Re: Prices

From: kevincar (kevindotcar_at_yahoo.com)
Date: 07/29/04 

Date: 29 Jul 2004 16:26:26 -0700

"smithaa02" <asdf@asdf.net> wrote in message news:<410864cd_1@newspeer2.tds.net>...
> Galapagos <nospam@nospam.com> wrote in message
> news:s7TNc.53663$OR2.2825172@news3.tin.it...
> > One of the ideas supporting market economies is the role of the prices.
> > Theory affirms that prices reflecting the scarcity of resources are a
> > guide for millions of buyers and sellers.
> >
> > How we can be sure that prices really do that?
> > And what is wrong if they do not ?
> >
> > Thanks for your reply.
>
> The idea that prices are a guide is circular logic. In reality price is
> more whimsical and manipulated, then an objective measure of textbook
> 'utility'.
>
> First ask yourself, what is price? It is the ratio of trade. 15K$ for that
> car. X gold peices for Y food. Etc... It is just that, the ratio of
> trade.
>
> Then ask yourself, why trade? To obtain the benifits from specialization.
> Say I produce 5 units of wool and 5 units of food by myself, while another
> also produces 5 wool and 5 food by themselves. Together though
> specialization, we can collectivly produce the same food, but 5 more wool.
> This increment of association is the reason for trade.
>
> What objective theory determines the subdivision of benifits from the
> increment of association (the only reason for trade)? Nothing.
>
> So the importance of price is? Good question!

   Further, There is always a lag-time in reflecting the
   market-correction... This where manipulation typically
   is made;

     a. Governmental interference (like cable tv or trash pickup)
     b. Artificially stimulating/dumping of goods.

   but not to be confused with;
     c. Technology (ie, the buggy-whip market falling out when
         Henry Ford comes to town)

  A good example in my mind of this is the price of oil- Imeanlike...
  WTF *is* the price of a gallon of gas?! Typically, it's only
  about %40 related to the actual price of oil. The rest is taxes
  (govt intererence), refining (technology), and marketing (artificial
  stimulation/dumping)...
 
  *sigh* The way I look at it, metaphorically we're all on the end
  of very long nails- How "rich" you want to be depends on how
  far up or down the nail you wish to be.

K.C

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