Being somewhat of a gadfly by nature, probably a bit steamed.
But that’s largely irrelevant.
Whether or not the gov’t was justify would depend on what service I was providing, on the initial price, and on who was paying.
Let’s say I was paid NT$2,000/hr.
Were this a private English class, with a single student who contracted with me directly and paid out of his own pocket… and on my own time… it’d be hard to justify gov’t interference.
On the other hand, if I were employed at a public school, where my wages were drawn from tax revenues but set by a school board friendly to me, and I was tutoring a single student, the gov’t may very well be justified in imposing a wage ceiling.
[quote=“Oil rises on Opec production curb”]After talks in Vienna, Opec president Chakib Khelil said the measures to curb over-production amounted to a cut of 520,000 barrels a day within 40 days.
[…]
The price has since fallen by nearly 30% as a global economic slowdown has reduced demand for oil.
Supply has also been increased in recent months by some Opec members - principally Saudi Arabia.[/quote]
I think we’re having problems analyzing this in the abstract. Everyone is making assumptions one way or the other as to whether there is a monopoly or not.
Suffice it to say that I think the answer to that question is oftentimes going to be outcome determinative. For instance, I have no problem with people selling water for $10 a bottle after a hurricane because at that price, the really desperate people can at least get some water and the rest won’t have to wait long because with the potential profits that are available, there will be many others rushing in to sell water, which will lower the price. Obviously, if there’s a monopoly that doesn’t happen.
Perhaps we would be better suited discussing the merits of broad verses narrow patent awards.
I’m not sure I really understand the concept of a “just” price in an absolute sense (by that I mean outside the context of an arbitrarily granted monopoly). I understand the concept of fairness, for example in price discrimination (e.g. selling to blacks at one price and whites at another) but I really don’t get the just-ness of a price in general. Neither party is under a duty to buy or sell, and neither would buy or sell if they didn’t think they were getting a benefit, so I don’t really see many transactions as being “unjust” absent some sort of fraud or duress inflicted by the one of the parties. Sure, I don’t like paying $3.50 a gallon for gas, but how can I tell the gas companies that it’s unjust when I’m willing to pay it?
I know someone will bring up medicine – but considering the benefit one gets from certain medicines (saving their life) can they really say that it’s unjust that they have to pay a lot for it? It’s a hard and unenviable situation, to be sure, and my sympathies to those who have to make such decisions, but I don’t see the price as being the unjust part of the equation.
Is it just to pay $500k for a drug that saves your life? Surely you would trade your life for $500k if those were your only options. But is it just you were denied that same drug to live even though you were able to scrape together $400k? Is it just to society that they will lose all of your future contributions for $100k?
The disagreement over a ‘just price’ in this thread, as far as I can tell, is due to differing opinions of what constitutes justice and a debate between two differing fundamental concepts of justice – egalitarianism and fairness. Those leaning towards egalitarianism apply the concept of a ‘just price’ in more situations than those leaning towards fairness. Given the wide disagreement over this issue, I think it’s fair to say that there really isn’t such a thing as a universal ‘just price’ except under some narrowly specified scenarios.
I’m making two distinctions here that I think have to be made to really analyze this. 1) Differentiation between “fair” and “just.” I think things can be unfair without necessarily being unjust - basically with justice I think you have to look further up the chain, and not necessarily at results only. 2) I think you have to differentiate between justice in the price itself and justice in the underlying procedures. Thus I think you 500K for a cure is not in itself unjust, but it may be unfair (not everyone can raise that kind of money) or there maybe underlying circumstances (for example some types monopolies) that are unjust – I don’t think there’s much way to handle this except on a case-by-case basis.
Well, fair market value is simply what you can get for something. It doesn’t have anything to do with an underlying sense of what you or I may think is actually “fair,” it’s simply the highest price someone is willing to pay. That’s more of a term of art in the financial industry wheras I was using more the laymans usage of fairness.
“Just Price,” seems to imply something along the idea that a given product’s price shouldn’t under any circumstances be higher or lower than some specified amounts, which would render it unjust.
The distinction I’m making between fairness (generally) and justice is a little different. It’s a little bit hard to explain, but essentially I’m saying that fairness looks at results whereas justice looks at procedure. As applied to free markets I think a price is just if both the seller and buyer, absent fraud, duress, etc by one or the other, agree to the given price. Thus, I think if purely market forces produced the types of prices we see in healthcare then it wouldn’t be unjust (certainly the benefit to the consumer exceeds the price paid, no?). Unfair? probably, by most people’s standards. Unjust? no.
Now, introduce patent law to the situation and I think there’s a possible claim for injustice, because now the price is inflated by pressures back up the chain. However, to analyze it I don’t think you can simply look at the end price. I think you have to determine whether the law in itself is unjust, and if not, alter it until it is. I’m not well versed in patent law so for me, the analysis is going to have to end there.
[quote=“redandy”]Well, fair market value is simply what you can get for something. It doesn’t have anything to do with an underlying sense of what you or I may think is actually “fair,” it’s simply the highest price someone is willing to pay. That’s more of a term of art in the financial industry wheras I was using more the laymans usage of fairness.
“Just Price,” seems to imply something along the idea that a given product’s price shouldn’t under any circumstances be higher or lower than some specified amounts, which would render it unjust. [/quote]Ok. But put that way, the US gov’t’s decision to buy equity in now defunct or failing financial companies at a ‘fair market value’, considerably more expensive than the market would currently justify looks like a ‘just price’ practice.
No, it would be a ‘just price’ practice if the government told Warren Buffet that he couldn’t purchase those shares of Goldman Sachs (or told Goldman that they couldn’t sell) at the price that the two parties agreed, and that the reason the sale was being blocked was that the two were about to conduct an exchange at an ‘unfair’ price.
If the government overpays for some preferred shares in a bank it might be:
(A) an intentional move to inject more liquidity into the system;
(B) stupidity on the part of the government (they’re just making a dumb investment);
(C) corruption on the part of the government (they’re rewarding their rich buddies).
I’m sure there are other explanations as well. But the one thing that it is not is an example of ‘just price’ policy, because no two private parties are being told that the price that they have both agreed on is unacceptable to the government.
[quote]But the one thing that it is not is an example of ‘just price’ policy, because no two private parties are being told that the price that they have both agreed on is unacceptable to the government.[/quote]No, but tax payers are being told that prevailing market prices offer an unacceptably good bargain, and that therefore the gov’t is going to use public funds to overpay for assets of dubious value. At first blush, that doesn’t look all too different from me, using your money, to overpay for some Tahitian knickknack, because I think the down-on-his-luck vendor (and his community) needs a break. A corporate officer acting in this way would face a shareholder revolt and lawsuits for breaching his fiduciary responsibilities. That being the case (if it is), it’s ironic that those who have been pushing corporate models of governance for public institutions, are now fleeing headlong into the institutions they’ve so long derided.
I accept that this is an example of A), possibly b) (though ignorance seems more likely than stupidity… I mean, who really knows what’s going to happen?), and less likely c) (though I wouldn’t see this a move to protect buddies, but rather those with stakes in the system).
ok, here’s a story in simplistic terms. all numbers are made up to be easy to work with.
a pharmaceutical company wants to make money selling a drug that cures cancer.
there are 1 billion people dying of cancer right now.
The governments of the world promise the pharmaceutical company 10 years of exclusivity on it’s cancer cure should it develop one. This price exclusivity acts as an incentive to get the company to front the money to do the research in the first place.
Pharmcorp spends a bunch of money developing a cure, and then has it’s marketing guys decide how much to sell the drug for.
100 million people can afford 1000 USD for the drug. 1 billion people can afford 1 USD. If they sell it at the price that everyone could afford it, they would make one billion dollars. If they sell it at the price that only a few can pay they make one trillion dollars.
They settle on $1000 US as the price, because it is the maximum amount they can make for the drug.
This is the market. Supply and Demand do not acknowledge ethics.
But still, on the “isn’t that nice” side, 100 million people who were good as dead yesterday get to live today, and whoever is still alive left in 10 years can be saved then. If there was a price ceiling on cancer drugs there is a good chance that they wouldn’t have been developed in the first place, and then no-one would have lived. where is the justice in that?
If so, then it just proves my point that “just” prices are completely arbitrary and bear no relation to the the concept of justice. You certainly won’t find me supporting the U.S. government’s bailout policy.
The US government isn’t the only one shelling out tremendous amounts of money to shore up the holdings of major banks, that honor goes to the UK. And “fair market value” as it has been used in these recent actions is refering to the value of a given stock based on fundamental analysis (assets - liabilities, divided by outstanding shares). This takes fear and optomism out of the equasion and tries to find the correct price to pay for the asset.
All that aside, it seems to me that the stated purpose of all of these bailout plans is to reduce the possiblity of a deep and prolonged worldwide recession. That’s the government spending the general public’s money on behalf of those same people. That seems like a good example of just action to me.
You might disagree with policymakers on the manner in which they try to stave off a recession. In particular people object to public funds being spent to back up private investors. But look at the overall picture. In March of 08 the US bailed out Bear Stearns, and the economy recovered somewhat. In September 08 Lehman Brothers was in a similar bit of trouble, and the Fed decided not to intervene, in large part due to public pressure rather than systems analysis. AIG threatened to go belly up as a result, heralding a worldwide crisis that could not be ignored. Clearly letting the bad boys get what’s coming to them isn’t a solution that works for overall prosperity.
Failing to protect the innocent in order to punish the wicked doesn’t really seem just to me.
The UK government plan seems clever to me because they buy shares in banks when they are low. The plan is to sell the shares later once the system has recovered. It’s based on what the Swedish government did during their banking crisis in the 90’s.
The swedish system is all the rave now, but that doesn’t mean that the BoE is purchasing shares from the market (at the current market price, not ‘fair value’). What they are doing is purchasing preference shares as part of a new issue of shares the banks can make, irrespective of the current value of their shares. This is new money, and the market valuation of the shares is whatever level the companies choose, independent of their actively traded stock price. Most are choosing a fundamental analysis method.
Though honestly, stock purchase is a very small portion of the bailout plans of any given country. The trouble isn’t a lack of assets it’s coagulation in the liquidity pipe. Personally I like the UKs solution to this problem more than the USs, but this whole subset is a bit off topic.
I return to the central question. Isn’t spending the people’s money on behalf of the people Just?
[quote]
I return to the central question. Isn’t spending the people’s money on behalf of the people Just?[/quote]
Very well, it can be cast that way, and I see the argument, but do you think this is a one time occurence? I don’t. There’s always a financial crisis around the corner whether it’s savings and loans, or .coms, or subprimes or whatever. Jumping in and saving the day just postpones the day of reckoning, so to speak. It also distorts the incentives. If companies can reasonably expect the government to jump in and save the day complete with golden parchute, then of course they’re going to take bigger and more ridiculous risks. Short term solution. Long term bad policy.
No one has mentioned the role of the black market yet.
Say a “just price” were determined for private English lessons, if there were still more demand than supply, the market would take effect anyway. What would happen is I’d say to potential students who were wealthy that they had to “take a number”. They’d then offer me more than someone else (so as to jump the queue), and conveniently, I’d suddenly have time in my schedule for them (and their higher fees) rather than someone else (and their lower fees) and they’d jump the queue. Within about five minutes, this whole notion of “just price” would be completely circumvented by a large number of people in society, and it would be business as usual. Those who complained to the government because they weren’t getting their “just price” would only drive the prices up higher (and thus, price themselves out of the market even more) because then English teachers would have to factor in the risk of getting caught by the government.