Value


Does the value of a thing determine its price? Valuable things do often carry a high price. Does the price of a thing determine the value? Expensive things are often quite valuable. Are the value and price essentially the same thing? Does the bear shit in the woods? If the dog hadn’t stopped to piss he would have caught the rabbit.

aa

“Value” is one of those concept words that essentially doesn’t exist, little more useful than the popular socialite terms “marvelous” and “fabulous”. Everything has some value, so everything is valuable. In the same way that some aspect of everything could surely be declared as “fabulous”. . . .”It was terrible that the orphanage burnt down, but it made a fabulous plume of smoke” . Take this loose term “value” and apply it to anything and it seems as though its somewhat better than it was.

Alright fine, everything has value. But some things must surely have more or less value than other things right? Is there a scale to be applied? Do we do a survey? I would surely value a diamond over a loaf of bread, but if I was starving. . . . ..

eee

So what about price? People more on the right of the political spectrum love to take price and apply it as the scale determining value. That’s what the free market system is all about. Its justified that a company can sell gas at outrageous prices because that’s what the public is willing to pay. We may complain that “prices are outrageous!”, but if we’re paying that price, then we’ve put our seal of approval on it stating that its completely justified. If we didn’t like it, we wouldn’t pay.

Compare your local food bank and your local professional sports stadium. Which is pulling in more cash? I recently had a short debate with a republican fellow blogger i sometimes frequent. He felt that it was perfectly justified for society to allocate billions of dollars towards professional athletes for their services because that is what the public is willing to pay. Athletic entertainment earns a high price, curing hunger earns a much lower price. A free market will determine the natural value of things elicited through price.

ew

The problem with this defense of the free market system is that it doesn’t account for manipulation through power. A slave would work long days for food, is that also justified because the slave has accepted the going rate? Those with excessive power to control prices are able to set values that are completely unfair. The slave may not like his wage, but if there is no escape, the slave wage becomes more valuable than the alternative, starvation. Others who are starving may even compete to be the well fed slave.

He who controls price, controls value. Whether its the only guy in town selling axes, or the only guy in town willing to buy axes; the value of an axe in town is set by the side of the trade equation who is least desperate. Now have a quick look at our world, who is least desperate? Owner or employee? Walmart or customer? Rich or poor? Don’t be mistaken. The people on yachts determine value.

ews

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

13 Responses to “Value”

  1. James Pew Says:

    Awesome post. Remi the Renegade telling it like it is. I love this part – “The problem with this defense of the free market system is that it doesn’t account for manipulation through power.”

    Wise words my friend.

  2. Remi Rotthaus (Really) Says:

    I actually almost completely disagree with you.

    First of all, not everything has value. Even more so, not everything has value to everyone. For something to be considered valuable, it has to be desirable and limited. For instance, air is not very valuable. Though it is true that air is quite desiriable, it is not limited (for now). However, if you were being held underwater, air would get more valuable (to you) by the second.

    On the other hand, price is not at all determined by the value of an item. Since different people place different values on different goods, trying to set prices on goods based on value to customers would be next to impossible. Instead, price is (or should) be determined based on supply and demand (Economics 101 flashback?). Saying the one who is less desparate controls price is completely false. In fact, consumers control price. Companies, such as Wal-Mart, set prices as high as customers are willing to pay. Also known as price maximization. Every bussiness, or rather, every successful bussiness does this.

    And finally, the reason professional athletes get paid so much, is not because of rich guys in yachts, but rather because that is how much they are worth to the owners. Of course, you are over-generalizing here, as the professional athletes you are referring to are most likely basketball, baseball, or football stars. Not small-market sports. It’s the ones that bring in lots of money. If you want to get upset at anyone, get upset at those who actually watch sporting events. They’re the ones that are spending their money on these athletics. If there was no market for these sports, I GUARANTEE you that you’d see a heavy cut in their paychecks.

  3. ponch58 Says:

    I’m a sports nut. It’s all I watch on television and I am constantly in tune to the goings on in the sports world. I appreciate the product that comes out of the sports world.

    However, I do agree with the ridiculousness of salaries to people in sports.

    For instance, Matt Stafford, star quarterback out of Georgia, went first overall in the NFL draft yesterday signing with the Detroit Lions for a six year deal worth 78 million dollars.

    There is of course the argument people make that athletes give up their lives to play the sport and can’t persue another career as their playing years carry them through their prime blah blah blah…

    Give me 78 million dollars and I’ll chop off my legs. Lets see what career I can get then?

    78 MILLION DOLLARS!!!!!!! For a player who has never played in the NFL!!! How can this happen? What kind of starting salary is this for any job? How much does Barack Obama make?

    If I was to go to Bick’s Pickle’s here in Dunnville and get an entry level position what do you think my starting salary would be? $10 an hour? 12 if I’m lucky.

    Consequently, all these sports players get all this money and the prices of tickets, concessions and merchandise go through the roof. Doesn’t matter right? The big wigs with the season tickets can still afford it. Doesn’t matter that common Joe Smith who’s on his last legs at the GM plant can’t go to a game.

    Greed. That’s all. Greed.

  4. remistevens Says:

    Hey Remi, love your name. great comment, thanks for coming by.

    I think you are confusing value with profitability. I agree air is not very profitable because of its limitless supply, but it remains valuable none the less. Value simply means it has some usefulness, whether someone can generate cash from that usefulness is irrelevant.. By your logic if you can’t make money from something it has no value, which can lead to some dangerously immoral decisions. . . .. I value my friends, and my survival skills were valuable while lost in the forest. These types of values are not subject to supply and demand, but they are certainly valuable. I admit many things are more or less valuable depending on supply and demand, but value does not depend on trade to exist.

    I wholeheartedly agree that prices in a free market system should be set by supply and demand. That is the essence of a free market, if it worked any other way it would not be a free market. Back to economics 101 again, if there is an overabundance of suppliers and few purchasers, it is the less desperate purchaser who is able to set the bar on price. Likewise a room full of desperate buyers are going to desperately accept the offers of a limited group of suppliers. Apply this to consumer vs Walmart. We the buyers/consumers are plentiful and ever in need of goods, Walmart on the other hand is a very lucky lonely supplier in a room full of desperate buyers. When there’s only one or few merchants in town, these merchants can set the price at whatever they like.

    You’ve claimed that “consumers control price” and used that as a justification of prices; which perfectly depicts my criticism of the right wing free market defense. When i buy gas I’m not stamping the price with my seal of approval, I’m begrudgingly paying a price i have no way to avoid. Now with some items, luxuries maybe, i can see how you could construe consumers as being the price setters. A merchant tests the limits of what the consumer is willing to pay, so by some twist you could say that when we passively reach our breaking point we have elicited a monetary figure which the merchant can then set as a price. But in the end, they put the sign up in the store not us. To say that we set prices is like saying that a horse sets his carrying limit by breaking his back when too much is loaded on.

    Now the part of my argument that you managed to overlook is my contention that manipulation by those in power causes the free market system to fail in delivering the trade that would naturally occur from the pressures of supply and demand. Examples: artificial demand created from bombardment of advertising, purposely limiting supplies, planned obsolescence and my favourite: monopolies. Price remains a characteristic of any thing that is for sale. Add a high price to an object and its value goes up because its availability becomes more limited. By these nefarious means those who control the price signboards are able to manipulate the value of objects. . . . ..Rich guys are in control of the price signboards, the supplies and even demand (through access to mass media). . . .. I’d say the relationship is pretty lopsided.

    I am not mad at those who overpay or go to sporting events. I’m angry with those in power who have deregulated global markets feverishly in the interests of developing a “free” market. All its done is shift power away from our democratically elected leaders and onto the dictatorial leadership of corporations. What I’m suggesting is heavy regulation of the free market. Examples: you make over 10 million as an athlete, you pay an athletic tax of 10% to little league sports. You want to outsource your manufacturing to a third world country, you pay a massive tariff to bring those goods back into our markets. You want to be the only retailer in town, you must contribute heavily to the local government. Also we need things like forced employee profit sharing, wage caps, and corporate transparency. It’ll be tougher to become a billionaire, but a smart businessperson could still find ways to get rich. Business is already throttled by things like road capacity, energy costs and employment rates- so long as the rules apply to everyone, heavy regulation won’t stifle healthy competition. A free market with obstacles, just like we have today, only with different obstacles. Imagine the positive affect on the world if a waste tax made it more profitable to make durable products than cheap breakable ones. Of course this type of thing is impossible since corporate lobbyist outnumber honest politicians about 1000-1. Government; another theoretically fair system completely fouled through rich guy manipulation.

    Although i will certainly agree about the disconnection of rich guys on yachts from all this. They simply hire people to manipulate and sauce consumers. They’ve really got little to bother doing besides sipping martinis.

    thanks again for the good criticism,
    Remi

    • Remi Rotthaus Says:

      Hello again.

      I’m sorry to say that you are misunderstanding my definition of value. For something to be valuable, it must satisfy two conditions. 1: It must be desired, people (or quite possibly just a person) needs to want it. 2: It needs to be limited (which sounds a lot like profitable, but it’s not). So true, under my definition air is not very valuable. However, friends are valuable; they are desired (by you in this situation) and limited. Survival skills too are valuable. They are certainly desired (especially when you get lost in the woods) and are not limitless (you aren’t going to learn them out of the blue when you need them).

      As far as the lone price setter, you’re right… sometimes. It really depends on the elasticity of the good. If the merchandise is very elastic (a luxury good) the seller cannot set the price wherever he wishes, because people do not need luxury goods. However, if the good is very inelastic (such as insulin or clothes) then consumers are definitely the more desparate ones and will pay whatever the store is selling at. However, I don’t think Wal-Mart is a good example, because they are not a Monopoly or partake in an Oligopoly. A better example would be OPEC and oil. Although oil isn’t (or rather shouldn’t be) inelastic, it is. Therefore, people will buy oil at ALMOST any price that is set.

      I’m too tired to reply to the rest of your post, but as far as me saying that consumers control price…. I should watch my words, because that doesn’t make much sense. (And I’m glad to see that you have thrown it in my face on multiple occasions on this page).

  5. remistevens Says:

    No no Ponch, its completely justified. If people are willing to pay we are supposed to just sit back and say, “yea thats the way it should be”.

    In the same way that we step back and allow people to make money from toxic waste dumping, kiddy porn and heroin. . . ..If there’s a market out there for it, its completely ok for people to make whatever money they can from it. Its the natural order.
    or so the free market defense goes. . . ..

    oh and Obama makes 400k + expenses. . . ..I’m not surprised though, did you see his lousy performance in last weeks game against New Jersey?

  6. remistevens Says:

    one more good one:

    The unemployed woman in a third world country who supports her family through prostitution. Basically bartering her body for bread. As a bread consumer its her fault for paying such a hefty price right? We shouldn’t pity her because hey, “consumers control price”.

  7. remistevens Says:

    Hi Remi,

    Your most recent post should be below my two most recent comments- i think this happens when i don’t get into the site to approve a comment soon enough or something. Anyone else reading this i just want to make sure they see that I did in fact go on about the consumer controlling price thing a few times. I hope you were not offended, it wasn’t meant to seem as though i was throwing this in your face. Its just that its a very very common defense used by conservatives and merchants alike- and i would love to throw it into their faces as an insufficient source of justification for prices and free market.

    Elasticity, an excellent way to depict the difference in the consumer/merchant relationship when considering luxuries vs needs.

    As for your definition of value, i think its a pretty good one, but i’m going to need to get back on this. I just finished a night shift and am myself extremely tired.

    I’ll have more to say on your comment later today.

    Thanks for keeping it interesting and improving my blog with your valuable input- no pun intended.

    Remi

  8. remistevens Says:

    The problem with declaring that there are things without value is that you then claim that some things do not require safeguarding. Take homeless people: its not desirable to have homeless people, yet the prospect of humanity continuing to have homelessness seems limitless. At the same time if we were to say the homeless had no value then we would not be safeguarding their existence.

    Alright, so lets look at these definitions again.
    You’ve said valuables are desirable and limited, i’ve said that everything is valuable. The two do actually work fine with each other.

    Anything physical is limited. We live on a finite planet, there is only so much of anything. We have nothing physical which is limitless. I like your non-physical denial of limitlessness by way of the need for these non-physicals to be created- I can only have as much survival skills as i have bothered to learn.

    Everything is as well desirable to someone somewhere. Even something like toxic waste might be desirable to say a government desperately in need of funds who is willing to accept other jurisdiction’s waste in exchange for cash. I suppose it is the cash which is ultimately desirable, but the waste becomes desirable by proxy as the means to an end.

    Basically, someone somewhere desires it- i don’t care what it is. Also finite human existence and our finite planet make everything limited.

    So everything is desirable and limited; by your definition then everything is valuable.

    The economics 101 use of these terms being that a good can be limited in the marketplace and desirable to consumers is still just a definition of profitability not value.

  9. exuvia Says:

    “air is not very valuable”

    hahahahahahahahahaha…

  10. Working “Full” Time « The Remi Stevens Bolg Says:

    […] of what it means to be fully employed, consequently its not something you can easily attach a cash value […]

  11. Gas, A Good One « The Remi Stevens Bolg Says:

    […] doesn’t seem to matter whether things swing massively one way or the other. Every change in supply or demand is a good thing. I remember, back when i had a car, how everyone kept complaining about how gas was […]

  12. You Can’t Vote With Your Wallet « The Remi Stevens Bolg Says:

    […] each person has a different amount of ‘votes’. The dollars themselves are all of equal value, but the voters are anything but […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Follow

Get every new post delivered to your Inbox.

Join 29 other followers

%d bloggers like this: