# What does "What the market will bear" mean? **URL:** \ **Category:** Great Debates\ **Created:** [September 10, 2003, 11:38am UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725 "2003-09-10T11:38:11Z")\ **Posts on this page:** 15\ **Page:** 3
**Author:** ![CurtC](https://avatars.discourse-cdn.com/v4/letter/c/ce73a5/32.png) [@CurtC](https://boards.straightdope.com/u/CurtC)\ **Post date:** [September 11, 2003, 9:45pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/41 "2003-09-11T21:45:55Z")
OK, BwanaBob, I’ll take a shot at convincing you. By the way, did you notice that every single person who’s posted a response has disagreed with you? Let’s say you’re a frequent customer of the gas station on the corner, and a crisis happens. This guy, being an associate of yours and like-minded, doesn’t raise his prices. In fact, none of the gas stations raise their prices. It’s a crisis, and you really need some gas so that you can take your family out of the danger zone. You go to your buddy’s station on the corner, only to discover - he’s sold out! You say “BwanaJim, how could you do this to me? Why didn’t you raise your price to a level that would smooth out demand? Now only the hoarders have gasonline, and my family really needs some, but none is available!” Now I ask which is the morally right way to price it. Do you get it? ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [September 11, 2003, 10:04pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/42 "2003-09-11T22:04:11Z")
The idea that there is some “fair” price for things is just nonsense. How do you know what something is worth to me? Only I know that. An heirloom which is of great sentimental value to me may be worthless to you. An item which is worth little to me normally may be worth a lot in an emergency. Ice is worthless in northern Sweden but valuable in central Africa. The price system in a free market is what transmits the information of what things are worth in each place and time and to each person. Hayek explains it very well in his article [The Use of Knowledge in Society](http://www.virtualschool.edu/mon/Economics/HayekUseOfKnowledge.html) where he explains that the prices of things in a free market act as a regulator and medium for the transmission of condensed information when this information is spread out among millions of producers, consumers, processors, etc. > [@](#): > > Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose–and it is significant that it does not matter–which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all his without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes. The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity–or rather that local prices are connected in a manner determined by the cost of transport, etc.–brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process. The value of things is in constant change and it is the added effect of all the forces that compose the market which determine what things are worth to people. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [September 11, 2003, 10:05pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/43 "2003-09-11T22:05:45Z")
> [@](#): > > _Originally posted by BwanaBob_ > I think my point is that we have a built it perception of what’s a fair profit. If something changes that equation, I expect change in price. Your “built in” perception is based on what you are used to paying for a particular product, how much of a dent it puts in your wallet and your knowledge of the market for that product. You’ve never hear someone say “In my day we only used to pay $0.10 for a burger”? > [@](#): > > \*Originally posted by bri1600bv \* > I think there should be a government agency that determines what is and is not “fair” profit. > \*\* There is…in communist Soviet Union. It didn’t work. > [@](#): > > Originally posted by bri1600bv > What would a gold dealer do if he bought gold at $300 and the price went to $200? Using your illogic he would just wait until the price went back up to $300 and if it never did he would just sit in his store with his overpriced gold until he went out of business. Um…yeah. That’s what people do. He has the choice of selling his gold at a loss or waiting for the price to go up (which it generally does). > [@](#): > > \*Originally posted by sailor > \*So, suppose the opposite happens. Suppose the merchant just bought a million gallons of gas and the next day the price drops 40%. All the gas stations around him waited and now have cheap gas. But you, of course, would be happy to pay 40% more for your gas, wouldn’t you? Because after all, you were happy to pay that just days ago. How are you losing by continuing to pay the same price? Welcome to the wonderful world of “options”/“futures”. People speculate on the future price of a particular good all the time. > [@](#): > > _Originally posted by BwanaBob_ > Well business people, what gives here; did I just have the misfortune in dealing with a couple of pricks (whom I told to go fuck themselves for their shitty business practices, and shared my experiences with colleagues so that they do not patronize they assholes either), or do you feel they’re justified? That’s some keen negotiating skills you have. Realize that the market does not revolve around YOU. If someone else is willing to purchase that stupid lamp for $20, then it was a good business practice. Especially if it alienates “undesirable” customers - ie people who wander in, don’t buy anything and then tell the manager to “fuck off”. > [@](#): > > \*Originally posted by bri1600bv \* > What’s the “fair” profit for Madonna or some other “star” to charge for her crappy (IMO) music? Given that it costs her almost nothing it should be almost free, no? The fact that she’s worth probably hundreds of millions of dollars suggests that she and other musicians, athletes, et. al, are charging “unfair” profits, don’t you think? Quick, bust her. [Insert favorite group here] has a rare and talented gift of creating music that people enjoy. How much is listening to that music worth to you? * * * Price Gouging is when merchants take advantage of inefficiencies in the market to jack up the price. You know that a bottle of water generally costs $1.00 so it is obvious that a merchant at a concert is price gougeing by selling it for $5.00. He is taking advantage of the fact that he has a local monopoly over the bottled water supply at the concert. The free competitive market is really the best way to allocate resources. What is freeer than sellers charging what they want and buyers pay what they want? It only works so long as there are relatively few barriers to entry and the market is allowed to stay competitive. Unfortunately many people (especially those with little or no understanding of economics) have a self-centered childish view that if the are below the “S curve” that somehow the price is “unfair”. ---
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [September 11, 2003, 10:20pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/44 "2003-09-11T22:20:39Z")
> [@](#): > > \*Originally posted by SunTzu2U \* > \*\*To sum it up Simple Basic Macro-economics 101 Dude! \*\* Actually, it’s baisc microeconimcs. ---
**Author:** ![BwanaBob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bwanabob/32/2985_2.png) [@BwanaBob](https://boards.straightdope.com/u/BwanaBob)\ **Post date:** [September 12, 2003, 1:44am UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/45 "2003-09-12T01:44:50Z")
I concede that I did not nor do I fully understand the market place. A few of you had constructive posts that were illuminating (John Mace gets the gold star). Others who I won’t bother to name are obviously knowledgeable but are classless boors who resort to insults when “explaining” why someone’s viewpoint is wrong. I’m no angel either. I probably shouldn’t have told those two merchants to fuck off; but as the saying goes, you had to be there. When someone smugly tells you that the price you saw the other day is invalid and you know damn well they jacked it up because you expressed interest in it, I cannot believe some of you high-and-mighty Adam Smiths would have cheerfully accepted the situation. Now I’ll go get myself a basic economics theory book and start reading. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [September 12, 2003, 3:49am UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/46 "2003-09-12T03:49:00Z")
> [@](#): > > \*Originally posted by Telemark \* > \*\* > > An antiques dealer probably has lots of old inventory, I bet stuff sits there for long periods of time before the right buyer comes along. In some businesses (such as car dealerships) there is great push to move old stock, but I doubt there’s much cost to keeping some antiques lying around. Perhaps they don’t dust to give the impression that things are neglected and they want to move them. It could give them a leg up in negotiations. > > \*\* That, and generally the cost of carrying excess inventory results from inventory costs and the loss in value of inventory over time. Antiques are a different story- they typically appreciate in value over time, so having a large inventory may actually help out on the guy’s balance sheet. Also, I doubt that the actual costs of carrying one dusty old teapot is much different than carrying a whole store packed full of them, so again, it’s to his advantage to have as much crap in there as he can. > [@](#): > > \*\* > You thought you were doing the dealer a favor. He thought that he could maximize his profits by raising the price on you. That’s all part of the system, maybe he’ll drop his prices when you show that you won’t pay the higher price. Maybe he’ll stop using this technique if enough customers walk away and never return to the store. But it’s his store, he’ll sink or swim based on the results. > \*\* That’s price discrimination for you. That’s what car salesmen do every day- except that they start high and it’s your job to negotiate them down. That’s why retailers & manufacturers offer rebates and coupons- they realize that there’s a segment of the population that’s more price-sensitive and will trade some degree of convenience for a lower price. Either way, they make money- obviously the rebated/discounted price is still profitable. But they make even more money per unit on the people too lazy to get the rebate/clip the coupons. And the kicker is that they sell more by having the rebates/coupons than without- all the people willing to pay the higher price buy it at list price, and the more frugal ones buy with the rebates. Sure, they could sell them all at the lower price, but what would be the point? They wouldn’t make as much money since there are people out there willing to pay the higher price. I bet the antique dealer sized you up when you went in, and figured you were good for $20, and raised the price either after you left, or after you called. That’s pretty much the way price discrimination works- however, if you waited, he’ll probably drop the price. Or, try this- wait a while so he forgets you, and get some clothes at Wal-Mart. Wear the cheapo clothes in on the next trip, and he’ll be less likely to raise the price on you if you look like you have less money to go around. One more thing- just what do you think is a “fair” profit margin? You do know that a 50% gross margin is pretty much standard in most things, right? (i.e. they charge about double what they paid for the goods) ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [September 12, 2003, 7:45am UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/47 "2003-09-12T07:45:55Z")
Interestingly, there was a word used in Orwell’s _1984_ along the lines of this thread: “bellyfeel”. The OP strikes me as an appeal to emotion (trying to glom onto some vague sense of unease that a merchant or corporation is cheating us when they sell us things) instead of basic logic. I go with my hunches occasionally when buying products, but I simply don’t expect to impose a limit on the profits a merchant can pursue based on some vague concept of “fairness”. The thread premise sounds like the Politics of the Lazy: since you won’t expend the effort to shop around for a lower price or negotiate for a lower price, you’re calling for the government to force lower pricing on your behalf. > [@](#): > > I think my point is that we have a built [in] perception of what’s a fair profit. Well, your point is useless, since everyone’s perception is different. Part of the Politics of the Lazy is assuming every feels (or should feel) about a subject the same way that you do, and if they don’t, it’s because they are ignorant or evil or something and need legislation to protect them from themselves. > [@](#): > > Now I’ll go get myself a basic economics theory book and start reading. Good! Shake off the laziness. And if you think I’m insulting you… deal with it. ---
**Author:** ![BwanaBob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bwanabob/32/2985_2.png) [@BwanaBob](https://boards.straightdope.com/u/BwanaBob)\ **Post date:** [September 12, 2003, 11:16am UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/48 "2003-09-12T11:16:35Z")
Hey Bryan Ekers - Talk about laziness, why don’t you try reading instead of skimming? I challenge you to find a quote in this thread where I called for the government to force lower pricing on “my” behalf. I am my own price police. And just like you’re all saying, “no one is forcing me to buy anything”. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [September 12, 2003, 9:19pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/49 "2003-09-12T21:19:16Z")
> [@](#): > > \*Originally posted by BwanaBob \* > \*\*Hey Bryan Ekers - > > Talk about laziness, why don’t you try reading instead of skimming? > > I challenge you to find a quote in this thread where I called for the government to force lower pricing on “my” behalf. No problemo. It’s there, but you read the subtext, which is hard to spot if you’re only “skimming”: > [@](#): > > there’s an implicit understanding that a person has a right to make a profit and a living but that the profit margin should be fair and reasonable In the United States, rights are defined by constitutional issues. When you start speaking of “rights” but add a “but”, it implies you’d like to see the consitution modified in some fashion. In this case, there is no existing legislation defining a “fair and reasonable” profit margin, so it sounds to me like you’d like to create it, giving government additional powers. It’s a subtle subtext, I’ll admit, but I’m naturally skittish of anyone who says or implies that there oughtta be a law about something that offends him personally. Your more directly stated position is the correct one: that if prices strike you as inappropriate, you should withhold your purchase or shop elsewhere. It will become clear that “the market” (or at least the smidgen of the market that is under your control), will not bear such pricing. ---
**Author:** ![BwanaBob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bwanabob/32/2985_2.png) [@BwanaBob](https://boards.straightdope.com/u/BwanaBob)\ **Post date:** [September 12, 2003, 10:42pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/50 "2003-09-12T22:42:20Z")
Bryan- I think you were looking a little too deep into my sentiments. What I described was merely a wish; one that isn’ t and shouldn’t be “enforceable”. ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [September 12, 2003, 10:51pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/51 "2003-09-12T22:51:43Z")
> [@](#): > > Now I’ll go get myself a basic economics theory book and start reading. Do that. I suggest _Principles of Economics_, by N. Gregory Mankiw. You can probably get a used copy on the cheap. ---
**Author:** ![Andy\_L](https://avatars.discourse-cdn.com/v4/letter/a/c67d28/32.png) [@Andy\_L](https://boards.straightdope.com/u/Andy_L)\ **Post date:** [September 12, 2003, 11:42pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/52 "2003-09-12T23:42:52Z")
> [@](#): > > \*Originally posted by BwanaBob \* > \*\*John Mace - well put, thank you for your observations. > > As to gouging , it can have consequences to the merchants. Personally, if the local gas station that I normally give all my business to, gouged me during a crisis, I would remember that fact later when prices stablized. I would probably not patronize him again. > > Say everyone raised their price to $3.00 a gallon. A merchant might go with the crowd. Or, he could charge $2.00. He will sell out his supply faster than everyone, yes. Will he make as much profit as his competitor, no, but so what? He has made a profit and maintained the good will of his customers. I think merchants/stores get too caught up on comparing their bottom lines with their competitors. Why isn’t enough to make a profit, the one that you were happy just days ago before oil prices went up? > > How are you losing? \*\* At the risk of covering something someone else already said, I’ll answer this last question. The station owner needs to charge a price that allows him to buy next week’s gas - if he doesn’t sell today’s gas at a price high enough to do so, he will be out of business, or will need to take out a loan to get that higher priced gas. Andy ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [September 13, 2003, 7:48am UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/53 "2003-09-13T07:48:08Z")
> [@](#): > > \*Originally posted by BwanaBob \* > \*\*Bryan- > > I think you were looking a little too deep into my sentiments. > What I described was merely a wish; one that isn’ t and shouldn’t be “enforceable”. \*\* Cool. Maybe I’ve been hanging around in too many of Aldeberan’s threads. The subtext in his writing is a lot more blatant. ---
**Author:** ![dal\_timgar](https://avatars.discourse-cdn.com/v4/letter/d/a88e57/32.png) [@dal\_timgar](https://boards.straightdope.com/u/dal_timgar)\ **Post date:** [September 13, 2003, 5:20pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/54 "2003-09-13T17:20:55Z")
caveate emptor, really means, never give a sucker an even break. If I can hide info from you and rip you off it is YOUR FAULT. I keep telling people to trash Microsoft and switch to Linux. The UNIX people like making the OS complicated and mysterious though. A “less” command to view a file. The VI editor is an insane joke. Dal Timgar ---
**Author:** ![J\_String](https://avatars.discourse-cdn.com/v4/letter/j/ce73a5/32.png) [@J\_String](https://boards.straightdope.com/u/J_String)\ **Post date:** [September 13, 2003, 5:58pm UTC](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725/55 "2003-09-13T17:58:31Z")
> [@](#): > > I keep telling people to trash Microsoft and switch to Linux. The UNIX people like making the OS complicated and mysterious though. A “less” command to view a file. The VI editor is an insane joke. 😕 😕 😕 [Previous page](https://boards.straightdope.com/t/what-does-what-the-market-will-bear-mean/200725.md?page=2)