Supply and demand economics the real killer

So, this is a tough idea to tackle here.

How do we get passed the idea of supply and demand economics and the idea of tieing something's value to its scarcity?

I know this is a very difficult. I have no ideas on how to do this.

I have questions though...

Is this a cultural idea predicated on the way we think has humans?

I understand its a principle buts it's the mindset we use as humans.

I don't know guys help me out!

a reply to: onequestion

As one who "dabbles" in the market a little. Supply and demand has been gone for a long time.
It's been replaced by speculation, insider knowledge, and corruption.

Want to prosper in this environment?


www.investopedia.com...

I like to mess around the metal mkts.

a reply to: onequestion

You are asking the right questions though, I imagine you won't like my explanation.

Competition is simply the absence of oppression to loosely quote Bastiat. Competition is what keeps prices down and the lack of it is what keeps prices up. Demand by people is what causes increased cost and eventually supply, lack of it results in diminished cost and supply. Supply grows when prices rise and shrinks when prices fall.

These facts cannot be legislated out of existence.

a reply to: greencmp

But having the value of something predicated on it scarcity I inherently flawed. It means no matter what we do most of te people on the planet will be in poverty.

a reply to: onequestion

It's not an optional characteristic of human action.

The best way to deal with humanity is to treat each individual as a human.

a reply to: greencmp
I beg to differ.

I think it's programming based on our genetic memory and the history of our cultures.

We've always had to fight for scarce resources. This is changing with technology and I think our model of economy needs to change with it.

a reply to: onequestion

Fair enough, it isn't that I dislike the promises of universal human contentedness.

a reply to: greencmp

I strongly believe in our ability to produce a better world.

We can do better than this.

a reply to: onequestion

I don't disagree, I just believe that legislators are not omnipotent and humanity is not clay to be molded.

I can't see how anything but liberty can solve these problems most efficaciously.

a reply to: onequestion

You cannot without numerous artificial constraints which would produce a cascade of negative outcomes.

a reply to: onequestion

Green said it: only in a free market economy can humankind possibly reach its potential. Look at history - progress has accelerated exponentially since the dawn of capitalism.

No economic system can turn 3 apples into 5 apples. The way to separate value from availability is to make all things infinitely available. The only hope for achieving that lofty goal is to allow free men the opportunity to benefit from their own ideas and creations. The only such system conceived is capitalism.

Supply and demand economics is a real killer, eh?

They teach you that in school? I take it your a millennial.

Any time prices have been 'fixed/regulated' , for example, Nixon, they found a way around those price fixes. A meat cut had it's price 'fixed'. The way around it was to cut that meat a little differently and re-name it a new 'cut'.

Being 'new', they could set their own price as there was no previous 'price' to fix...

Hence, black markets, illegal trade,...oh yes, fix the price and the only alternative is to reduce the quality or CUT WAGES to maintain their profit level.

Yes, these things happen in the supply and demand system as well. It will only increase under arbitrary price fixing....the only alternative to supply and demand.

originally posted by: onequestion
a reply to: greencmp

But having the value of something predicated on it scarcity I inherently flawed. It means no matter what we do most of te people on the planet will be in poverty.

Not really.

It also creates opportunity for those people.

I'll give you an example.

Why do you think so many people ... mainly cab services ... are upset with ride-sharing services like Uber and Lyft? It's because those services found smart ways to undercut and outcompete the cabs.

Most cities have a few, a very few cab companies, and those companies make it very hard to break into their market and compete on their turf. There are licenses and fees and regulations. A big, established outfit can absorb those hits, but a little guy trying to get started and compete is going to be more or less smothered and kept out. It's protectionism. The market stays small, and those cab companies can charge more or less larger fees than most of us want to pay, but since they're the only option, we don't have much choice.

Then along come Uber and Lyft who re-write the rules and invent a way to hook up average Joe's going the way you want to go with you. You pay the average Joe a nominal fee for the lift and the average Joe pays Uber or Lyft a small fee to be listed in their database. It all operates very cheaply, but Uber and Lyft make a huge profit, and the consumer wins by not having to pay cab fees.

The drivers make a little extra on the side. The guys who saw the opportunity are doing fantastically as are all their employees, and the people who no longer have to pay cab fees are better off too.

The only losers are the cab companies who now either have to find way to adapt their models to compete to try to regain lost business or do what they're doing - throw a huge tantrum and try to litigate Uber and Lyft out of existence.

But in a normal market scarcity of any kind, in this case, scarcity of competition, creates opportunities for anyone who has the wits to solve that issue. Either you find a way to compete by creating more the scarce commodity or service or you find a way to come up with an alternative, but you find a way to supply the demand and it enriches.

But of course, you have to have a normal market. We don't exactly have that.

a reply to: ketsuko

Good points but an important correction, agencies like New York's Taxi and Limousine Commission make it hard to get a medallion to operate a cab.

Some of their reasons are justified; safety, reliability, etc. But much of it is fees and regulation.

a reply to: olaru12

Correct. True supply and demand would be the superior way, depending on if you believe subspeciation is both inevitable, ideal, and you want to be an elite-winner for your offspring.

We don't have supply and demand. As long as the technology to create abundance for everyone's basic needs and wants isn't readily available, supply and demand seems the most efficient way.

I think it's the actual implementation of this, details of the economic theory, game theory, whereby assumptions can really get us into trouble. Now, it's far beyond just this, we have artificial economies/markets affecting real economies/markets. Information is now the real currency.

originally posted by: greencmp
a reply to: onequestion

You are asking the right questions though, I imagine you won't like my explanation.

Competition is simply the absence of oppression to loosely quote Bastiat. Competition is what keeps prices down and the lack of it is what keeps prices up. Demand by people is what causes increased cost and eventually supply, lack of it results in diminished cost and supply. Supply grows when prices rise and shrinks when prices fall.

These facts cannot be legislated out of existence.

Simplistically yes. If EVERYONE plays by the rules yes. We know that this does not happen. This simplistic market driven economics suffers from the same flaw as the idealistic communist approach and that is that humans do not play by the rules (market economy) nor do they all collectively behave for the good of all (communist). We know there are greedy, selfish , ignorant people who distort the situation.

In a supply-demand economy you can increase your wealth (greed) by creating a false shortage. There are many ways of doing this. Buy the competition and have a monopoly, then control the supply. Have deals with the competition to achieve the same. Stir into this mix the fact that human labour is treated as a resource and thus priced and thus if there is an imbalance then cheap labour will be used in preference to the higher cost labour........DUH!

You also have the problem of the raw materials. There is a limit to the amount of raw materials and you have two basic methods of extraction :

1. Consume everything as fast as the demand requires, take the money and profits and sit back afterwards.
2. Limit consumption to ensure supply for all generations which limits profits and ironically increases prices.

Needless to say we follow method 1 and have to since number 2 requires legislation and government intervention (which people complain about).

The solution! Well you have to split the economy in two. One side is the essentials : food, water, energy, health etc. On the other side is the non essentials : TV's, Cars, luxury clothes, fine wine etc

You control the supply of essentials so that everyone gets a fair and necessary share. You lift all legislation and controls on the non essentials. Why? Well if anyone providing TV's was to capture the market and distort supply we can all not buy and nobody will suffer. It is not in in the interest of any supplier to distort the market in non essential goods. With essential goods the situation is different. Being held hostage to distorted market economics when you are thirsty, hungry or sick only fuels discontent and eventual social breakdown. Noticed recently !!!!

Oh and the old mantra that private/competition is best is utter BS. Good management is what works on both public and private and ideology usually plays a part in the bad management of one over the other. Make the public utilities/ essential suppliers cooperatives since every worker is a consumer then this is bound to result in a healthy business. Make self interest work for all....jaw dropper.

a reply to: yorkshirelad

We all despise monopolies (I hope) but, the largest and most powerful monopoly of all is the state and it is not preferable.

I do not believe that monopolies can exist in a free market without actually providing better what is wanted and needed by people. Only violence can maintain a monopoly which does not and there is no greater enabler for such a circumstance than the state.

a reply to: yorkshirelad

People can say what they want but in capitalism there is no roof which means it eventually leads down a path of totalitarianism because some psychopath will come along and take over the entire economy.

Failed system every time.

originally posted by: onequestion
People can say what they want but in capitalism there is no roof which means it eventually leads down a path of totalitarianism because some psychopath will come along and take over the entire economy.

Failed system every time.

List them.

a reply to: AugustusMasonicus

You don't make any sense.