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The Forum > General Discussion > The effect of ideology on outcomes

The effect of ideology on outcomes

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Thinker 2, I want the name of your lock smith: $6, cool!
Posted by Jockey, Tuesday, 21 September 2010 7:48:39 PM
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Obviously the people advocating a fair price aren’t able to define it.

If the definition of what is fair, is that no-one should be able to charge more than what it cost him to produce the product, then why would anyone produce anything? Isn’t anyone entitled to any benefit from any action? Cost cannot be the measure of fairness.

Talk of "fair" prices is reminiscent of the dispute in the church over usury. Usury - lending money at interest - was considered a sin. So churchmen and scholars tried for hundreds and hundreds of years to define the difference between the market price and "the just price". They tried every cockamamie scheme under the sun to try to come up with what was the just price. But they all failed and the attempt to ban usury collapsed.

The theory of just price was refuted because there is no objective way to decide what is the just price. People’s views of what is fair are subjective. There are as many opinions on what is a fair price as there are people. Everyone wants more for his own product or services, and to pay less for others’.

Cyclone Larry devastated banana plantations, so the price of bananas went up. Were the new prices “just”? Well how could anyone ever know, other than by seeing whether people were willing to buy and sell at that price? How could someone without knowledge of all the specific circumstances and values of the parties, imposing a price based on irrelevant facts, arrive at a “fairer” result?

Prices are always only ever what a specific person agrees to pay for specific goods from a specific seller at a specific time and date. Neither the purchasing power of money, nor the quality of the goods, nor people’s circumstances, nor their subjective purposes, nor their relative values are stable, so there is no reason why prices should be stable.

What is agreed is the fair price, and what is forcibly imposed is not a fair price.

GH: presumably the gulags were just an excess of co-operativeness?
Posted by Peter Hume, Wednesday, 22 September 2010 10:52:04 AM
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@Thinker2, it’s an interesting problem, and though I disliked what Howard did and stood for, not all of the blame can be placed upon him. Keating deregulated banking AND business, the theory being, that business may be allowed to self-regulate.

Realistically, business views pricing in this manner…how much will the market bare?

It’s not a case of, what is a fair profit? The reasons for this are many, but going back to the 80’s, it can be well said that it basically started there through deregulation. What a lot of people don’t realize about deregulation, is how it freed the banks, insurance and finance companies to list on the stock exchanges, thus changing their focus from client orientation, to stock-holder orientation.

For those old enough, the stock market was never mentioned on the nightly news prior to around 1980, other than on news items whereby something dramatic had occurred. Since about 1980, there have been nightly reports on the news, and through the early 80’s, the only news was, that it was rising. So, ordinary people that traditionally never invested in the stock market, now slowly became interested, and in particular, retirees. The stock market facilitated this new business by creating smaller bundles to purchase, for in those days, you couldn’t become involved for less than a spare ten grand or more. Now you can start dabbling for a few hundred dollars.

This focus upon the stock market then made most companies that were listed, become even more focussed upon their stock-holders, not on their clients and business, who now in a backhanded manner were treated as the fodder that fed the stockholders. Thus the increased need to create more profits in order to pander to stockholders enabling the share prices to look attractive, and not just for the company to turn a profit.

TBC...
Posted by MindlessCruelty, Thursday, 23 September 2010 10:13:11 AM
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The banks, insurance companies and finance companies have also listed and are competing with each other on share prices, not product prices. The price is basically the same for a mortgage, they just bundle the fees differently to appear different and look cheaper, but in most, you find that there are trade-offs, and the products are basically the same…the interest rate might be cheaper, but the fees are higher, and the like. That’s not to say that you can’t actually find one institution cheaper than another, but it’s a hard look that needs to be made to achieve this.

I worked in the insurance game in the 1980’s, and we were told to sell the variable rates, not the capital guaranteed rates, and a few years earlier, the banks had already dropped fixed mortgage rates for the variable rates….because it was easier. It meant less responsibility upon the organisation to be responsible for changes in rates, and could always blame the “market”. Now instead of having to make conservative long term investments to guarantee rates, they just threw a lot of the money into the stock market, and it dictated the rates. That in turn placed a rather large increase of funds into the market, and all companies then were competing to show good share prices, to gain access to that extra money. And for a good share price, you require good profits.

Now we get to Howard, who facilitated the rationalizing of business to enable better efficiencies for even better profits by the way he destabilized the workforce and sealed the fate of the unions by the use of contracts, part-time and casual staff. That combined with political correctness has put the workforce in fear of saying anything against management, as contracts don’t have to be renewed, which nullifies “unfair dismissal”, and it takes away union membership and strength, while making the workforce in fear of saying or doing the wrong thing for it’s easier to lose a job, than to find one….and I got this mortgage to pay, that’s increasing every three months.

TBC...
Posted by MindlessCruelty, Thursday, 23 September 2010 10:13:18 AM
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Some of the by-product of this has been the volatility of mortgage rates, and the introduction of fiscal policy using mortgage rates to “control spending”. What utter BS!! You can do that by increasing taxes on goods, particularly foreign goods, or encourage savings. But no, they do it by adding monies to the coffers of the banks, because they regulate themselves now, they are not regulated by government, and so in a subtle way, regulate government fiscal policy.
Posted by MindlessCruelty, Thursday, 23 September 2010 10:13:25 AM
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Another scenario regarding costs of services Thinker 2 that I was recently informed about.

Call out fees differ greatly between tradespeople, the particular services and from, say, electrician to electrician.

The elderly living on their own, with no-one to oversee payments for services, are being continually conned in both cities and towns, without knowing it!

Paying a $150 - $200 call out fee in addition to a heater re-wiring or small part [located in a tradesperson's van] costing a pensioner $600+ with ten minutes spent on the entire labour is theft.

I am hearing these stories frequently; a common occurrence of tradespeople charging an exorbitant call out fee figure, and over charging the most vulnerable people, in order for them to have heating for the cold months.
Posted by we are unique, Thursday, 23 September 2010 11:07:06 PM
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