That’s not at all how prices are set in a Market as per all the applicable theories of Economics (and in practice).
Any profit-driven sellers (i.e. all except maybe a mom-and-pop shop with soft hearted owners) will charge the most that they think buyers are willing to pay, so if for example a seller becomes a local monopoly in an essential good, they’ll pump prices up because customers have no other options (with nothing on the cost side pushing it) and will act similarly when cartels are formed.
This is very much proven again and again by observeable reality - market competition goes down prices go up, completelly independently of costs.
Cost pressures will only push prices up in a market with actual competition when it affects every seller (for example if input prices go up, certain taxes go up, or there’s an event that most sellers can use as an excuse to up prices, such as widespread news of inflation in which case they informally act as a cartel would) or if the cost pressure is so large that it will bankrupt a seller that won’t raise prices (so the seller has no option than to raise prices to try and survive, even at the risk that customers will just walk away).
This theory of yours as well as the “if companies pay less taxes they’ll raise salaries” and other such Economically-ignorant theories that ignore basic market principles and causality, seem to be immenselly popular with people with certain political-faiths who have never actually run a business or worked with Markets.
I suggest you read some books about Behavioural Economics.
But yeah, most of what you see out there from Economists is really Politics, not Science.
However those observations about price making are also from Finance, and those are immensely pragmatic people (as they put real money on the line) - you might disagree with their morals (what morals, eh?!) but they certainly are putting their money where their mouth is.
A. Those experts are beaten out by random stock picker software over long term.
B. The entire industry requires the government bailing them out, regulating their small competition out of business, huge infusions of cash via the Fed, and a complex legal structure that pretty much limits your investment options to stocks and bonds or your mattress.
C. For people who claim to be able to predict the future they sure need other people’s money a fair amount. Pensions, managed market accounts, 401Ks, trusts. If you really could best the market you would never team up with anyone since all they would do is open you up to liability
D. When those wall street scumbags do take over the management of a company the company consistently fails. It turns out pledging to Skull and Bones after daddy got you into an ivy doesn’t mean you can run a retailer or a tech company. Who knew? Remind me how Toys R US, Sears, and Fluke multisystems are doing.
E. There is a link between growth in finance and poverty for everyone else. Which makes sense since it sucks away people from productive work to unproductive work. As Wall Street grows in the US incomes for everyone else have fallen.
Economics is bullshit lies that aspires to the accuracy of astrology. Economists are shills with zero integrity. Financial bros are conmen.
But thank you for your reading suggestion. If I ever want to read up on mathematical models that have no connection to the real world based on a sociopathic paraody of humans I will. Everything you want to know about the types of people who become economists can be understood if you know who their hero is. Homo economis a being of pure self. Is there any in particular book you can recommend? If so what chapter is titled “fuck the diabetics, let them mortgage their house for insulin”?
Behavioural Economics is exactly the only part of Economics that actually works like a real Science with actual experimental validation of theories (with properly conducted experiments).
Using mathematical models doesn’t make something false (or true), it’s the lack of real world validation that does. Believing otherwise is believing Physics has “no connection with the real world” so things like artillery rounds won’t fall were the Newtonian Physics formulas predict they will.
But yeah, most of the rest of Economics is self-serving bollocks, especially the closer you get to politically-significant monetary management (i.e. central banks).
It’s not by chance that the only time a Behavioural Economist won the “Nobel Prize” of Economics (which is not a real prize set up by Alfred Nobel but in fact the “Swedish Central Bank Prize for Economics in Honor of Alfred Nobel” which is very purposefully misrepresented as a genuine Nobel Prize) was for “Nudge Theory” which is about how to push the masses to favour certain financial choices (i.e. manipulation) and is minor next to the bulk of that guy’s work, which proves without a doubt the irrationality of humans in economic matters (people don’t behave at all as the Homo Economicus that is the human model that serves as foundation for the whole Free Market Theory bollocks, but he was hardly going to get even a fake-Nobel from the Swedish Central Bank for disproving Free Market theories, now was he?!)
IMHO, your take on this is too simplistic and as a consequence you’re throwing the baby with the bath water.
Alright your argument has swayed me. At some point I will look into behavioral economics. Maybe it is the lone island in the sea of bullshit and lies regular economics is. I am a hard empiricalist materalist, engineer so I have to be. Any of us can tell you 2 + 2 equals 5 for unusually high values of 2.
I have listened to the freakonomics podcast. I think they do a decent job on small stuff like why are there so many mattress stores but they are all empty or why are all you can eat places a thing if homo economis is the model. Anything beyond that stuff I don’t think much of. Their abortion crime link has been disproven.
In the meantime I am still going to consider any economist talking about tax, bailouts, trade, debt to be shills with less integrity than a snuff film maker.
That’s not at all how prices are set in a Market as per all the applicable theories of Economics (and in practice).
Any profit-driven sellers (i.e. all except maybe a mom-and-pop shop with soft hearted owners) will charge the most that they think buyers are willing to pay, so if for example a seller becomes a local monopoly in an essential good, they’ll pump prices up because customers have no other options (with nothing on the cost side pushing it) and will act similarly when cartels are formed.
This is very much proven again and again by observeable reality - market competition goes down prices go up, completelly independently of costs.
Cost pressures will only push prices up in a market with actual competition when it affects every seller (for example if input prices go up, certain taxes go up, or there’s an event that most sellers can use as an excuse to up prices, such as widespread news of inflation in which case they informally act as a cartel would) or if the cost pressure is so large that it will bankrupt a seller that won’t raise prices (so the seller has no option than to raise prices to try and survive, even at the risk that customers will just walk away).
This theory of yours as well as the “if companies pay less taxes they’ll raise salaries” and other such Economically-ignorant theories that ignore basic market principles and causality, seem to be immenselly popular with people with certain political-faiths who have never actually run a business or worked with Markets.
Fuck economists. It is about as accurate as astrology. Except most government officials don’t take astrology seriously so it doesn’t matter as much.
I suggest you read some books about Behavioural Economics.
But yeah, most of what you see out there from Economists is really Politics, not Science.
However those observations about price making are also from Finance, and those are immensely pragmatic people (as they put real money on the line) - you might disagree with their morals (what morals, eh?!) but they certainly are putting their money where their mouth is.
Are they? Because last I checked
A. Those experts are beaten out by random stock picker software over long term.
B. The entire industry requires the government bailing them out, regulating their small competition out of business, huge infusions of cash via the Fed, and a complex legal structure that pretty much limits your investment options to stocks and bonds or your mattress.
C. For people who claim to be able to predict the future they sure need other people’s money a fair amount. Pensions, managed market accounts, 401Ks, trusts. If you really could best the market you would never team up with anyone since all they would do is open you up to liability
D. When those wall street scumbags do take over the management of a company the company consistently fails. It turns out pledging to Skull and Bones after daddy got you into an ivy doesn’t mean you can run a retailer or a tech company. Who knew? Remind me how Toys R US, Sears, and Fluke multisystems are doing.
E. There is a link between growth in finance and poverty for everyone else. Which makes sense since it sucks away people from productive work to unproductive work. As Wall Street grows in the US incomes for everyone else have fallen.
Economics is bullshit lies that aspires to the accuracy of astrology. Economists are shills with zero integrity. Financial bros are conmen.
But thank you for your reading suggestion. If I ever want to read up on mathematical models that have no connection to the real world based on a sociopathic paraody of humans I will. Everything you want to know about the types of people who become economists can be understood if you know who their hero is. Homo economis a being of pure self. Is there any in particular book you can recommend? If so what chapter is titled “fuck the diabetics, let them mortgage their house for insulin”?
Most of that is just a generalization falacy.
Behavioural Economics is exactly the only part of Economics that actually works like a real Science with actual experimental validation of theories (with properly conducted experiments).
Using mathematical models doesn’t make something false (or true), it’s the lack of real world validation that does. Believing otherwise is believing Physics has “no connection with the real world” so things like artillery rounds won’t fall were the Newtonian Physics formulas predict they will.
But yeah, most of the rest of Economics is self-serving bollocks, especially the closer you get to politically-significant monetary management (i.e. central banks).
It’s not by chance that the only time a Behavioural Economist won the “Nobel Prize” of Economics (which is not a real prize set up by Alfred Nobel but in fact the “Swedish Central Bank Prize for Economics in Honor of Alfred Nobel” which is very purposefully misrepresented as a genuine Nobel Prize) was for “Nudge Theory” which is about how to push the masses to favour certain financial choices (i.e. manipulation) and is minor next to the bulk of that guy’s work, which proves without a doubt the irrationality of humans in economic matters (people don’t behave at all as the Homo Economicus that is the human model that serves as foundation for the whole Free Market Theory bollocks, but he was hardly going to get even a fake-Nobel from the Swedish Central Bank for disproving Free Market theories, now was he?!)
IMHO, your take on this is too simplistic and as a consequence you’re throwing the baby with the bath water.
I suggest you read “Freakonomics”.
Alright your argument has swayed me. At some point I will look into behavioral economics. Maybe it is the lone island in the sea of bullshit and lies regular economics is. I am a hard empiricalist materalist, engineer so I have to be. Any of us can tell you 2 + 2 equals 5 for unusually high values of 2.
I have listened to the freakonomics podcast. I think they do a decent job on small stuff like why are there so many mattress stores but they are all empty or why are all you can eat places a thing if homo economis is the model. Anything beyond that stuff I don’t think much of. Their abortion crime link has been disproven.
In the meantime I am still going to consider any economist talking about tax, bailouts, trade, debt to be shills with less integrity than a snuff film maker.