An excellent analysis as usual, Yanik. I've noticed that most posters (including yourself) insist on educating the masses. For me, the best answer to that was given by Jean Baudrillard. Being a French philosopher, he was (or at least started as) a Marxist. But he had no illusions. I find this passage fascinating:

Whatever the political, pedagogical, cultural content, the plan is always to get some meaning across, to keep the masses *within reason*; an imperative to produce meaning that takes the form of the constantly repeated imperative to moralise information: to better inform, to better socialise, to raise the cultural level of the masses, etc.

Nonsense: the masses scandalously resist this imperative of rational communication. They are given meaning: they want spectacle. No effort has been able to convert them to the seriousness of the content, nor even to the seriousness of the code. Messages are given to them, they only want some sign, they idolise the play of signs and stereotypes, they idolise any content so long as it resolves itself into a spectacular sequence. What they reject is the "dialectic" of meaning.

Nor is anything served by alleging that they are mystified. This is always a hypocritical hypothesis which protects the intellectual complaisance of the producers of meaning: the masses spontaneously aspire to the natural light of reason. This in order to evade the reverse hypothesis, namely that it is in complete "freedom" that the masses oppose their refusal of meaning and their will to spectacle to the ultimatum of meaning.

They distrust, as with death, this transparency and this *political* will. They scent the simplifying terror which is behind the ideal hegemony of meaning, and they react in their own way, by reducing all articulate discourse to a single irrational and baseless dimension, where signs lose their meaning and peter out in fascination: the spectacular.

(from "In the Shadow of the Silent Majorities")

It's not that the masses can't learn; it's that they actively resist learning. This resistance is their weapon. Fascinating.

It's very clear as he speaks that he has some marxist tendency. never does he address the individual, rather it is always "masses" "they" or "them." while the grouping of people together for analysis can be an effective tool at times, I always feel as if there is an oversimplification of the common folk. in many case their motives are much deeper than the ruling class, who fixate around power, principle or peace.

with that having been said, I do see the traits he describes within various populations. He died as the internet was coming into full swing, but i would love to see what he would say about how the interconnectivity has done to conversation.

@Yanik, you're right about Marxism always grouping people. Still, I don't think the common folk has any deep motives. You're romanticizing them.

As for the internet, I think he'd be delighted. He pioneered the idea that simulations would eventually supplant reality.

I always liked comrade Lenin, when he said something like 'intellectuals aren't the cream of society, they are its shit'

You like mass murderers?

i think he liked a specific mass murderer, when he said a specific thing

Yeah, I guess. We all have our favorite lunatics.

@Ogion is mine

fiedler is mine

*Only because ND has not been as vocal on the forum. You are missed ND...

James, you are wrong about Brad the builder, he never had a reputation for "being discreet" with dirty cash going into that particular job, he had a reputation for getting difficult jobs done, and for doing high quality work, but was a "cleanskin". And at the time be had plenty of competition, it was during a bit of a slump in the building caper. That's why he was so resistant to our " view & advice"..we saw, correctly, that it was a case of a consumer "not acting as the theories about economics assume consumers do"

The "medicine tastes bad but is good for you" myth being exploited by Mr Red Bull is, I believe correct. The source of that information was Russell Howcroft, a man with a long and very successful career in Advertising and media in Australia. A man whom I would suggest knows a hell of a lot more about consumer behavior than you, me and a battalion of ivory tower economists. He specifically uses the example of Red Bull to demonstrate the power of brilliant marketing of a brand and product to negate the idea that it's "always about the lowest price"..
Often it is, but NOT always, and you're not getting that. And you bring in "quality"..well I'll put thetwo voncepts of "real quality" and "perceived quality" at you with two examples.. Rolls Royce automobiles.. Real quality...& Red Bull..mythical/perceived quality

Let's face it, if it doesn't agree with your political and economic beliefs, then imho, you NEVER even consider it, but just throw up the shutters on your mind and attack.
So wallow in your ignorance built on the illusion that a little knowledge gives you wisdom.

James, there is a wonderful irony in people feeling good about consuming a product that does them harm..eg tobacco, sugar loaded soft drinks, dodgy fast food.
@_Zmaj, finally and it's been aong wait for me..you've written something that interests me as worth following up..your French philosopher chappy. Please don't get smug and comback with a smart arse remark. Ever consider the possibility that a few of your pals and your good self are behaving in a similar way to those determined to be obtuse masses who reduce articulate discourse to a single irrational and baseless dimension... I thought of Capt Brad when I read that.
And James, you haven't been keeping up, maybe I've been doing my little acts of penance in the form of charitable acts for a long time, and maybe hinted at it in many posts. I won't pretend to have the philanthropic kudos of many, many other people, I'll just suggest that it's possible that I have a good side as well as my undoubted darker side. Ta ra & toodlepip for now

@MajorMitchell

"James, you are wrong about Brad the builder, he never had a reputation for "being discreet" with dirty cash going into that particular job, he had a reputation for getting difficult jobs done, and for doing high quality work, but was a "cleanskin". And at the time be had plenty of competition, it was during a bit of a slump in the building caper. That's why he was so resistant to our " view & advice"..we saw, correctly, that it was a case of a consumer "not acting as the theories about economics assume consumers do" "

um... well the consumer gets a choice here. he could have easily gone to another contractor if the price had been bumped up.

furthermore, it's not going against economic theory. you are wrong. what was happening here, is that the original price tag on the job, was actually less than what the consumer was willing and able to pay.

he wasn't at maximum demand. in this case, you're correct, Brad SHOULD have charged more. however, he was already operating at below optimal profits. this, in a market with other suppliers who are more savvy: is bad for his own business.

i'm still waiting for some piece of information about this that debunks economic theory. why do you think that centuries of research and empirical data collection are faulty? i mean... even socialist economists understand this stuff, they just reject the morality of it.

"The "medicine tastes bad but is good for you" myth being exploited by Mr Red Bull is, I believe correct. The source of that information was Russell Howcroft, a man with a long and very successful career in Advertising and media in Australia."

can you give me a direct source? i've still yet to see your proof.

i don't like red bull personally, but i have many friends who LOVE the taste.

the actual business plan of red bull, was to eliminate the "neutral zone."

if you rate a drink from 1-10 where 1 is bad and 10 is great, red bull created a product with as few 5-6s as possible, and even accepted more 2-3s as long as they could have a large base of 8-9s.

thus they can use the demand of the population of the 8-9s as a price setter.

of course in the macro market of all soft drinks, red bull consistently loses out compared to Coke and Pepsi.

"A man whom I would suggest knows a hell of a lot more about consumer behavior than you, me and a battalion of ivory tower economists."

1. don't use appeal to authority
2. please source
3. he kind of sounds like a ivory tower economist.

"He specifically uses the example of Red Bull to demonstrate the power of brilliant marketing of a brand and product to negate the idea that it's "always about the lowest price".."

oh my god. MajorMitchell, we're talking about two different things. i'm so sorry.

it is NOT always about the lower price: IF THE PRODUCT ARE DIFFERENT

people will pay more for 1. higher quality 2. higher perceived quality 3. social standing 4. habitual addiction 5. serious addiction etc. etc. etc.

lower prices are always better for HOMOGENOUS products.

"Often it is, but NOT always, and you're not getting that. And you bring in "quality"..well I'll put thetwo voncepts of "real quality" and "perceived quality" at you with two examples.. Rolls Royce automobiles.. Real quality...& Red Bull..mythical/perceived quality"

so what? it may not have anything tangible, but just because it's giving you a psychological reward, we should ignore it?

of course psychological benefits should be taken into consideration with quality. ALSO: Rolls Royce are good cars, but get shit mileage. it's the brand name that sells them.

despite the economic inferiority of the rolls royce, people enjoy the social standing they get when riding in one.

compare it to hybrids: loses on fuel efficiency
compare it to other higher-end cars: loses on handling
compare it to SUVs/pick ups: loses on horsepower.

but the social standing that comes with a rolls royce: priceless to some.

"Let's face it, if it doesn't agree with your political and economic beliefs, then imho, you NEVER even consider it, but just throw up the shutters on your mind and attack.
So wallow in your ignorance built on the illusion that a little knowledge gives you wisdom."

MajorMitchell, what am i saying is specifically is wrong? I've given explanations to everything you've said, but you haven't directly addressed each aspect of what i've said

furthermore, why are YOU unwilling to accept that "perceived benefits" such as social standing mean NOTHING, despite them giving extra happiness to a consumer? do we not buy for happiness, or is there only the necessity?

no.

economists understand people have desires, and i find it strange in your attempt to refute centuries of analysis on consumer demand, and decades more of economics of advertising.

New Trump camp handling of the CBO report: The report addresses only the 1st phase of the replacement to Obamacare. If they included the other 2 phases, the numbers would be much more favorable. Bad CBO!

@James, a note on drug costs: in every other major country in the world, the government negotiates a price for drugs. In the US, that practice is actually illegal--the government isn't allowed to negotiate for a good price. The result is that drug prices are much higher in the US than anywhere else--we in the US are subsidizing the cost of medication for the rest of the developed world. This isn't the whole problem with health care costs but it's significant--around $100 billion, or 20% of the US trade deficit.

Ok so:

there are two markets

Pepsi has a monopoly on selling pepsi. only pepsi can sell pepsi.
Coke has a monopoly on selling coke. only coke can sell coke

now: there are demands for drinks. these two markets, enter into a (for lack of a better term) macro-market.

lets say someone finds out coke's secret recipe, and creates a product slightly cheaper, but that tastes the same.

two things occur.

Coke devotees, who love the brand, will not change.
People who see Coke as substitutable will go with the lower price.

now this will occur in varying rates. some normal consumers will become devotees, and vice cress. however, these two groups, act as markets themselves.

(for lack of a better term, once again) we'll call these, micro-markets

***when i say lack of a better term, i mean usually economists know these are all just "markets" but because i want to make my terms clear, i'm going to separate them for you***


my assertion was that more competition will always lower prices (unless if prices are at lowest possible capacity to maintain operations i.e. 'break even' - although sometimes companies will operate at a loss, in order to reduce the number of suppliers, then after that is reduced, they'll raise their initial prices back up again, potentially to a higher bar. but this is sidetracking the conversation, and in a state perfect competition would mean that their destruction of smaller firms would only be temporary, and their profits minimal. anyways... i'm sidetracked. sorry.

my assertion (essentially): more competition, lower prices (up until break even - that's better)

so let's look at what happens when increasing competition in micro, macro and normal markets:

MICRO AND NORMAL MARKET: someone begins to make a replica coke at a lower price. coke will lose revenue, unless they can lower their price as well.

in this situation, the product is homogenous. both coke product taste exactly the same, the only differences are:
1. brand
2. price

for Coke, they need to maximize profits once again, now since a share of their losses have been taken away by this replica-coke. they have two options:
1. raise prices, and focus solely on the brand devotees. thus, the average consumer can still afford a nice cheap-replica coke

2. lower prices to try to compete with this replica-coke: thus the average consumer still afford a nice cheap coke.

in either scenario: overall price for a coke product is lowered. for brand devotees the first situation IS bad, but once again, it's still within their own demand curve: they were already operating below what they were maximum willing to pay for it.

thus for normal markets: price share of a coke product will decrease

thus for micro markets: the normal consumer always wins with competition, the brand-devotee has a chance of losing (though his loss means cheaper prices ***for the same homogenous product, subtracting the brand name***)

MACRO MARKET:

now there's only Pepsi and Coke, there's nobody else. two heterogenous products.

now, X-Drink comes along. X-Drink is dissimilar to both other products, and thus will not affect the micro markets in the same way as a homogeneous product would. rather:

there are 100 people.
50 like coke: 10 devotees, 40 normal consumers
50 like pepsi: 10 devotees, 40 normal consumers

now X-Drink

if X-Drink comes into the market, there are several factors that must be considered, when wondering whether or not prices will drop.

X-Drink needs to make a profit. to do so, they need to attract customers:

1. make a more highly desirable product of equal price
2. make an equally desirable product of less price
3. make a less desirable product of MUCH less price
4. make a MUCH more highly desirable product of higher price

if they can do one of these 4, a slice of the market share will come to them, so they can operate at a profit.

***bear in mind, "desirable" refers to demand, inasmuch both brand recognition AND taste of population are taken into consideration***


for every scenario 1-4, the devotees will stay with their brand, while normal customers, see an alternative substitute of superior quality.

40 like coke: 10 devotees, 30 normal consumers
40 like pepsi: 10 devotees, 30 normal consumers
20 like X-Drink: 20 normal consumers

(notice the devotee base has not been built up yet. for firms entering markets)

thus Coke and Pepsi just lost 10% for their market share each.

each company has a choice:

lower price in an attempt to gain back market shares
raise price in an attempt to increase the amount they make per unit

(notice that change in quality is not considered: this would compromise the devotee base, and it's unknown what new tastes would bring, and whether or not they'd be "more desirable")

so which to do? lower or raise prices?

socratic answer: is demand elastic, or inelastic?

Price X Quantity = Total Revenue

if demand is elastic, then an increase in price will lower quantity demanded so much, total revenue decreases

if demand is inelastic, then an increase in price will raise quantity demanded so much, total revenue increases

well:

40 like coke: 10 devotees, 30 normal consumers
40 like pepsi: 10 devotees, 30 normal consumers
20 like X-Drink: 20 normal consumers

devotees are known to be price inelastic. raise prices: the still desire the product
normal consumers are known to be price elastic. raise prices: they'll look for a better price

(given that the marginal quality is the same for each product, or that the proportion of price:quality was already set, and this is a FURTHER increase in prices. also it is important to note that price inelastic consumers, are only inelastic inasmuch they are able and willing (I.e.:demand) for a product. 200$ for a can of coke: maybe there's a hundred or so devotees across the country. 100,000$ for a can of coke: maybe a few dozen.)

so:

30 normal customers : 10 devotees

the overall market share is elastic.

therefore: lower prices.

ONLY if there is 50%+ devotees will a firm raise prices, AND EVEN THEN, those raises in prices, could be done WITHOUT another firm entering into an industry. in fact, firms with 50%+ devotee bases, almost always spike up prices as high as possible, simply to maximize total revenue.

more competition won't affect them: unless their devotee base develops what is known as "reason" (LOLOLOLOL) and focuses only on quality of product, rather than brand.

prices for product of the same nature will drop.

what economist recognize, is that in a free market, more competition will mean lower prices for the same quality good.



class is dismissed

@pastoralan

"@James, a note on drug costs: in every other major country in the world, the government negotiates a price for drugs. In the US, that practice is actually illegal--the government isn't allowed to negotiate for a good price. The result is that drug prices are much higher in the US than anywhere else--we in the US are subsidizing the cost of medication for the rest of the developed world. This isn't the whole problem with health care costs but it's significant--around $100 billion, or 20% of the US trade deficit."

this is true.

but let's run down this road a bit, why don't we?

companies have 2.6 BILLION dollars to get a new drug onto the market 1.2-1.6 billion out of pocket, but much of this is opportunity cost). the main reason why the pharmaceutical companies put out better drugs at all, is a good profit margin. now let's say that the government comes in and narrows that profit margin down a lot - like in europe (a problem they have over there too)

multinational pharmaceutical companies have restricted profit margins in other countries: but thrive in the USA. they're the 3rd biggest industry in the world's biggest economy

now, let's say the US gov't restricts profits.

pharmaceutical companies had a 19.9% return on revenue for the USA

https://www.bloomberg.com/view/articles/2014-01-08/what-liberals-don-t-get-about-single-payer

so let's consider this to be 1.2 billions * .199 = 238,800,000 million dollar return on investment.

so, companies are willing to be 1.2 billions, if they'll make 20% profit. and this is why pharmaceutical companies are MUCH more willing to sell to insurers who are in the USA or other countries who don't legally haggle down prices.

now would you take the risk of a 1.2 billion dollar investment, if we had a "fair" price where they make 2% profit? 3%? what risk would you take then? simple answer: funding would DROP.

governments couldn't afford to NOT have new drugs come on to the market, so they'd have to subsidize companies.

lack of competition in the market, means companies are less innovative with their drugs. the govt is the ultimate monopoly, and we would not have as many drugs created with them in charge of pharmaceutical company funding: where your paycheck isn't dependent upon success.

but if we could make it cheaper to produce drugs, by removing massive restrictions, 12 year testing periods: excessive on even the most dangerous of drugs, and a weird umbrella limit on entire markets of drugs, and if we could make it where companies competed with one another, and were forced to lower prices or go out of business:

we'd have cheap cheap cheap drugs for all. ever wonder why those socialists in canada always come looking for cheap medication in the states?

There's a lot of shit to read from y'all. Perfect markets, as described by Yanik, are different from reality. When it comes to drugs, markets are anything but perfect. Patents, marketing and economy of scale barriers to entry are but a few examples that lead to above-market returns for the big boys. Is Yanik still trying to argue that the costs to produce new drugs are too high due to regulations?

@Hauta

But first we must slay the ancient dragon by the garden of iratoyax to recover missing 2nd piece of Trumpcare, lost for ages when Ryan accidentally used it as toilet paper, and flushed it down to unfathomable depths, where a sea nymph by the name aperoly recovered it, but was betrayed by the merpeople, who in turn were driven into hiding by crab people. in time they moved to inland swamps, which dried up, and as a passing knight's convoy was ambushed by a dragon, their treasure stolen, the 2nd part of Trumpcare was gathered up along with it.

Oh, and the 3rd part of Trumpcare is the ACTUAL toilet paper Ryan was going to use...

in any case, i feel like i shouldn't have to explain all of this. just watch the news

@hauta

are you still pretending that regulations have NO bearing on the price to create new drugs? because that my friend is delusional. but nope. we need stringent testing. no longer is it "buyer beware" nowadays it's "don't worry, we're the gov't. we got this"

furthermore, i never said perfect markets

what ARE perfect markets?

markets in perfect competition?

free markets?

very unclear.

but no, i just don't want undo restrictions. a few regulations here and there don't DESTROY the capacity of low prices high competition free markets.

excessive regulations?

now we got beef. arbys quadruple decker beef.

but creating a relatively free market takes time.

for right now, this would be a nicer temporary solution:

https://hbr.org/2015/09/its-time-to-rein-in-exorbitant-pharmaceutical-prices

it's actually quite leftist (but not TOO leftist)

I never said regs have NO bearing on price. However, I do say that regs are not an UNDUE burden. wrt perfect markets, I should've said perfect competition. You got me; perfect markets is more about new information being available to the entire market instantly.

@Hauta

what if... we could have two markets.

one FDA approved drugs, one are literally ANYTHING goes. it could be rat poison called aspirin, but it'd be allowed. the ultimate buyers beware. complete freedom: and complete knowledge on the consumers part that it's unsafe.

allow lawsuits in the non-FDA market: so fear still drives the suppliers. but the suppliers who don't want to wait 12 years can put they drugs out if they're confident enough... that way any true miracle drugs don't have to wait in line, AND we're allowing freedom of choice

would you be down for that???

I see no prob with drug companies charging what the market will bear. However, I have a real problem when drug companies evade the 20 year limit on the patent. The best way to limit drug prices is when a generic becomes available (after 20 years).

i mean... you get the current market, plus super cheap one that simply has much more risk. freedom of choice allowed. doesn't hold back drugs that are needed cheaply immediately

@Hauta

um... that's not a problem in the USA

it's the european socialists that hate patents. THEYRE the ones who are messing with patents

wrt to anything goes, the easiest way to game that system is to create subsidiaries that collect revenues when times are good and file bankruptcy when the lawsuits mount. Are you more concerned about the cost of waiting for the pharm company or the cost of waiting for the consumer, because I'm not sure either one of these is really the thing leading to escalating drug prices.

Drug companies in America tweak the patents and get extension all the time. After all, if you sold Prozac, you make more than enough money by extending the patent for one year to be pay for an expert team of lawyers/lobbyists to get you that 1 yr extension.

@Hauta

if we can make student loan debt stick with you through bankruptcy: we can make an exception here

also, time costs are over 50% of the costs to pharma companies. didn't you read my earlier source?