Cell phones are not a free market. There is only a certain amount of bandwidth to go around, free market DOES work best but only when anyone can enter that market. This is one of the reasons channels 52 - 69 were taken away from TV. They are to be given to cell phones and wireless and such.
You are confusing short-run and long-run marginal cost. When you build a new factory you are changing scale so the relevant marginal cost is the long-run marginal cost which is not discontinuous. In the long-run the cost of building a new factory becomes a variable cost and therefore is incorporated into the long-run marginal cost.
Yes like I already explained we accept departure from marginal cost pricing in industries with a lot of intellectual property. Essentially we are accepting a temporary monopoly as a way of stimulating invention. However like I said this isn’t relevant to the SMS industry where the basic product is fairly standard. I am not saying that departures from marginal cost pricing necessarily imply the need for regulation but that they need to be investigated and justified particularly if they are large in magnitude and especially if costs and prices are moving in opposite directions as seems to be happening for SMS.
First let’s note a lot of oil is produced essentially by state-run companies which have political goals in addition to profit-maximizing. In addition there is heavy government intervention from for example environmental laws. Despite this I am not sure that long-term oil prices depart massively from long-term marginal cost. For example this sitequotes a Goldman Sachs study which says that the marginal cost of oil production is $80-85 which is quite close to the average price of oil the last few years. If a few years from now the oil price rises to say $150 and is expected to stay there I would expect the marginal cost to rise as more difficult and costly oil-fields are exploited.
Anyway let me try to reframe the whole issue without using the concept of marginal cost which is frankly causing a whole lot of confusion. Let’s just take average cost instead. Because a voice call uses a lot more bandwidth than an SMS, its average cost will be a lot higher. So how come the prices of voice calls and SMS’s don’t reflect this? That is the fundamental issue.
Your basic answer seems to be an SMS is a partial substitute for a call and therefore cellphone companies charge a higher price for SMS’s as a way protecting the higher-priced product. This makes sense for the companies but not for the consumers or economic efficiency. After all in most industries low-priced versions of a product compete with higher priced versions. What seems to be happening in the cellphone industry is that the low-priced product is automatically bundled with the high-cost product which allows the company a lot more freedom to overcharge. Furthermore you have high barriers to entry and limited competition which gives companies greater freedom to jack up prices in certain segments.
Consumers would likely be better off if the different segments were unbundled so for the same phone number you could buy SMS from a different provider than your voice calls. This would allow for much greater competition and would probably lead to rapid falls in SMS prices. If such unbundling isn’t feasible there may be a case for price regulation though obviously that would require more detailed analysis of the industry.
I’m going to use small words, so try to follow this time:
A can not trade the legal right to shoot B for the legal right to B’s money because he does not have the legal right to shoot B. Even if A can get the legal right to shoot B, he can not get this right without B’s consent.
You are asserting that being in mortal peril gives the other man the right to take what he needs, without regard for the bystanders he is stealing from. Frankly, I feel it would be far better that he lie down and die with some dignity than for him to murder innocent people to sustain himself.
You still seem to be missing the point that, with your rules, there simply wouldn’t BE any generators to buy at a store, even if it was so important to you that you would give up all your money for one. But, I guess it’s ok for someone to freeze to death because they got to the store too late, at least everyone who was there early and sort of needed a generator got to buy them at the normal price.
Survival is not some poor bastard dying with dignity; survival is making the other poor bastard die with dignity.
Strange how searches turn up plenty of links to arbitration cases decided in favor of the employee (such as this one: Employee Wins Big in Arbitration). (Perhaps Google is part of the conspiracy?)
And I will talk to you like you’re a fellow adult who can handle complex thoughts.
The problem is that you defined an immoral act in terms of the law. Whatever is illegal is thereby immoral. If this is the case, then gouging is also immoral wherever it is illegal. So once we’ve brought gouging and mugging to the same level.
The obvious counter-argument is that morality and legality are not congruent. Some things that are immoral are not illegal and some things that are illegal are not immoral. It can be argued that we should address these situations by changing our laws. But to do this we have to step outside the law and argue the points on the bases of their morality without invoking their legality. Otherwise we’re reduced to saying that what’s illegal is illegal and what’s legal is legal and no law should ever be added or subtracted.
Your reading comprehension is suspect or you’re being willfully ignorant of his main point. Grumman defined the immoral act in terms of consent.
I do realize that Grumman’s quote has “legal” appearing 4 times and “consent” only 1 time but don’t let the word count frequency throw you off. It’s the consent that drives both the morality and legality. Read his quote again and try parsing it correctly.
I would dispute this. The generators weren’t there because of the storm. The whole point is that the storm knocked out normal distribution. The generators are there because the guy sold generators and happened to have a bunch on hand when a storm came along and knocked out the power throughout the area.
The normal rules of the free market work in normal situations. But trying to apply them to extraordinary situations is foolish. Extraordinary situations require extraordinary rules.
Hey, he put it in simple words for me. I understood it quite well.
Consent is not an absolute. Obviously I don’t consent to the terms of the transaction if I’m being held at gunpoint. But I also don’t consent to the terms of the transaction if I’m being charged an exorbitant price. The whole concept of the law is that society as a whole decides what are appropriate standards of behavior and then forces individuals to comply with those laws even when they don’t consent to them as individuals.
As I’ve said, I’m not an absolutist. I feel it’s justified to make a law that says people can’t demand money from other people at gunpoint. Muggers may not consent to that law but I feel the will of society overrules their lack of consent. And I feel the same way about price gouging. If society as a whole feels there should be a limit to the amount a price can be raised in certain situations, then the law can overrule the individual’s right to charge whatever he wants in that situation.
And could we get off the whole issue of saying that anyone who doesn’t agree with our points of view must be too dimwitted to understand those points of view? I try to respect people even when I disagree with them. I assume they understand what I’m saying even if they don’t agree with it.
No, we haven’t. If I offer to sell you a donut for $500 and you say no, you are no worse off than if I didn’t make the offer at all. If a mugger was giving you the options “get shot by me, give me your money, or say ‘no’ and go on your way”, then you could reasonably compare it to price gouging.
If the other guy is denying him survival for profit, then the profiteer is anything but innocent.
That’s a distortion. When it’s a matter of “get the commodity or die”, the analogy is quite close. You are simply arbitrarily declaring that only one form of coercion counts as coercion.
Can you see a difference between failing to save someone from being run over by a bus, and being the one that pushed them? That is why I say the price gouger is innocent. They might not be doing any good, but at least they aren’t making your situation worse.
I am saying that adding options is, at worst, of no benefit. If the price gouger’s intervention makes you better off, I think it’s ridiculous to blame him for not helping you enough.
If someone watches me drown, with a rope by their feet, but they refuse to toss out the rope because they demand I pay them a million dollars first are they to blame for my death ? I say yes.
Letting me die for the sake of profit is not making me better off. I say kill him, and take what he has. He’s the one who turned it into a matter of life and death.
So the hardware store has 5 generators to sell and is forced to keep the price down. So the first five people who show up, or just the first guy who shows up buys them whether he needs them or not. Now, you have assured that no one is going to bother loading a truck full of generators and bringing them over from the state next door because there is no incentive. Some governement agency will have to do that. Is gvernment-run-everything the way to go? Then why not let the hardware store sell at whatever price they want and have FEMA bring more generators to keep prices low?
And what to do with people in the area who have their own generators and might be willing to rent or sell? Are you going to force them if they don’t “need” them? Who determines “need”? Do we just allow people to take from others what they “need”?
I am beginning to understand why someone might feel the need to have an arsenal at home. It kind of helps when you need to prove you really “need” to keep your generator.
The fact that people seem unwilling to respond to the things I’ve actually written and keep insisting on making up other things which they’re more comfortable arguing against leads me to believe they’re unable to refute what I’ve said. If you want to debate me, then debate me. Don’t argue with some imaginary Nemo.
Would you want to go to an emergency room that operated on those rules. “Hello, Mr Grumman, you’ve been in a serious car accident. We’re ready to take you in to surgery. But before we do I think we should discuss the fact that we’ve decided you should be paying a thousand dollars a pint for blood. Of course, feel free to say no if that price is too high.”
You’re making things up. I’ve never said half the things you’re claiming.
First off, nothing I said has any effect on people delivering generators to a disaster site. I’ve repeatedly said that I’m talking about a situation where normal transportation isn’t working. So nobody’s driving in truckloads of anything. I have been exclusively talking about the people who happen to have vital supplies at the scene of the disaster.
There are people who sell generators. When the roads are cleared and trucks can drive in, they’re going to deliver truckloads of generators and whatever else people are going to want to buy. We’re now back to normal business and normal rules apply. People are going to sell generators because there’s a market for them. The prices will probably be higher than normal because of the difficulties of the situation but there won’t be anyone trying to sell a generator for twenty times its cost. If they tried then their customers would just go down the street to the guy selling generators out of the next truck. The free market is back in operation.
So having eliminated that situation, I’ll go back to the site of the disaster. There are no truckloads of generators here and there’s no way that truckloads of generators are going to appear. There is a hardware store that has five generators. And in my world, they would sell those five generators for a reasonable price. Not give them away (or confiscate them). Not even sell them at the normal price. But there would be a limit to how high they could raise the price. And while I can’t think why anyone would want to buy all five generators, in my world nobody would be able to buy every generator in town on this day. There would be a limit of one generator per customer. It’s an emergency situation and for the duration of the immediate emergency, I’d be enforcing laws against price gouging and hoarding.
Your “world” is constrained. If you disallow price gouging, then you’ve just killed off the other residents that couldn’t get one of the 5 that were left. Yes, you emphasize that ALL ROADS ARE UNUSABLE to prevent more generators but that’s not enough of a barrier. You see, if you ALLOW the freedom to charge high prices, then someone might be willing to pay $5,000 or $50,000 for that generator. For $5000, it may be worth it for someone to rent a helicopter and lower it in the hard to reach place. It’s the high pricing that makes people THINK about how to SOLVE the BLOCKADE of that road.
You’d think that altruism is all the world needs to solve our fellow man’s problems but that’s just not the case. Sometimes, the lure of $$$ really triggers the creativity to help people out in the disaster.
I understand you have a well-intentioned idea behind the anti-price-gouging. However, you’ve ignored the “Law of Unintended Consequences.” You have made the situation better for those 5 individuals but inadvertently made it worse for the entire community.
You are fixated on PRICES PRICES PRICES instead of looking at the situation holistically.
And sometimes it makes it worse; sometimes, it’s the motive for the creation of the disaster in question.
No; he’s just not caught up in your “profit is God” worldview which holds that it’s OK to condemn people to death for money.
If Little Nemo condemns the other citizens that didn’t get those 5 generators to freeze to death because of a fixation on PRICE instead of a fixation on the PROBLEM… isn’t their blood also on his hands?
Hmmm… let me guess… no… he would be innocent because he murdered them via a misguided policy vs standing in front of person face-to-face with a $5000 generator.
You want to obscure morality and insulate yourself from others deaths by using sterilized labels like “charity.” People can see through that inconsistency.