Is there such a thing as a 'just price'?

A question of political economy Hobbes posed offline.
(We both listen to Econtalk and it was a recent topic: Roberts on the Price of Everything)

Roberts, the host, asserts that gov’t actions to curtail price gouging are self-defeating even in emergency situations. I think he’s off-base.

First, in an emergency situation where there is a severe shortage of some necessary – but normally inexpensive – good/service and insufficient time for market mechanisms to generate additional supplies – suppose a remote village cutoff from the outside by earthquake – a purely market-oriented response may be too slow to provide the appropriate price signals until irreversible harm is done.

Second, patents conveying a monopoly maybe considered as endorsing a form of sanctioned hording, and therefore encouraging price gouging. Such market distorting measures are implemented to serve a reasonable end, no doubt, but are market-distorting nonetheless. Where strong patent laws apply, should not there also be price ceilings to prevent abuse? For example, the re-branding and repackaging of a drug for sale at inflated prices for use treating another illness, while simultaneously curtailing “off-schedule prescriptions” seems abusive. The use of a second price looks very much like ‘gouging’ and suggests that there is a ‘just price’.

Of course, Hobbes just shook his head and muttered about how long it would take to correct and chastise my inner socialist. I’m hoping he’ll do so here.

Oh yes, there’s another thread on whether or not it’s outrageous to charge +NT$1,000/hr for a private class. Anyone interested in taking up that argument here is welcome to it.

Why does anything have a price? Because there’s not enough. Supply vs. demand we are told. If there is enough, then why have a price. Free market capitalism is a delusion that helps business exploit the poor.

When I was a kid, a candy bar cost 15 cents. To me, that is the “just price” of a candy bar.

There is a discrepancy between the ‘just price’ of a buyer and the ‘just price’ of a seller. However, as long as we’re talking about non-primary goods (ie. everything except goods needed to live), the just price is that which people are willing to pay. Sometimes, this leads to goods becoming so expensive that only a select few can purchase them. Well, as long as the business is still profitable from a seller’s point of view, that price is still just. There’s no right to buy anything: only a right to sell.

Make 'em an offer they can’t refuse.
Monopoly Capitalism.

[quote=“Jaboney”]…
Of course, Hobbes just shook his head and muttered about how long it would take to correct and chastise my inner socialist. I’m hoping he’ll do so here.[/quote]

The way I remember it, the head shaking and muttering was when we were talking about labor unions, but it may have been both. :slight_smile:

If there was any head-shaking going on in the price discussion, though, I don’t think it would have been in the context of emergencies. I agree with you when we’re talking about how to ration drinking water in the 24 hours after a flood, for example. And a government granted patent monopoly is already a case of the government making a market correction – so we’re not really talking about a laissez faire vs. interference situation there.

What I do remember saying to you was that I didn’t understand how people manage to convince themselves that there is a “fair” or “just” price for something like a car, or a house, or a pizza, or --yes-- an English lesson. To me, a price is an amount of money that two people agree to exchange for something. That’s pretty much it. I may, personally, believe that it’s ridiculous to spend $4,000,000 on a diamond, but to say that the price is “unfair” or “unjust” just seems silly to me. If it’s not worth that much to me, then I won’t buy it. :idunno:

I can sort of accept that if the government grants monopolies like patents it should put some sort of limit on prices. I’m not sure how this would be done in practice.

The patent system does suck though, e.g.

jonahprobell.com/lexra.html

[quote]Though you can not patent an instruction set, you can patent designs and methods that are necessary to implement a particular unusual instruction that is part of the instruction set. That prevents competitors from creating a fully compatible clone of your processor without infringing your patent. There are four instructions in the MIPS-I instruction set that are protected by one US patent, 4,814,976. These instructions, lwl, lwr, swl, and swr are known as the unaligned load and store instructions. These instructions are useful in systems in which memory is scarce or expensive. In such systems, it is often useful to pack 16-bit or 32-bit data values in to memory in such a way that they are aligned to arbitrary byte boundaries and not necessarily to natural 16-bit half-word or 32-bit word boundaries. Accessing such unaligned variables requires at least two bus clock cycles, whereas accesses to aligned data can be performed in a single cycle. Most assembly programmers and compilers for modern systems align data to their natural address boundaries in order to gain the system bus performance benefit of aligned loads and stores.

Prudent high tech companies study their competitors’ patent portfolios, and Lexra was no exception. Lexra was well aware of the patent on unaligned loads and stores that was owned by Silicon Graphics and later by MIPS Technologies. To avoid infringing, Lexra chose not to implement unaligned loads and stores in its processor design.

When MIPS filed its S-1 IPO prospectus form it sued Lexra for copyright infringement. The suit was settled after a few months with Lexra agreeing not to use MIPS trademarks without attribution and to state in its documentation and in its public statements that it implemented “the MIPS-I instruction set except for unaligned loads and stores”. MIPS Technologies agreed to the settlement, apparently acknowledging that Lexra did not execute unaligned loads and stores.

If a Lexra processor encountered an unaligned load or store instruction in the program that it was executing then it did the same thing that it would do for any other invalid opcode, it took a reserved instruction exception. In the second lawsuit between MIPS Technologies and Lexra, MIPS Technologies claimed that because an exception handler could be created to emulate the function of unaligned loads and stores in software with many other instructions Lexra’s processors infringed the patent. Upon learning of this broad interpretation of the patent, Lexra requested that the US Patent and Trademark office (PTO) reexamine whether the patent was novel when granted. Almost every microprocessor in the world can emulate the functionality of unaligned loads and stores in software. MIPS Technologies did not invent that. By any reasonable interpretation of the MIPS Technologies’ patent, Lexra did not infringe. In mid-2001 Lexra received a preliminary ruling from the PTO that key claims in the unaligned load and store patent were invalid because of prior art in an IBM CISC patent. MIPS Technologies appealed the PTO ruling and also won a favorably broad interpretation of the language of the patent from a judge that forced Lexra into a settlement that included dropping the reexamination request before MIPS Technologies might have lost its appeal.[/quote]
So MIPS got a dubious patent on a couple of instructions. Lexra built a MIPS compatible processor which didn’t implement those instructions and was still destroyed.

I can see if you do some research you should be allowed to hawk it round large companies and try to get them to license the patent to pay for the work you did. The problem here is that MIPS wasn’t interested in royalties, it was interested in crushing Lexra completely. Oh and Lexra wasn’t interested in licensing the patent. So this case is pretty far from the situation where I can see patents are justified.

If IBM or Intel had managed to do this, we’d be paying a lot more for our computers.

But people need AIDS drugs, cancer drugs, and medical care to live. Providers know that, so they jack the prices to ridiculous levels, offering all kinds of excuses, so as to maximize their profits, and don’t care that they’re financially breaking the people they are treating, and making the care unavailable to many, thus killing them. Is that a fair price?

Not trying to contest you here as of course, I too would like to see everyone have sufficient access to the medication they need, but just to open up a sideline: if there were a working medicine against AIDS, and it would be freely available to all, how many more people would have AIDS? Knowing that there’s an easy and free cure available to you in case you do get it, why take responsibility? People know certain things such as smoking and excess UV radiation may lead to cancer, so many make an effort to avoid such things. Again, I’m in no way trying to justify prices but I think it would be interesting to see what happens if there are no financial aspects to getting sick. With cancer and AIDS, there being no real cure, it shouldn’t change much except for the unknowing. But if everyone could afford any surgery at will? Hmm.

Knowing that cancer drugs were affordable wouldn’t make me want to get cancer, no.

You don’t need to reply if you’re not going to try and make an effort. No, it doesn’t make you want to get cancer. But it might mean people are going to try less hard to avoid getting it.

You don’t need to reply if you’re not going to try and make an effort. No, it doesn’t make you want to get cancer. But it might mean people are going to try less hard to avoid getting it.[/quote]
People will become more promiscuous and get AIDS more often. Promiscouity = bad; AIDS = good. Am I right?

:laughing:

How many people now wear a condom because of the expense of AIDS drugs? How many people quit smoking because of the expense of lung cancer treatment, or wear sunscreen because of the expense of skin cancer treatment?

[quote=“KingZog”]If IBM or Intel had managed to do this, we’d be paying a lot more for our computers.[/quote]Intel processors can do unaligned load and stores…

The LZW compression algorithm is another good example, it’s a good algorithm, I’ve used it myself, it was also used in .GIF files (about half the images on the internet). The Unisys found out they owned the patent via buying out other companies, then started charging for it, or trying to charge for it. The patent has now expired.

I’ll pass (for the moment) on housing and pizzas. The costs of transportation and education, however, strike me as offering a particularly easy argument in favour of a just price. The argument is related to this (as yet) neglected thread: [url=http://tw.forumosa.com/t/political-consequences-of-economic-inequality/46755/1 consequences of economic inequality[/url].

If there is a strong social commitment to equality of opportunity and meritocratic promotion, leaving the delivery of social goods that promote those ends to the market alone would seem mistaken: the sons and daughters of the most successful will enjoy greater access and become a self-perpetuating class. A free-market aristocracy of excellence will, perhaps, serve the end of promoting excellence, but it makes a mockery of a commitment to equal opportunity, and therefore social mobility… which raises some serious questions about the character of that society.

As transportation and education costs are obvious barriers to access to the means of self-promotion, a price sufficient provide incentives to attract providers, but not so outrageously high as to exclude those of ability but not means, would seem just. (I must admit to a personal bias here, as my undergrad university was established as part of a program specifically designed to make university educations available to students in their home towns, rather than urban centers alone, and tuition was set appropriately… thereby defeating transportation and education costs.)

A just price need not mean that there is a single price for all: rebates or surcharges are possible, and make sense. I apply a sliding price scale to my work. Those better able to pay, pay a premium, and thereby subsidize students (or activities) less able to pay but no less worthy.

I think this topic is too hard for us. We’re just a bunch of f*&king losers stuck in deadend jobs in Taiwan, struggling to earn enough grog money to dull the pain. If we knew the answers to complex shit like this, we wouldn’t be here! Dui bu dui? :slight_smile:

:laughing:

How many people now wear a condom because of the expense of AIDS drugs? How many people quit smoking because of the expense of lung cancer treatment, or wear sunscreen because of the expense of skin cancer treatment?[/quote]

I shouldn’t need to quote myself but…

Cancer and AIDS are not the easiest examples.

There are many factors that weigh in on such contemplations. These diseases being as serious as they are, expense is perhaps only a very minor one (but it is there). If, however, everytime you got a sunburn you’d have to pay thousands of dollars in skin treatment, I’m pretty damn sure that everyone would be putting on their sunscreen before going on those trips to the beach. The fact that there is no such immediate, in this case financial, response to forgetting to put sunscreen on, means that a lot of people simply do not.

Similarly, some people “forget” to wear a condom because they are willing to take the risk of pregnancy, knowing there’s always abortion.

The possibility of an inexpensive, effective cure does change behaviour: it’s enabling. And need not be invasive. Before pasteurization various dairy products were unsafe; now, we enjoy the benefits of an expanded diet. Before the development of a small pox vaccine, there was a much honoured Hindu goddess charged with protecting believers: no doubt the development of a vaccine reshaped the moral universe of that particular priesthood and community of believers… what of it? A society shaped by empowerment, rather than fear, ought to be a good thing, no?

Now now, a.j. think of it this way:
If the price of beer is NT$45/can, except during a typhoon, when it rises to NT$250/can, would that be right? Even if the extra money went to the guy delivering the suds in the wind and rain?

Now now, a.j. think of it this way:
If the price of beer is NT$45/can, except during a typhoon, when it rises to NT$250/can, would that be right? Even if the extra money went to the guy delivering the suds in the wind and rain?[/quote]
Counterpoint: How would you feel if the government decided that you could only charge half as much for a lesson.