in real life (at least that I know) seems to talk about. I like topics like these because infantile basic "issues" like abortion and gay-equality seem to dominate these kinds of discussions and I think this is MUCH more important (as most people worth your time are already on the same side of popularized social issues as you) for society as a whole.
To be honest I think the best way to fix this is to create a whole bunch of radical changes to how we distribute goods and that this wouldn't be a problem under that system, but I don't want to derail the thread with socialism. I do find the idea of sort of fixing costs to be entertaining, but I think it would never get a lot of support among the general people without a lot of other ideas gaining ground, and in my country even touching this topic would instantly be decried as SOSHURLISM.
Very well spoken my friend. Curious if I may, have you received a degree, done any readings, or where did you gain your knowledge? I really admire people like yourself... Your views also identically mimic that of my father xD.
Anyway, I don't have much to say in response to you. I agree with you... I wish there was a place online where we could discuss ideas like these with other people, void of other trolls, and ideas could develop into more concrete philosophies etc. Right now there are lots of people that will be vocal if you don't choose your words in the exact correct way, and it often just makes typing these messages out very tedious. If you posted something like that about black people on facebook, I'm sure there would be people complaining about what you said... However in your context I can obviously tell you mean no offense, and so forth.
It's true that when the "basic" things can be agreed on like religion, abortion, gay rights and the like, a much higher-level conversation can develop. If every time you discuss something with somebody you have to mention everything you believe and assumptions you are making for this argument, it really slows down the pace of conversation. You made a compelling argument with very few words for what you said, and I think it's because you and I are on the same page. Anyway, hats off to you sir, respect.
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you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long.
Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc.
It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET
On December 28 2013 13:25 FiWiFaKi wrote: Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (:
In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point.
It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business.
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On December 28 2013 15:19 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 14:58 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:53 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote: Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach. See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere, However, I don't believe the fluctuations would be very sharp because: 1) Menu Cost would discourage manufacturers to do this. 2) Companies have stock in the warehouse that they can still expend. 3) Retailers would not respond to price change instantaneously. So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed. And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (: Whoops, I think I took exception to an argument you weren't even making... I agree with your points about the inhibition of price fluctuation. The system you describe would control short-term consumer-level changes more effectively than they are today. I then assumed that you were also stating that this system would provide the lowest overall prices for consumers, which I disagree with. It was this notion my arguments were directed towards. With these controls in place, I feel that consumers would gain a sense of false confidence in the "real" price they are now paying for goods. With all oversight concentrated on the sales-side, it would be simple for this reality to be distorted over time. Also: sadly, I didn't generate that title spontaneously. Last I read, there were seventeen plus official czars in the Bush-Obama continuum, overseeing everything from car safety & student loans to tobacco & terrorism. If something like this was put into place, it wouldn't take long for the bureaucracy to take on a life of its' own. I'd bet it exceeds equilibrium before industry even finishes adjusting to the new model. =/ I am making both arguments actually. I believe (as does every economics textbook that discusses that I've read) that: The more stability there is in a market, the lower the rate of returns will be. If someone sees a safe industry, they will enter it and drive the profits down in the long-run. Constant prices create stable markets, and stable markets lower prices. That's why I believe that stable prices = long-term lower prices... This might not have been something I stated, just a fundamental assumption I guess. The reason is... When there are two firms and the prices constantly change to who has the better price, you'll just pick whichever one and go to it. However when the prices are constant and one therefore one firm has a lower price than the other the consumer will rather go to the cheaper one. This will put pressure on the higher price firm to lower price. This cycle will drive down prices and will occur until the price either goes low enough that one of the firms can't compete or it'd lose money, or two, they'd have very similar costs with slight deviations in product/service, and so customers would be split between where they went. This is what happens in most markets. For example Apple vs Android. Android has definitely driven the price of Apple down, and there is pressure on Apple to either make new innovations or lower prices, some people will still remaing with Apple, but Samsung is increasing its market share. Anyway, I think you get the idea. So to summarize: Illegalizing sales will create less fluctuations in pricing, which will be easier for consumers to handle, which thereby will lower retailing profit, and lower cost of goods for consumers. I suppose above is exactly what my argument is. There is a lot and a lot of back-up needed to back-up this claim, and not to mention the necessity to consider every counter-example people will come up with.
I always got the image of a toilet bowl or draining sink when I encountered this notion in economics texts. If all parties in the system continue to behave according to the rules of the system, then either everyone goes down the drain into improfitability together or one party behaves differently, not in accordance to the system's rules, in order to increase profits - but thereby invalidating the very assumptions of the system in question. It seemed a futile thought-exercise. I guess I'm just not willing to assume that all parties will continue to conform to behaviors predicted by theory. I do understand your point and it rules most markets within the consumer retail industry, especially those with less brand volatility.
However, all of that only addresses retail or in-house manufactured goods. You'd have visibility to markup from the point of origin, through supply chain, distributor & retailer, onto the shelves. I'm just pointing out that this system still has no visibility beyond the retailer's point of origin, i.e. manufacturer pricing. I don't like legislation that promises to control something that's impossible to control.
(Hypothetical: Korean giant ChipMake raises the price of their Whizzdinger500 chipset to all American-based mobile phone manufacturers, giving a comparative advantage to their domestic partners and forcing American manufacturers to raise their vendor pricing to retailers, who pass the increased cost on to the consumer. Samsung is now $50 cheaper per unit than the American competition and it's all based on source cost, so the new legislation doesn't apply.)
Currently, competing for the business of retailers is the primary restraining force on pricing for manufacturers. I believe that globalization and mega-corp retailers have changed the landscape. With Supercenters replacing smaller specialty stores, providing less chances for low-volume, higher-markup sales to said specialty shops, manufacturer prices are more normalized than ever across the board. This puts all the power in the hands of retailers, which leads to the consumer-manipulation at the root of this discussion. + Show Spoiler +(a nod to sam!zdat on the merchant capital vs industrial capital discussion, and I also believe this has a lot to do with our shift from a manufacturing economy to a service-based, or lately arguably, information-based economy).
So what happens when you clamp down on the retailers' ability to manipulate pricing with lumpy short-term sales gimmickry? After a painful adjustment period for every corporate retailer's revenue stream models, power shifts back to the suppliers - who now have far less pressure on them to conform to retailer demands, allowing them to adjust pricing back to comfort-zone levels. Knowing that your customer has to plan a purchase schedule more precisely over time due to the inability to manipulate sales through pricing provides powerful leverage. Or, rather, mitigates the leverage that retailers currently have.
This price-variance control mechanism constrains the marketing tactics of retailers, but cannot make a claim of guaranteeing lowest overall prices. Of course the same can be said of our current system, but then again, that's my point. I'm just not sure short-term retailer pricing volatility controls will constrain overall consumer cost over time any better than our current system does, especially with the added cost of oversight.
Caveat: If not painfully obvious, I've had little instruction in Economics; a few classes in college that I enjoyed, and some informal reading of the Austrian school. I'm coming at this from 12+ years in the belly of the Beast in Bentonville. Tell me where I'm going wrong =P
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On December 28 2013 16:55 Smurfett3 wrote:you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long. Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc. It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET Show nested quote +On December 28 2013 13:25 FiWiFaKi wrote: Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (: In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point. It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business.
I will reserve this post to respond to Hilltop tomorrow. It is getting late and I wont be able to formulate a good reply right now.
However I will ignore your post as pretty much the first thing you are taught in the first university microeconomics course is that in long-term costs equal to revenue in a perfectly competitive market. Hence the economic profit of a competitive firm is zero. Cost refers to AFC (Average fixed cost) which is the initial investment needed, as well as the maintenance costs of operation etc. It also includes AVC (Average variable cost) which is the extra money spent on each good produced, which includes to cost of materials and the cost of salaries to the workers, royalties, and all other capital that needs to be spent to produce a certain output. Hence it is possible for a company to earn nothing and stay afloat with zero economic profit. It also appears you have not read any previous replies in this thread.
I have decided to ban you from posting in my blogs because I do not appreciate your CAPITALIZATION trying to SCREAM things into my face, that's not how to have a friendly discussion. I obviously have knowledge in the field and I do not need to be told that I don't understand how a market works, when it shows you have minimal business or economic knowledge. If you would not like to contribute, that's fine, but don't aggressively post messages void of meaning here. Thanks.
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I don't mean to say this aggressively or anything, but isn't it a tiny bit condescending to assert that you know what's best for the consumers and that the average consumer can't handle sales because it makes them confused about how much something is really worth?
I know that's not what your intention is, but I have faith/hope that the average person is smart enough to:
A.) understand that he or she either has to research the good/product that he or she is going to buy B.) just completely ignore it and buy the product no matter the cost because he or she needs it enough that its cost is basically arbitrary.
That said, I do like the idea of consumer protection and trying to advocate for the buyer and not entangle them in the bullshit that corporations try to use to swindle them out of money, but that's leaning towards socialism and isn't really what the free market is. I just think that making sales illegal wouldn't help the problem of uneducated consumers. I think that businesses should be more open about their products and provide more information and have more knowledgeable staff when it comes what they're selling, but that's again up to the owner of each business.
And I guess I should also note that I have no formal education with anything besides extremely basic economics (we talked about marginal profit, cost, revenue, and the demand function in my intro to calc class, does that count? ).
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Good job figuring out that a thing is stupid in an inherently stupid system!
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Wait, without sales, how are stores supposed to empty their stock for next season or remove products?
Also, value is subjective. I don't think banning them will stop stores from lowering their prices for a fixed period of time and them raising them again. They just won't call it a sale.
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value isn't subjective, value is socially necessary abstract labor time
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+ Show Spoiler +On December 28 2013 17:39 FiWiFaKi wrote:Show nested quote +On December 28 2013 16:55 Smurfett3 wrote:you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long. Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc. It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET On December 28 2013 13:25 FiWiFaKi wrote: Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (: In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point. It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business. I will reserve this post to respond to Hilltop tomorrow. It is getting late and I wont be able to formulate a good reply right now. However I will ignore your post as pretty much the first thing you are taught in the first university microeconomics course is that in long-term costs equal to revenue in a perfectly competitive market. Hence the economic profit of a competitive firm is zero. Cost refers to AFC (Average fixed cost) which is the initial investment needed, as well as the maintenance costs of operation etc. It also includes AVC (Average variable cost) which is the extra money spent on each good produced, which includes to cost of materials and the cost of salaries to the workers, royalties, and all other capital that needs to be spent to produce a certain output. Hence it is possible for a company to earn nothing and stay afloat with zero economic profit. It also appears you have not read any previous replies in this thread. I have decided to ban you from posting in my blogs because I do not appreciate your CAPITALIZATION trying to SCREAM things into my face, that's not how to have a friendly discussion. I obviously have knowledge in the field and I do not need to be told that I don't understand how a market works, when it shows you have minimal business or economic knowledge. If you would not like to contribute, that's fine, but don't aggressively post messages void of meaning here. Thanks. I think we should stop pulling uni education out lol, but for the moment: + Show Spoiler + Also, zero economic profit doesn't mean zero accounting profit. It's perfectly acceptable for ceo of Random Retail to earn 10 million/ year if that's what ceo's across the industry earn. So actually the term "zero econ profit" is pretty much theory and quite hard to pin down. You basically look at an industry that has been around a while and say, "yup, that's zero econ profit". Even then, when tech or innovation is introduced, zero econ will probably fall apart for a while.
Back to sales: I think quite a few people have pointed out sales are used to liquidate inventory, aka promoting efficiency. and sales can be used as promotion tool. If you're going to argue advertising is bad, that's a different subject, but what do you think of the above two uses for sales.
(also you mentioned menu costs before, but with the introduction of digital inventory management, it's not that costly to retail. The menu costs to consumer is the one I think you have problem with.)
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On December 29 2013 02:47 sam!zdat wrote:value isn't subjective, value is socially necessary abstract labor time Except that people value a purse at 4K and its just a purse. But someone out there thinks it is worth that much money. I am not that person.
Value is subjective, always has been, always will be.
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United States10774 Posts
On December 28 2013 17:39 FiWiFaKi wrote:Show nested quote +On December 28 2013 16:55 Smurfett3 wrote:you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long. Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc. It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET On December 28 2013 13:25 FiWiFaKi wrote: Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (: In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point. It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business. I will reserve this post to respond to Hilltop tomorrow. It is getting late and I wont be able to formulate a good reply right now. However I will ignore your post as pretty much the first thing you are taught in the first university microeconomics course is that in long-term costs equal to revenue in a perfectly competitive market. Hence the economic profit of a competitive firm is zero. Cost refers to AFC (Average fixed cost) which is the initial investment needed, as well as the maintenance costs of operation etc. It also includes AVC (Average variable cost) which is the extra money spent on each good produced, which includes to cost of materials and the cost of salaries to the workers, royalties, and all other capital that needs to be spent to produce a certain output. Hence it is possible for a company to earn nothing and stay afloat with zero economic profit. It also appears you have not read any previous replies in this thread. I have decided to ban you from posting in my blogs because I do not appreciate your CAPITALIZATION trying to SCREAM things into my face, that's not how to have a friendly discussion. I obviously have knowledge in the field and I do not need to be told that I don't understand how a market works, when it shows you have minimal business or economic knowledge. If you would not like to contribute, that's fine, but don't aggressively post messages void of meaning here. Thanks. he's saying the pricing of goods must be high enough to cover both AFC and AVC. you are both essentially making the identical point, just using the word "profit" in a different sense. as you are indeed taught in basic microeconomics and as common sense dictates, companies must be at least be able to cover those costs to stay afloat. so the price naturally accounts for those costs and is not just the the manufacturing cost. "profit" must cover those costs. he wasn't incorrect about that.
sales are good. i see it as a mechanism that benefits both the producer and the consumer. obviously it's not perfect, just as everything else in the market. companies evaluate the elasticity of the goods on their own and are able to determine whether the increased quantity will outweigh the decrease in price. as the poster above pointed out, it's liquidating your inventories. obviously there are marketing benefits as well - primary objective is to advertise the brand and lead consumers to buy other products that are not on sale. consumers also decide if the extra costs, such as having to go to that particular store during that particular time or having to wait a longer line, are worth buying the product at a lower price than the market price. of course, there's an information gap and some consumers may never have the opportunity to evaluate this because they never knew about it. this is not, however, a problem isolated to sales. or perhaps you can argue that that itself is the consumers' decision or investment because they have to make extra efforts to find out about sales i.e. look through magazines or coupons. i think the latter is the more correct perspective. why in the world the government should prohibit this boggles me. you talk about efficient markets. the government taking on that role would make the market less efficient because both parties are no longer free to make optimal, efficient decisions based on their preferences and circumstances.
one of the reasons reason why there's no true perfectly competitive market is because the asymmetry of information. this information gap also ties to institutional competence: whether a regulatory government body would even be suitable for setting prices. is it going to talk to all the major companies and choose a price in the middle? what about the delay in responding to changes in demand or input costs? this is the epitome of what an inefficient market would look like.
i don't see much benefit for consumers in banning sales. if you are willing to buy product A at market price, why does it matter that your neighbor bought it at a lower price? your neighbor made extra effort to find out about the sale, go to the store and take advantage of it. he did the work necessary to bridge the information gap between the seller and the buyer. if the good is not worth the market price for you, you will not buy it. or perhaps you will wait for another sale, but time is money and you are deciding to pay more in minutes instead of dollars (present value also plays a role here). or buy an inferior good at a lower price. that's how a free market works in the first place.
EDIT: if you are going to ban people for "screaming at your face," i would like to politely ask that you also stop the condescending tone as well. no need to harp on about your economics studies at university in dismissing people's points. theories are not always foolproof, especially in real-life application. what you learned in the classroom is not always a justified basis for simply ignoring and rejecting people's otherwise possibly valid points. i am not necessarily saying they're incorrect, but that people may have different interpretations of how to apply them in real situations.
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JC penney had the same mentality as you, they wanted to cut out the 'bullshit'
Big case study over there, look what happened to it
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United States10774 Posts
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Sales are really fun! It's like playing Diablo II all over again.
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Wow - a lot of interesting discussion here. Just to clarify, though, this discussion covers multiple discrete (albeit interrelated) concepts:
Marketing: the business capability that drives consumer brand perception (i.e. the culture of one-upsmanship, whether a brand is cool or worth spending money on, how consumers are engaged by a brand's culture)
Sales: the natural culmination of marketing, which is the transactional exchange of goods for currency.
Your original complaint is seemingly related to Sales Discounts but is actually tied to the concept of Consumer Fatigue, which occurs when price and value differentiation fail to create a compelling purchasing proposition. Just to build on the thoughts others have offered, your original argument both champions free market competition and governmental price regulation, which are at odds with each other.
Source: I work in consulting for large-scale sales and marketing organizations. Econ and jargon are fun, but the real world is even better!
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On December 28 2013 10:58 FiWiFaKi wrote: Wasn't initially the goal of democracy to create like a free-market with no barriers to trading... Instead all of this bullshit to consumers?
I just wanted to comment on this small thing. I often see a free market economy/capitalism lumped together with Democracy like they are the same thing or interdependent when this is not the case.
Capitalism is an economic system based on a free market
Democracy is a form of government in which all citizens participate equally.
Often they are paired together. But they are not the same thing and they can exist independently from one another.
Otherwise good read
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Err.. maybe I havent read everything right and should take more time to construct a valuable answer, but it seems to me that your mixing up things wrongly. I mean, how can you talk about free market and government intervention in one sentence? The goal of free market is to limit government interventions in order to stimulate competition amongst companies.
By restricting things you will create a less competitivr environment. Sales in general are actually good for companies to promote their products and good for consumers because they get value for their money. If everything was restricted by government *no sales* then companies could never make entry into existing and establised markets and there would be monopoly.
It seems to me that not finishing my economics major and straight up start a company paid off l.
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