Capitalism's Arrogance Flaw

[Zenmervolt]

<< The great flaw in cap. economies probably is the belief that it's the law of supply and demand alone that governs the fair pricing of goods and service, and all based on natural "market conditions", when to the contrary, nearly as often it is based on mis-informed consumers and or false advertising. >>

Supply and demand still holds despite your argument. Advertising that mis-informs consumers creates demand. The entire intent of advertising is to create demand. The fact that demand can be manipulated to an extent does not invalidate the law of supply and demand. Also, note that supply and demand says absolutely nothing about the quality of the products demanded. The law of supply and demand does not care how demand is caused nor does it care about the quality of the product being demanded. However, the law of supply and demand still holds true.

ZV

 

[Ornery]

BINGO! Caveat Emptor! Now, do you think we could start teaching the art of consuming wisely in our public schools? Sheesh, would that be asking too much? What? Is being a smart consumer not worth teaching? And no, I wouldn't leave it to parents. Remember, they're the ones in debt up to their gills with SUV and Minivan payments twice the size of their mortgages!

 

[KevinMU1]

But my question now only changes: why the HELL do people demand inferior products???

 

[CocaCola5]

<<

<< The great flaw in cap. economies probably is the belief that it's the law of supply and demand alone that governs the fair pricing of goods and service, and all based on natural "market conditions", when to the contrary, nearly as often it is based on mis-informed consumers and or false advertising. >>

Supply and demand still holds despite your argument. Advertising that mis-informs consumers creates demand. The entire intent of advertising is to create demand. The fact that demand can be manipulated to an extent does not invalidate the law of supply and demand. Also, note that supply and demand says absolutely nothing about the quality of the products demanded. The law of supply and demand does not care how demand is caused nor does it care about the quality of the product being demanded. However, the law of supply and demand still holds true.

ZV >>





By your argument then, a Monopoly would not be a undesireable thing because its creates demand(for its own product), which in fact does perfectly.

 

[Gonad the Barbarian]

<< BINGO! Caveat Emptor! Now, do you think we could start teaching the art of consuming wisely in our public schools? Sheesh, would that be asking too much? What? Is being a smart consumer not worth teaching? And no, I wouldn't leave it to parents. Remember, they're the ones in debt up to their gills with SUV and Minivan payments twice the size of their mortgages! >>



I have a feeling that if that were to actually happen, our entire economy would collapse. If everyone suddenly became a smart consumer surely half of the businesses that exist today would fail.

 

[b0mbrman]

<< But my question now only changes: why the HELL do people demand inferior products??? >>



Woah...explain please...

 

[Zenmervolt]

<<

<<

<< The great flaw in cap. economies probably is the belief that it's the law of supply and demand alone that governs the fair pricing of goods and service, and all based on natural "market conditions", when to the contrary, nearly as often it is based on mis-informed consumers and or false advertising. >>

Supply and demand still holds despite your argument. Advertising that mis-informs consumers creates demand. The entire intent of advertising is to create demand. The fact that demand can be manipulated to an extent does not invalidate the law of supply and demand. Also, note that supply and demand says absolutely nothing about the quality of the products demanded. The law of supply and demand does not care how demand is caused nor does it care about the quality of the product being demanded. However, the law of supply and demand still holds true.

ZV >>

By your argument then, a Monopoly would not be a undesireable thing because its creates demand(for its own product), which in fact does perfectly. >>

Actually, there are many times when a monopoly is desireable (most cases involve utilities and large efficiencies of scale), but my argument does not advocate that, I believe that you have not quite understood. I made no value judgement on whether creating demand was good or bad, I only pointed out that it does not invalidate supply and demand. The law of supply and demand is nothing more and nothing less than a useful tool for modeling the economy and predicting the outcomes of certain situations. It is not an affirmative value judgement (nor is it a negative value judgement) of anything at all.

ZV

 

[Martin]

<<

<< BINGO! Caveat Emptor! Now, do you think we could start teaching the art of consuming wisely in our public schools? Sheesh, would that be asking too much? What? Is being a smart consumer not worth teaching? And no, I wouldn't leave it to parents. Remember, they're the ones in debt up to their gills with SUV and Minivan payments twice the size of their mortgages! >>



I have a feeling that if that were to actually happen, our entire economy would collapse. If everyone suddenly became a smart consumer surely half of the businesses that exist today would fail. >>



Lol, probably true. Let's leave things the way they are, they work well enough.

On a more relevant note, personal finance should definately be taught. I mean, there have been reports that HUGE percentages of young people are in debt and that bankrupcy is way up there.

Having dumb consumers may not be bad, but having bankrupt ones probably is.

 

[Ornery]

"...half of the businesses that exist today would fail."

Good riddance to 'em! Manufacturers would be forced to build decent quality products. A win-win situation!

 

[b0mbrman]

<<

<<

<< The great flaw in cap. economies probably is the belief that it's the law of supply and demand alone that governs the fair pricing of goods and service, and all based on natural "market conditions", when to the contrary, nearly as often it is based on mis-informed consumers and or false advertising. >>

Supply and demand still holds despite your argument. Advertising that mis-informs consumers creates demand. The entire intent of advertising is to create demand. The fact that demand can be manipulated to an extent does not invalidate the law of supply and demand. Also, note that supply and demand says absolutely nothing about the quality of the products demanded. The law of supply and demand does not care how demand is caused nor does it care about the quality of the product being demanded. However, the law of supply and demand still holds true.

ZV >>





By your argument then, a Monopoly would not be a undesireable thing because its creates demand(for its own product), which in fact does perfectly. >>



I don't think he's talking about socially desireable or not. He's just saying that even with false avertising/ill-informed consumers, what people buy still depends on supply and demand...no moral judgments...just fact

 

[b0mbrman]

<<

<< BINGO! Caveat Emptor! Now, do you think we could start teaching the art of consuming wisely in our public schools? Sheesh, would that be asking too much? What? Is being a smart consumer not worth teaching? And no, I wouldn't leave it to parents. Remember, they're the ones in debt up to their gills with SUV and Minivan payments twice the size of their mortgages! >>



I have a feeling that if that were to actually happen, our entire economy would collapse. If everyone suddenly became a smart consumer surely half of the businesses that exist today would fail. >>



It would eventually be for the better though...those people who are in the business of making consumer goods would switch to making capital goods (like machines or education) increasing the capital:labor ratio and making us all more productive

 

[CocaCola5]

<<

<<

<<

<< The great flaw in cap. economies probably is the belief that it's the law of supply and demand alone that governs the fair pricing of goods and service, and all based on natural "market conditions", when to the contrary, nearly as often it is based on mis-informed consumers and or false advertising. >>

Supply and demand still holds despite your argument. Advertising that mis-informs consumers creates demand. The entire intent of advertising is to create demand. The fact that demand can be manipulated to an extent does not invalidate the law of supply and demand. Also, note that supply and demand says absolutely nothing about the quality of the products demanded. The law of supply and demand does not care how demand is caused nor does it care about the quality of the product being demanded. However, the law of supply and demand still holds true.

ZV >>

By your argument then, a Monopoly would not be a undesireable thing because its creates demand(for its own product), which in fact does perfectly. >>

Actually, there are many times when a monopoly is desireable (most cases involve utilities and large efficiencies of scale), but my argument does not advocate that, I believe that you have not quite understood. I made no value judgement on whether creating demand was good or bad, I only pointed out that it does not invalidate supply and demand. The law of supply and demand is nothing more and nothing less than a useful tool for modeling the economy and predicting the outcomes of certain situations. It is not an affirmative value judgement (nor is it a negative value judgement) of anything at all.

ZV >>




I understand the law of supply and demand and I don't believe I was saying its was false. I think what I was saying was the ways in which cap. economies arrives at a fair price of products and services(which was my intended point) often is not a product of supply&demand but other means, ie mis-information, false advertising/marketing.

Remember that, the other means I mention above is not a variable of supply and demand, it is external factor, and although it eventually effects the function of S&D, it has no relation to the law(s&d) itself.

 

[b0mbrman]

<< I understand the law of supply and demand and I don't believe I was saying its was false. I think what I was saying was the ways in which cap. economies arrives at a fair price of products and services(which was my intended point) often is not a product of supply&demand but other means, ie mis-information, false advertising/marketing. >>



You really didn't change your statement

If consumers are mis-informed due to false advertising/marketing, then it *changes* their preferences and *shifts* the demand curve. If the price that the good is selling for is less than or equal to their *perceived* utility, then they will buy it. Is this optimal? Nope!

Not sure what the alternative is though...



<< Remember that, the other means I mention above is not a variable of supply and demand, it is external factor, and although it eventually effects the function of S&D, it has no relation to the law(s&d) itself. >>



Sure it does...income, prices of alternate and complementary goods, preferences (prejudices, culture, mores, perceptions), population, etc...

This is the stuff that demand is made of

 

[mss242]

<< show me a better system, and i'll root for it... >>



here goes:

I decided to call this system distributism (loosely based on a property distribution system originally advocated by G.K. Chesterton, and no I am not a catholic freak). It is basically capitalism on a small scale, but socialism on a large scale. The evils that I see inherent in capitalism boil down to one thing: The massively unequal distribtution of resources. Look at the innumerable luxuries most middle class americans have compared to people in much poorer countries that struggle for basic things like food and rudimentary health care. This is one of the greatest evils in the world. Think for example about the amount of food that most americans eat. We eat so much meat and animal products while others struggle for wheat and corn. Ten pounds of grain is required to harvest one pound of beef. We can afford to eat things like beef because we are more or less the corporate headquarters of the world. That is also why some families have four cars and others walk 2 miles to get a bucket of water. But how can you solve something like this? Communism is not viable because people won't work if they don't have to, and then everyone stands in lines for food like in the USSR. But imagine if each region were to have approximately the same amount of resources distributed to them based on their needs (more populated areas might need more food, colder areas more heating oil, etc.), but within a given region capitalism would be the used system. This would prevent the massive MNC's that are really nothing more than modern day colonialism described as globalism, but able people within a region would still have to work for a living. For proper implementation, this system would of course require a much more powerful worldwide organization than the UN. It would probably require a worldwide government whose sole purpose is to redistribute resources and keep the peace between regions, but the rest of the decisions would be up to the regional governments. Well that is my little idea in a nutshell. Oh yeah, one more thing. The problems that I attribute to americans here really apply to most countries in the developed of first world. I didn't intead to single us out.

 

[CocaCola5]

*shifts* the demand curve

I think this was the key point I left out and it proves my point, I believe, that S&D does not alway produce the fair price, which is the main idea anyways.

 

[CocaCola5]

b0mbrman, you're right it is a variable, my fault i need to say its a external factor, not variable and it shifts the demand curve.

External factors are accepted(in economics) but they are looked down because they are greatly inefficient for both consumers and suppliers, they are to be avoided.

 

[b0mbrman]

<< Look at the innumerable luxuries most middle class americans have compared to people in much poorer countries that struggle for basic things like food and rudimentary health care. This is one of the greatest evils in the world. Think for example about the amount of food that most americans eat. We eat so much meat and animal products while others struggle for wheat and corn. >>



This meat makes us smarter, stronger, faster...I wouldn't be able to do a single econ problem without the pound of beef I eat every day.

People complain about poor people all the time. I'd like to see them practice what they preach...Get all your money and keep exactly what you need to survive (probably less than $6,000 a year) and give the rest to poor people.



<< Communism is not viable because people won't work if they don't have to, and then everyone stands in lines for food like in the USSR. >>



Your system seems to penalize the better-off. The way the world works right now, if you put in a dollar's worth of detriment (made up of time, effort, scheming, hurting your morals [e.g. you have a job clubbing baby seals] etc.) you anticipate receiving a dollar's worth of stuff. Why is this true?

Because if you perceived that you could get more than a dollar's worth of benefit for putting in that dollar's worth of detriment, you'd do it, no?

On the other hand, if you went past "the peak" and were at a point where you were getting less than a dollar's worth of benefit for a dollar's worth of detriment, you'd certainly work less.

In the economy you describe, people would stop working *much* sooner. What if that extra little bit of work would have produced a cure to cancer, or a perpetual-motion machine or something like that? I bet *you'd* feel silly

 

[CocaCola5]

Ok, its true everything "pricewise" is derrived from Supply and Demand, however, if external forces(such as false advertising/marketing or mis-information) influence this relations(curve) [ed: beyond a certain extent /ed] it becomes something else and is called something other than a S&D curve, sadly I can't remember the term for this phenomenon.

 

[b0mbrman]

<< *shifts* the demand curve
I think this was the key point I left out and it proves my point, I believe, that S&D does not alway produce the fair price, which is the main idea anyways. >>



I totally agree...and disagree at the same time...

It's fair because no one's ever forcing them to buy anything...it's not optimal cuz it causes misallocation...

Remember that Carl's Jr. commercial where the guy bought all those capers? That grocery store then made an order for more capers because they thought teenage kids were gonna start buying all sorts of capers. People who process capers made some profit. Other people saw that caper-processors were making profit and switched their resources into making capers...Now, some farmer's not growing wheat for bread and instead giving the US more of those damn capers...

Society doesn't need more capers! We want our bread back!

 

[b0mbrman]

<< Ok, its true everything "pricewise" is derrived from Supply and Demand, however, if external forces(such as false advertising/marketing or mis-information) influence this relations(curve) [ed: beyond a certain extent /ed] it becomes something else and is called something other than a S&D curve, sadly I can't remember the term for this phenomenon. >>



You mean to say that it's a (negative) externality?

Yup...those things cause misallocation...check out all the gibberish I said about capers^^^

 

[KevinMU1]

Wow, I can't believe all the discussion that has been generated by this... and I would respond but I'm way too tired to think clearly. However--now that we have almost 50 responses this is where I'll put my blatant plug--thought provoking rants like this are the mainstay at rantITraveIT. Anyone who's interested in more, I invite you to check out the site, and the forum discussions. It's a managable forum, without insane numbers of posts, and without all the stupid stuff that goes on with tens of thousands of members.

I'll write more tomorrow about all this discussion... but not right now, bed calls.

 

[CocaCola5]

<<

You mean to say that it's a (negative) externality?

[/aid about capersq]


Perhaps, not sure though.

Correct, negative externality.

 

[b0mbrman]

<< Ok, its true everything "pricewise" is derrived from Supply and Demand, however, if external forces(such as false advertising/marketing or mis-information) influence this relations(curve) [ed: beyond a certain extent /ed] it becomes something else and is called something other than a S&D curve, sadly I can't remember the term for this phenomenon. >>



You mean to say that it's a (negative) externality?

Yup...those things cause misallocation...check out all the gibberish I said about capers^^^

 

[mss242]

<< This meat makes us smarter, stronger, faster...I wouldn't be able to do a single econ problem without the pound of beef I eat every day. >>



Umm . . . sure.



<< People complain about poor people all the time. I'd like to see them practice what they preach...Get all your money and keep exactly what you need to survive (probably less than $6,000 a year) and give the rest to poor people. >>



I only make about 5 grand a year, and I still give some of that away. Despite my inability to contribute significantly with cash, I still contribute my time and abilities through service work. But my point is not just that you should give away all your money. Someone asked for a better system than capitalism, and I just tried to provide it. I'm not trying to make you feel guilty about your wealth (though apparently you do).



<< Your system seems to penalize the better-off. The way the world works right now, if you put in a dollar's worth of detriment (made up of time, effort, scheming, hurting your morals [e.g. you have a job clubbing baby seals] etc.) you anticipate receiving a dollar's worth of stuff. Why is this true?

Because if you perceived that you could get more than a dollar's worth of benefit for putting in that dollar's worth of detriment, you'd do it, no?

On the other hand, if you went past "the peak" and were at a point where you were getting less than a dollar's worth of benefit for a dollar's worth of detriment, you'd certainly work less. >>



In this economy the overwhelming majority of people would end up working just as hard as before because they can still achieve relative wealth within their region. Their working hard might not get them as much in america as it used to, but in the rest of the world working hard would get you a lot more, thus increasing the amount of work done everywhere.



<< In the economy you describe, people would stop working *much* sooner. What if that extra little bit of work would have produced a cure to cancer, or a perpetual-motion machine or something like that? I bet *you'd* feel silly >>



Well shouldn't some people stop doing jobs that don't contribute to technological growth? Take special education teachers for example. Everybody knows that a bunch of speds will never contribute to ttechnological progress of society, so why should we try to take care of them or educate them? That teacher could instead use her brain to research cancer cures. I bet *she'd* feel silly.

Progress is not everything you make it out to be. As someone apparently versed in economics, you should know that you need to sacrifice some efficiency to achieve more equity. The question is what is more important: Millions of starving people or your physically impossible perpetual motion machine? I have made that choice and have no qualms about it. Do you have any qualms about yours?