Comment by mumblemumble
2 years ago
"Lower prices" doesn't necessarily mean they just suddenly and immediately drop. That's no surprise; dropping prices purely out of the goodness of your heart isn't terribly good business practice. Also, for a lot of retail, MSRP is MSRP, and that's a pretty big anchor point.
What I'd expect instead, based on my having taken exactly one class in economics as an undergraduate, is subtler effects that play out over time. Maybe the general growth in prices over time slows down a titch until a new equilibrium point is met. Maybe wages rise a little bit because retailers can afford to pay their employees more. Maybe life gets easier for smaller businesses that have less negotiation power than the multinational behemoths. Maybe some bank executive somewhere decides not to buy that third luxury car at the same time as ten thousand restaurant owners decide that, just today, they will treat themselves to an espresso drink from the coffee shop instead of making drip coffee at home. That kind of thing.
I think maybe that last example is most interesting to me, because it calls attention to how merchant/consumer is a false dichotomy and things are always a bit more subtle than how the news likes to make us think they are.
> What I'd expect instead, based on my having taken exactly one class in economics as an undergraduate, is subtler effects that play out over time.
As a PhD student in Econ, I am glad to see that you learned something about how to actually apply this work. Thanks for making my day after some rough grading.
> What I'd expect instead, based on my having taken exactly one class in economics as an undergraduate, is subtler effects that play out over time. Maybe the general growth in prices over time slows down a titch until a new equilibrium point is met. Maybe wages rise a little bit because retailers can afford to pay their employees more. Maybe life gets easier for smaller businesses that have less negotiation power than the multinational behemoths. Maybe some bank executive somewhere decides not to buy that third luxury car at the same time as ten thousand restaurant owners decide that, just today, they will treat themselves to an espresso drink from the coffee shop instead of making drip coffee at home. That kind of thing.
To veer a little off-topic, this is why my biggest economic policy dream would be banning or severely restricting ads and marketing.
The fees you describe are a few percent points. The average B2C company spends 10-15% of their budget on what is, for the most part, a zero-sum game with their competitors. Even ignoring all the aesthetics and societal benefits, imagine the boon to overall productivity.
obviously gradually, and over many years, to make the transition manageable. e.g. increase taxation on marketing expenses by a few % a year so it is less and less financially viable.
I think massively restricting advertising is probably also the only way (well, pretending it's remotely politically feasible) to move away from the horrid pile of perverse incentives and their consequences that is the modern technology landscape.
>because it calls attention to how merchant/consumer is a false dichotomy
Yes! People forget that the many merchants in this country are also participants in this consumer economy as well. I think one's exposure to mom&pops/small businesses informs this view greatly. One can be forgiven of seeing merchants as faceless corporations if the entire shopping experience has happened at faceless multinationals (...of whom's profits contribute to many consumer's 401ks!)
And also Merchants are in many ways the "edge compute" of the long, very complex tangle of suppliers, wholesalers, service providers, and (of course) the bank. All which entail transactions that, in isolation, looks very similar to merchant-consumer.
Except prices in Australia, especially in Tech, are among the highest in developed countries.
Like I get what you are saying, but reality, in this case, trumps theory.
But that was true before too. So it's probably irrelevant.