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Drunk Vegan
2008-Oct-13, 02:47 AM
Has it occurred to anyone that the most dangerous aspect of this entire economic collapse may well be the effect it is having on the cost of groceries and other essential goods?

The prices are skyrocketing.

If you ask me, the most important and immediate step that should be taken to ease the impact of this disaster on the average citizen is for Congress to pass a resolution that fixes the prices of essential goods and services until this financial crisis has run its course and the economy has begun to recover.

Otherwise, what will happen in America will be exactly what happened in Russia:

a) Prices rise because of business' fears - trying to get what they can, while they can

b) Demand lowers because fewer people can buy as much in goods at the new high prices.

c) Prices increase again because there are fewer people buying their goods, and businesses need to charge more just to meet their goals.

d) The cost of groceries is now so high that the average citizen simply cannot afford a loaf of bread, which now costs $20.

Food is rationed and police are required to safeguard supermarkets and oversee the distribution of food.

e) Because no one is able to get food except buy stealing it or having it given to them by the government, grocery prices increase even more because they no longer have reason to produce as much supply, so they incur extra production costs from not producing in as large a bulk as they used to.

...... until finally:

f) The system is so ridiculously unsustainable and inflated that the currency system is abandoned entirely. All debts are written off as unrecoverable. The economy has officially ceased to exist.

In its place will be printed new currency that breaks clean from the old. Bluebacked or another color paper bills perhaps instead of green, to make obvious the difference.

publius
2008-Oct-13, 03:35 AM
DV,

The danger is not inflation now, but *deflation*. Commodities are falling like stones:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOXtsi2zl5Q4

http://money.cnn.com/data/commodities/



-Richard

Ara Pacis
2008-Oct-13, 03:46 AM
If you ask me, the most important and immediate step that should be taken to ease the impact of this disaster on the average citizen is for Congress to pass a resolution that fixes the prices of essential goods and services until this financial crisis has run its course and the economy has begun to recover.

Isn't that oxymoronic? How can you both let it run its course and prevent it from running its course at the same time?

novaderrik
2008-Oct-13, 04:08 AM
people can't afford food or gas any more, but they always have money for booze, drugs, PS3's and plasma tv's.
i guess we could panic and get all socialist, but i don't think that's a good long term solution. we need to ride this out and let it take it's course.

Neverfly
2008-Oct-13, 04:33 AM
people can't afford food or gas any more, but they always have money for booze, drugs, PS3's and plasma tv's.
i guess we could panic and get all socialist, but i don't think that's a good long term solution. we need to ride this out and let it take it's course.

I have no plasma screen T.V.'s
I have three T.V.s but that's only because I repaired two of them.
I don't drink and I have never done illegal drugs.
I don't have a PS3.
I haven't gone out to the movies in forever, I don't go to malls or bars.

One gets tired of the typical stereotype that all Americans are living in the lap of luxury.

Drunk Vegan
2008-Oct-13, 05:31 AM
people can't afford food or gas any more, but they always have money for booze, drugs, PS3's and plasma tv's.
i guess we could panic and get all socialist, but i don't think that's a good long term solution. we need to ride this out and let it take it's course.

Preventing hard working people from starving to death does not equal socialism.

It's basic common decency.

Van Rijn
2008-Oct-13, 05:55 AM
Well, if you want to increase the supply of a product, forcing suppliers to sell at a lower price than they are asking is exactly the wrong thing to do. In fact, price controls, unless they are set so high that they are irrelevant, tend to reduce supply. And then if you get nasty, and force suppliers to continue at previous production levels, they tend to go out of business one way or another. Then you get into rationing. If you really want to increase supply above what the market will support (or continue current supply at a lower price than the market will support), you use subsidies. One way or another, you have to pay for your choices.

The Bloomberg article (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOXtsi2zl5Q4) Publius mentioned is interesting. One of the things it mentions:



The Department of Agriculture unexpectedly raised the size of this year's corn and soybean crops and said global wheat inventories will jump 21 percent, after record prices encouraged farmers to plant more.

Price went up, so supply went up. Now, price is going down. Expect to see food prices heading back down in the next few months.

Van Rijn
2008-Oct-13, 06:03 AM
DV,

The danger is not inflation now, but *deflation*. Commodities are falling like stones:
[snip]
http://money.cnn.com/data/commodities/



-Richard

That's impressive too. Every single item listed there is dropping.

publius
2008-Oct-13, 07:11 AM
Yes, if there any lesson to learn from modern economic theory, it's the folly of wage and price controls. Wage controls are a type of price *floor*, as opposed to ceiling. An employer must pay a minimum price for labor. These things are always geared to toward the little guy vs the big guy. When the little guy is buying things, "social justice" wants to limit the price, but when the little guy is selling something, his labor, they want to increase the price.


Price is determined in a free market by the intersection of the supply and demand curves. That's the market equilibrium. If you put a ceiling on price below that equilibrium, you limit supply and increase demand. You get a shortage. Put a floor on price, and you get a glut.

Price controls lead to shortages and hoarding. Wage controls lead to higher unemployment.

This depends on a free market, open competition, reaching equilibrium. If something else is at play, the price may not be the optimum. Two prime examples are monopolies and monopsonies. Everyone is familiar with the former, one supplier with many buyers, but the latter is one buyer with many suppliers.

Monopolies tend to artificially raise the price, while monopsonies artificially lower the price. An example of the latter is a one company town where there is only one employer.

If you look at the "total benefit", the ecomonic benefit to all involved, buyers and sellers all, it can be shown the free market equilibrium maximizes that sum, but the benefit to either side alone will be less than the possible maximum for that side alone. What monopolies and monopsonies to do it maximize their own profit/benefit at the expense of the total. In a monopoly, the seller increases his personal benefit, but he reduces that of the buyers by more. And likewise for a monopsony. The single buyer increases his own benefit, but reduces that for the sellers.

In those cases price and wage controls would be beneficial, but only below or above the free market equilibrium.

If you have a monopoly, forcibly lowering the price will increase supply (until you reach the natural equilibrium) and if have a monopsony, increasing wages will increase employment.

Monopolies and monopsonies are obvious. However, there are oligopolies and oligopsonies that may not be so obvious. They will be somewhere in between the free market ideal and the mono- worst case. Analyzing the behavior there gets complex. There is some competition, but not enough to drive the market to equilibrium. Or it can go really crazy if the oligarchs start trying to drive the others out of the market. For example one supplier might lower the price ridiculously to put the other ones out of business, losing greatly in the short term, but winning and raising the price dramatically when he drives the competition out. And similiar in the employement case. One employer might pay ridiculous wages temporarily to drive the others out.

Anyway, in these oligarchic situations, wage and price controls can actually benefit. The only problem is knowing when you have it.

-Richard

Ivan Viehoff
2008-Oct-13, 07:38 AM
Otherwise, what will happen in America will be exactly what happened in Russia:

a) Prices rise because of business' fears - trying to get what they can, while they can

b) Demand lowers because fewer people can buy as much in goods at the new high prices.

c) Prices increase again because there are fewer people buying their goods, and businesses need to charge more just to meet their goals.

d) The cost of groceries is now so high that the average citizen simply cannot afford a loaf of bread, which now costs $20.

Food is rationed and police are required to safeguard supermarkets and oversee the distribution of food.

e) Because no one is able to get food except buy stealing it or having it given to them by the government, grocery prices increase even more because they no longer have reason to produce as much supply, so they incur extra production costs from not producing in as large a bulk as they used to.

...... until finally:

f) The system is so ridiculously unsustainable and inflated that the currency system is abandoned entirely. All debts are written off as unrecoverable. The economy has officially ceased to exist.
These do not remotely resemble the reasons for hyper-inflation in Russia in the early 90s, nor the subsequent outcome.

The main reason was that the Russian government ran out of credit and chose to print money to pay its bills (as currently in Zimbabwe, or Argentina in the 1980s, Wiemar Germany, etc) in preference to cutting spending. Other things also contributed to inflation in Russia, like the fact that that goods had been subject to price control under communism and more money was issued than was available to pay for them, leading to the notorious communist era queues.

What we can predict from Russian history is that if the US government is so daft as to borrow policies from Russian communists, like price control of food, it will lead to communist-era symptoms like food queues.

Pick up a copy of Goodbye Lenin from your video store and indulge in Ost-algia.

Ara Pacis
2008-Oct-13, 08:13 AM
Well, if you want to increase the supply of a product, forcing suppliers to sell at a lower price than they are asking is exactly the wrong thing to do. In fact, price controls, unless they are set so high that they are irrelevant, tend to reduce supply. And then if you get nasty, and force suppliers to continue at previous production levels, they tend to go out of business one way or another. Then you get into rationing. If you really want to increase supply above what the market will support (or continue current supply at a lower price than the market will support), you use subsidies. One way or another, you have to pay for your choices.

The Bloomberg article (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOXtsi2zl5Q4) Publius mentioned is interesting. One of the things it mentions:


The Department of Agriculture unexpectedly raised the size of this year's corn and soybean crops and said global wheat inventories will jump 21 percent, after record prices encouraged farmers to plant more.

Price went up, so supply went up. Now, price is going down. Expect to see food prices heading back down in the next few months.

And with petroleum and therefore gas prices dropping, there may be less corn turned into ethanol fuel, then there will be a corresponding drop in price for any food made out of corn products... which is just about everything in the grocery store.

PraedSt
2008-Oct-13, 09:38 AM
Drunk Vegan, almost all of your statements are wrong.


The prices are skyrocketing
FALSE Prices were skyrocketing. That happens in a boom. Prices rarely go anywhere in recessions.


the most important and immediate step...Congress...fixes the prices of essential goods and services
FALSE In many ways. The most important step is to fix the credit markets. Price controls are always tried, but they rarely (never) work. At least not in the way you intend them to work.


Otherwise, what will happen in America will be exactly what happened in Russia
FALSE Russia when? Japan 1990s onwards is a better comparison, and over there prices have been falling. Without any imposed controls.


a) Prices rise because of business' fears - trying to get what they can, while they can
FALSE Again, in many ways. Prices rise if (growth of demand)>(growth of supply), with correct signs used. Businesses tend to raise prices when confident, not fearful. And 'trying to get what they can, while they can' is always correct, at all times, for every economic agent.



b) Demand lowers because fewer people can buy as much in goods at the new high prices
FALSE You're confusing 'Demand' with 'Quantity Demanded'. A lower quantity demanded due to higher prices is the Law of Demand. Demand, on the other hand, is a function of variables other than price.



c) Prices increase again because there are fewer people buying their goods, and businesses need to charge more just to meet their goals
FALSE Again, prices rise if (growth of demand)>(growth of supply), with correct signs used. No businessman worth his salt raises prices if his goods are not being sold.



d) The cost of groceries is now so high that the average citizen simply cannot afford a loaf of bread, which now costs $20
FALSE $20 dollars?! In the US? Where?! Or do you mean converted from Roubles? Or in purchasing power terms? Bread is a staple in Russia. $20 dollars for a loaf would mean riots. It would never happen. I dare say that if, in purchasing power terms, bread hit $20 in Monaco, that ridiculously rich principality would also collapse.



Food is rationed and police are required to safeguard supermarkets and oversee the distribution of food
FALSE Again, when and where? You seem to be taking isolated incidents and extrapolating them to the entire nation.



e) Because no one is able to get food...grocery prices increase even more because they no longer have reason to produce as much supply
FALSE 'No one being able to get food' is ordinarily a good reason to produce more. If business have no incentive, as you suggest, then that's probably due to your previous point and the argument you make in the OP, price controls. Ironic.



f) The system is so ridiculously unsustainable and inflated that the currency system is abandoned entirely. All debts are written off as unrecoverable. The economy has officially ceased to exist
FALSE This can happen. But when did this happen in Russia? You referring to the 1998 rouble crisis? The currency was devalued, debts are being paid off and, last time I checked, the Russian economy was still there.

Finally:

Preventing hard working people from starving to death does not equal socialism. It's basic common decency.

This is true, yes. What you're proposing, price controls, is not strictly socialism, if only because it has also been tried by both sides of the political spectrum. But your claim of the high moral ground to justify a redistribution of resources clearly is. Unfortunately, although I would love to respond, that would be politics..

Lomar
2008-Oct-13, 10:25 AM
Preventing hard working people from starving to death does not equal socialism.

It's basic common decency.

Some people are more entitled to common decency than others. Thousands starve to death on a daily basis, and have for as long as everyone here has been alive, and nobody gets worked up over that. Now, all of a sudden, they do. Wonder why that is.

djellison
2008-Oct-13, 11:03 AM
You can't just say "RIGHT - That's IT... a loaf of bread is now $1, and gas is $3 a gallon"

Because the forces that drive the costs behind manufacture of those goods would still be acted upon. They would simply stop making them rather than manufacture them at a loss.

CJack
2008-Oct-13, 12:33 PM
Preventing hard working people from starving to death does not equal socialism.

It's basic common decency.

Basic common decency is what compels me to oppose this most indecent policy, which removes the incentives of farmers to produce more, removes the incentives of consumers to consume less (by eating less meat and more grain, for example), and will inevitably cause lots more hard working people to starve to death.


Well, if you want to increase the supply of a product, forcing suppliers to sell at a lower price than they are asking is exactly the wrong thing to do. In fact, price controls, unless they are set so high that they are irrelevant, tend to reduce supply. And then if you get nasty, and force suppliers to continue at previous production levels, they tend to go out of business one way or another. Then you get into rationing.

I would propose that those who support price controls receive the lowest priority in the food rationing that follows.

Argos
2008-Oct-13, 02:27 PM
If you ask me, the most important and immediate step that should be taken to ease the impact of this disaster on the average citizen is for Congress to pass a resolution that fixes the prices of essential goods and services until this financial crisis has run its course and the economy has begun to recover.

In the 80´s, under a severe inflation, that heterodox formula was tried down here [the infamous freezing of prices of 1986]. The result? Items disappeared from the supermarket shelves [beef, particularly, but many others too] because the frozen prices got bellow the cost of production. My advice: don´t try it [I know that desperate things are being done in the attempt to fix the US economy, but freezing prices is an instrument for failed states. Try it in the US right now and it will be the last nail in the coffin of the idea of free market]

SpaceShot
2008-Oct-13, 02:37 PM
I think it is obvious that Drunk Vegan is posting from the future. It seems like an awful place with bread riots, police guarding markets, and people stealing food. His warning is well-heeded. Thank you Drunk Vegan... there is still time to change course.

Always in motion, the future.

Drunk Vegan
2008-Oct-13, 05:08 PM
I'm just wary of us going through the same collapse that Russia experienced - for much the same reason (excessive military spending, funny money in the economy, and then panic in the markets).

The ridiculously high cost of groceries is simply the first indicator of where we're headed. Whether we choose to cushion the fall or not is of course entirely our choice, and since we're a capitalist system we don't give a crap about each other, so ultimately we'll let everyone starve to death rather than allow anything resembling sanity to take hold.

Ilya
2008-Oct-13, 05:32 PM
I'm just wary of us going through the same collapse that Russia experienced - for much the same reason (excessive military spending, funny money in the economy, and then panic in the markets).

People already explained to you why what happened in Russia in 1998 has very little resemblance to what is happening now in US. You are just plain wrong.


The ridiculously high cost of groceries is simply the first indicator of where we're headed. Whether we choose to cushion the fall or not is of course entirely our choice, and since we're a capitalist system we don't give a crap about each other, so ultimately we'll let everyone starve to death rather than allow anything resembling sanity to take hold.
I do not know what you consider "ridiculously high cost of groceries", but a) as Publius pointed out, prices are dropping, and b) your "$20 loaf of bread" in Russia is so far off the mark that it suggests you have no clue what you are talking about, and just spout whatever SEEMS good and moral. Hint -- it's not.

PraedSt
2008-Oct-13, 05:35 PM
Oh I see.

Capitalists:
1. Are not wary of economic collapse
2. Ignore high grocery prices
3. Hate each other
4. Encourage starvation
5. Are insane

Did I miss anything?

publius
2008-Oct-13, 05:45 PM
Check out the commodities again today:

http://money.cnn.com/data/commodities/

The slide has apparently stopped with the rally -- I think the tide has turned, so long as we don't have some other big bad news somewhere. Most are up a little bit, but gold and a couple others are still falling.

Gold can be a good inflation/deflation indicator.


-Richard

SpaceShot
2008-Oct-13, 06:23 PM
The ridiculously high cost of groceries is simply the first indicator of where we're headed. Whether we choose to cushion the fall or not is of course entirely our choice, and since we're a capitalist system we don't give a crap about each other, so ultimately we'll let everyone starve to death rather than allow anything resembling sanity to take hold.

I wasn't going to add this because it literally means nothing. But as an anecdote, I do the grocery shopping. I also do the budgeting in my household. Groceries have not gone up in my budget. Gas has. Groceries have not. Neither have other consumables like clothing or household goods.

I might live in a magically protected economic sphere. But I actually am spotting more deals on a wider variety of items... perhaps to get me in the store or to liquidate inventory? I don't know. Bread is still not $20. In fact, the last loaf I bought was $1. I could have gotten one for free with that but the second would spoil.

So the problem people have in grappling with your original post is that it's not grounded in reality. I'm sure you can craft a fact-based argument about rising costs and inflation and perhaps pressure on wages, jobs, and standard of living. But you didn't do that, so it's hard to take seriously or respond to.

Argos
2008-Oct-13, 06:41 PM
I´d say we got to this mess exactly because the principles of the real economy have been violated. Adam Smith´s 'impartial spectator' has been disregarded. An infectious greed has taken over. Remember that this crisis stems largely from derivatives, the elusive side of the economy, which few people can grasp [though everybody pretended they did, as no one took the time to ask 'what is it you´re talking about Mr. Greenspan?'].

Lets get back to making real goods and services and everything is gonna be alright by 2015.

Drunk Vegan
2008-Oct-13, 08:27 PM
Oh I see.

Capitalists:
1. Are not wary of economic collapse

Actually, no - quite a few people saw this coming. They were laughed at and ridiculed for suggesting it would happen though.


2. Ignore high grocery prices

Those who can afford to, do ignore it. Those to whom a $2 increase on a $2 product means a significant percentage of their grocery bill has increased and this presents an additional burden in a climate where gas and energy bills are skyrockting, tend to notice that grocery prices are through the roof.


3. Hate each other

Apathy does not = hate.

The very definition of capitalism is to pursue the acquisition of wealth by any means necessary. Altruism and philanthropy simply do not make money. Hence, a good capitalist does not care about his fellow man. He cares about money.

It doesn't mean he hates anyone or is "out to get the little guy" but it means he is completely apathetic to the concerns of his neighbor.


4. Encourage starvation

They're not trying to do so.

They may succeed at it though.


5. Are insane

Only in that they did not realize that exploiting every single aspect of our economic system would result in its full-blown collapse.

This crash was inevitable, as the greedy SOBs no longer have anything left to steal. They've taken everyone's pensions, left an IOU where Social Security used to be, gave mega-billions in debt to the American public through loans that should never have been granted, even got Washington to start putting our tax money in to the stock market. There's a reason it inflated as high as it did.

Now that there's no one left to rob blind and stick their funds in the stock market to make even more money in the stock market, of course the bubble has burst.


Did I miss anything?

The point, perhaps.

Drunk Vegan
2008-Oct-13, 08:33 PM
I do not know what you consider "ridiculously high cost of groceries", but a) as Publius pointed out, prices are dropping.

I'd like to see a chart that shows the cost of groceries as it increased over the last 4 years or so.

It has easily doubled if not tripled in many cases.

I am not suggesting that groceries are skyrocketing as a result of the Great Crash of 2008, I am simply pointing out that this will only make things worse.

I'll attempt to Google for such a chart when I've finished getting up to date on other subscribed threads.

PraedSt
2008-Oct-13, 08:49 PM
Look, I'd love to argue economics with you, but every time you post something, 90% of your sentences turn out to be wrong; either in fact, or in analysis.

I'm living in India at the moment. They churn out a lot of socialist-leaning economists over here. Many of them are my friends. We argue a lot.
BUT, and this is important, none of them make the basic economic errors that you do.

Now I appreciate that you have different views. We all do. But wouldn't it have been better to start a thread with this question: 'Can anyone tell me if price controls are an effective tool for fighting inflation?' That would have gotten you a lot of pleasant responses and you might have even learnt something.

But the whole point of your OP seems to be to shove your economic analysis and prescriptions down our throats. Which, I suppose, is also acceptable; but how do you propose to achieve this if you don't know the ABCs of the subject? Even a simple wiki search would have prepared your arguments better.

$20 dollars for a loaf. Sheesh...

Larry Jacks
2008-Oct-13, 09:14 PM
I'd like to see a chart that shows the cost of groceries as it increased over the last 4 years or so.

It has easily doubled if not tripled in many cases.

I am not suggesting that groceries are skyrocketing as a result of the Great Crash of 2008, I am simply pointing out that this will only make things worse.

I'll attempt to Google for such a chart when I've finished getting up to date on other subscribed threads.

All I can provide is the fact that no grocery items my wife and I purchased over the last 4 years have doubled in price, let alone tripled. The prices for many products have increased but by no means that much. This may not be the case for everyone everywhere. For example, I've heard reports that the price of corn for tortillas has increased sharply in part due to demand for ethanol. I don't know if the price has doubled, tripled, or what but some of the disruption in prices may be due to populist pressures to regulate the price of essential commodities.

Neverfly
2008-Oct-13, 09:18 PM
Beef has gone up a Lot.
So much so, that I began buying more turkey and chicken and less beef to compensate.
Most food products around here seem to have risen. I had attributed it to transportation costs with the rising cost of fuels. Beef, I attributed to the Mad Cow Fear Mongering that is total Bull Feces.

ALSO, one sneaky tactic is to leave the price on the box the same, but decrease the amount of product in the same sized box.
Read The Labels.

I have find a great many products that went from 22oz to 18˝ oz but had the exact same sized box and the exact same price. Do it across the board and it's the same as raising prices without freaking people out. Fewer notice.

I had read the OP as predictive of rising costs- not that they already have but that they will.

chipster
2008-Oct-13, 10:21 PM
people can't afford food or gas any more, but they always have money for booze, drugs, PS3's and plasma tv's.
i guess we could panic and get all socialist, but i don't think that's a good long term solution. we need to ride this out and let it take it's course.

Thank you

Torsten
2008-Oct-13, 11:05 PM
I'd like to see a chart that shows the cost of groceries as it increased over the last 4 years or so.

It has easily doubled if not tripled in many cases.

Simply not true.

Check it out (http://www40.statcan.ca/l01/cst01/cpis08a.htm?sdi=food%20monthly)

Neverfly
2008-Oct-14, 12:30 AM
Simply not true.

Check it out (http://www40.statcan.ca/l01/cst01/cpis08a.htm?sdi=food%20monthly)

Ok, All you're showing is a statistical Average over-all.- In Canada.

This does not refute whether or not some individual items have doubled or even tripled in price or not. Outside of Canada.

I'm not necessarily agreeing that they have- merely pointing out that your chart is no more a rebuttal than if I said that Pepsi has doubled in price and you showed a chart that averages the price of all beverages including wine, beer, liquor, water, soda, fruit juice and animal extracts and then claiming that disproves the claim.

Also, Drunk Vegan does not live in Canada.

PraedSt
2008-Oct-14, 02:43 AM
one sneaky tactic is to leave the price on the box the same, but decrease the amount of product in the same sized box

Yeah, that really irritates me. But what annoys me more is that I often go along with it anyway. With an 'upfront' product and a 'sneaky' competitor next to each other in front of me, I've picked the sneaky one several times. As long as the weight loss was within a mental 'margin of error' if you know what I mean. And I've done this with full knowledge of their sneakiness. Why??? :mad:


Beef, I attributed to the Mad Cow Fear Mongering that is total Bull Feces

I think I can also provide you with some more fruitier additions. I read this in some commentary a few months back. If I remember correctly, the analyst said something like this:

Demand: Developing countries developing>Want more meat in their diet>Demand for US beef rises.
This is an ongoing thing of course, it's just that everything seemed to come to a head over the last year.

Supply: Ethanol subsidies>More demand for corn to make ethanol>Rising corn prices>Becomes too expensive to feed cattle with corn feed>Farmers cull lots of cattle>Temporary fall in beef prices>Followed by longer lasting shortage of cattle

Something like that anyway... :)

Torsten
2008-Oct-14, 04:13 AM
Ok, All you're showing is a statistical Average over-all.- In Canada.

This does not refute whether or not some individual items have doubled or even tripled in price or not. Outside of Canada.

I'm not necessarily agreeing that they have- merely pointing out that your chart is no more a rebuttal than if I said that Pepsi has doubled in price and you showed a chart that averages the price of all beverages including wine, beer, liquor, water, soda, fruit juice and animal extracts and then claiming that disproves the claim.

Also, Drunk Vegan does not live in Canada.

Then try to figure it from these:

Click on the 4th box down in this choice of tables (http://data.bls.gov/cgi-bin/surveymost?cu), and retrieve the data. If I read that correctly, the USA city average CPI for Food and Beverages increased from 187.3 in August 2004 to 216.4 in August of 2008, for an increase of 15.5%. Go ahead and argue that the price inflation may have been higher in some parts of the USA, but chances of that being sustained, on the order of a doubling or a tripling, for more than a few days, are slim to nil in an economy like the USA. Entrepreneurs would quickly fix that.

Oh, I finally found what I was looking for here (http://www.bls.gov/news.release/cpi.t02.htm), though it doesn't give detailed subcategory results for 4 years. Maybe they are somewhere on the site. Given that the CPI base year(s) is 1982-84, it seems that it's taken about 16 years for the average cost of groceries in to slightly more than double.

Drunk Vegan was complaining about groceries in general. Earlier in the thread, the "ridiculously high price of groceries" was mentioned, with the suggestion of huge recent inflation. I was trying to address DV's "in many cases", thinking that phrase might mean particular subcategories of groceries, so I presented that particular table with the more detailed breakdown of the broad category "food". But I didn't initially find a US example with that kind of breakdown. Therefore, I maintain that my example is not comparable to your "Pepsi" vs "all beverages" categorization, because in my example, the table includes the broad category of "food" prices (which is Drunk Vegan's complaint), and subdivides into its various components. Further, if food price trends between USA and Canada were so different (200% or 300% inflation vs 15% over that time period), I think by now we would have observed some significant changes in the nature of cross-border shopping. The media here pick up on that type of thing.

Neverfly
2008-Oct-14, 04:20 AM
The irony is- even if it refutes the 'doubling even tripling' claim, it supports the premise of Drunk Vegans claim that Food Prices have increased.

So you can chalk him up as an exaggerator, but not flat out wrong.

PraedSt
2008-Oct-14, 04:54 AM
The irony is- even if it refutes the 'doubling even tripling' claim, it supports the premise of Drunk Vegans claim that Food Prices have increased. So you can chalk him up as an exaggerator, but not flat out wrong.

Don't think anyone denied inflation Neverfly. The bone was the exaggeration I think :)

Neverfly
2008-Oct-14, 05:01 AM
Don't think anyone denied inflation Neverfly. The bone was the exaggeration I think :)

Well, then I guess it's been covered; picking the bone seems to have led off on a tangent from the OP.

filrabat
2008-Oct-14, 05:13 AM
I agree with all that's said about price controls - its what they say about good intentions and the road to The Underworld. This is particularly true if production costs are rising too (which includes even the price of the very materials used to produce the machines, etc. used to produce food).

Suppose your production cost for a single item of food (henceforth called "Food", notice the capitalization) is $100 per kg of "Food". In basic terms, Profit = Revenue minus Expenses. For simplicity's sake, let's say "Expenses" means ALL expenses (including materials, loans and their interests, labor, maintainence, fuel, machinery, electricity, etc and all other things used to directly or indirectly produce "Food")

If Food costs $100 / kg to produce and the consumer pays $105/kg, then the farmer/producer makes $5 profit, or "five percent margin" (note well that, for simpliticy's sake, I'm excluding all the steps between the farmer and the grocery store shelf).

Say production costs rise to $104/kg. In that case, assuming demand for Food remains the same, the grocery store price can rise to, say $110/kg and the farmer will still make a comparable "margin". This can happen ONLY in the absence of price controls.

Now suppose the government sets price control of $105/kg and production costs rise to $104. That means only $1/kg profit -- less than 1% margin. Profits drop by over 80%!!!. Would you keep producing something if your profit was less than 20% of what it was before? Possibly, although to earn the same amount of total income as before you'd have to expand capacity (land for food growing in this case) by FIVE TIMES. In reality, it's hard for farmers (or any self-employed person, for that matter) to take a hit like, say $50,000 total profit going down to $10,000 and continue in that line of business - the profit margin simply is not high enough to make it worth the effort to grow Food. The situation's even worse, of course, if production costs exceed the retail value of food (by definition, UNprofitable for the farmer). This is why price controls actually make shortages worse - they create DISincentives to produce a needed good...unless, as someone said earlier, the government also subsidizes the farmer, which costs tax money. Either way,you'll end up paying more for food when you take the totality of factors into account -- 1 part at the grocery store, the other part from your taxes.

ADDED: If you want to save money on food, increase the vegetable content of your diet. That will give you more nutrition for your dollar, pound, euro, yen, etc.. I personally have something called Filrabat's Mix that I eat every day: 50% frozen vegetables, 25% Rice, 25% chicken, tuna, or salmon. That certainly is not only filling and nutritious, but it's also good for weight loss if you don't eat huge portions of it (I lost 20 lbs/ 9 kg since New Years by eating mainly that)

closetgeek
2008-Oct-14, 12:15 PM
I have no plasma screen T.V.'s
I have three T.V.s but that's only because I repaired two of them.
I don't drink and I have never done illegal drugs.
I don't have a PS3.
I haven't gone out to the movies in forever, I don't go to malls or bars.

One gets tired of the typical stereotype that all Americans are living in the lap of luxury.

I don't think that is the intended stereotype but you do have to admit that our idea of "poverty" scarcely resembles global poverty.

LotusExcelle
2008-Oct-14, 12:20 PM
Food costs in the US are among the lowest on the planet. Food price crisis in other countries is unrelated to the US markets. Go to any country in Europe and see what things cost there and then see if you are justified in worrying about the US prices for nearly anything. And historically speaking we pay less for food than anyone in history.

Neverfly
2008-Oct-14, 12:40 PM
Food costs in the US are among the lowest on the planet. Food price crisis in other countries is unrelated to the US markets. Go to any country in Europe and see what things cost there and then see if you are justified in worrying about the US prices for nearly anything. And historically speaking we pay less for food than anyone in history.

This is nonsense.

We are not Europe.

We are the United States.

I don't give half a care about how OTHER people do things. We STILL will maintain the standards we choose and we will uphold them- and voice it out daily if needs be.
Comparing it to other places and nations is utterly irrelevant to how this nation chooses to operate.


I don't care if Europe choose to have high taxation for example.
We Don't.
And we plan to keep it that way.
I don't care if China does things their way.
It's not OUR way and we will do it differently.

LotusExcelle
2008-Oct-14, 01:40 PM
This is nonsense.

We are not Europe.

We are the United States.

I don't give half a care about how OTHER people do things. We STILL will maintain the standards we choose and we will uphold them- and voice it out daily if needs be.
Comparing it to other places and nations is utterly irrelevant to how this nation chooses to operate.


I don't care if Europe choose to have high taxation for example.
We Don't.
And we plan to keep it that way.
I don't care if China does things their way.
It's not OUR way and we will do it differently.


That is quite separatist and doesn't deal with reality at all. 'Europe' doesn't *choose* to have high taxation. Many nations offer universal healthcare in cradle-to-grave form and thus taxes must be increased to deal with the bottom line. Many people see this as a requirement. Not a choice.

Taxes aside: The economies of nations are linked across the globe. This is not the first time there has been a domino effect. Curling up in our collective shells is not how to solve the issue - but more to my point claiming that prices are astronomical is myopic. As the economies are linked we must look at per-capitas and so forth to figure out just how bad off we really are. And when you do that you see that the US is in fact one of the cheapest modernized countries on earth. Gas, food, housing, whatever. We have it good.

Neverfly
2008-Oct-14, 02:07 PM
That is quite separatist
Thank you. That is, after-all, how my nation formed.

and doesn't deal with reality at all.
Yes, actually, it deals with it quite well, considering that is the exact reality that is existing and has done so for over 200 years.

'Europe' doesn't *choose* to have high taxation. Many nations offer universal healthcare in cradle-to-grave form and thus taxes must be increased to deal with the bottom line. Many people see this as a requirement. Not a choice.
Obviously, it IS a choice- they are doing it- we are not.
Your post compared how we do things to how Euprope does it.

I don't care about Europe.
I don't care about how Europe does things.

This nation over here, the US, may very well have a lower cost to food. SO what?
It's because we made that happen. Made it possible. So if Europe isn't- that doesn't mean we shouldn't voice out when things get out of hand from our perspective.
We Should.
It's WHY we have what we have.

LotusExcelle
2008-Oct-14, 02:24 PM
"Out of hand" is relative. is 4.00/gal for gasoline out of hand? not in the perspective of the world. To the US it may be. but not when you consider where it should have been but wasn't. When prices meet and reach real-world economics then here in the US you can expect price increases for everything.

Other countries deal with other pressures that we in the US are just now coming around to realize. Fuel prices are a modern example. But its everything. And remember- you pay for everything anyway. If gas, corn, milk, etc is subsidized you DO still pay for it. And the less you pay now the more it will cost later. Our cheap goods are catching up to us. The responsibility is collectively ours. Complaining about prices does nothing. Having expected prices to remain artificially low in the realm of world economics is just plain silly.

Argos
2008-Oct-14, 03:02 PM
I don't care if China does things their way.


You should. After all, China is the biggest US creditor. The fate of the Dollar is in their hands, so to speak.

Neverfly
2008-Oct-14, 03:12 PM
You should. After all, China is the biggest US creditor. The fate of the Dollar is in their hands, so to speak.

Oh.

So I guess this means we should imitate China too.


:rolleyes:


Remember the Good old days? We need to get back to that.

LotusExcelle
2008-Oct-14, 03:16 PM
Neverfly - Now you really are being silly. If we had ever truly been an insular as you believe - or more to the point if we were to become as insular the cost of everything, every good here, would skyrocket beyond affordability. As an example I give you computer motherboards, capacitors, batteries, clothing of all types, etc etc. basically name it and the cost, if it were solely produced in the US, would go through the roof.

Neverfly
2008-Oct-14, 03:25 PM
Neverfly - Now you really are being silly. If we had ever truly been an insular as you believe - or more to the point if we were to become as insular the cost of everything, every good here, would skyrocket beyond affordability. As an example I give you computer motherboards, capacitors, batteries, clothing of all types, etc etc. basically name it and the cost, if it were solely produced in the US, would go through the roof.

Wrong. Competition and free market.
When, exactly, did the market go global? Although trade was always around- the Global Market is Purely recent.

LotusExcelle
2008-Oct-14, 03:33 PM
Wrong. Competition and free market.
When, exactly, did the market go global? Although trade was always around- the Global Market is Purely recent.

I double-wrong your 'wrong'. The reason we go to, say, Taiwanese manufacturers for resistors, caps, etc is precisely because we *can't* compete with them. A few electronics manufacturers still fab here in the states but essentially no electronics you own would exist sans the Asian electronics market. And the cost of producing what the produce here is outlandish - hence WE DON'T DO IT.

Same goes for car parts. Many, many, many parts on cars produced today are not manufactured in the US. Why? Free market. It costs too much to produce here so we go elsewhere - end result is the average person can afford to buy things. Thanks to the free market in which we trade with other countries. Closing off those markets would not keep things affordable here. It would simply shoot the price of everything so high that no one could afford anything.

The markets are complex so we're both making things sound more simple than they are. but your example of the free market in a close-off economy would lead to an even greater gap between rich and poor and would create a new wave of working-poor. Their wages for producing these cheap goods would be so low that they couldn't afford anything.

Scratchy
2008-Oct-14, 03:37 PM
'Europe' doesn't *choose* to have high taxation.

Of course they do. Is somebody forcing them to have universal health care programs against their will? If they like, they can get rid of these programs, lower the taxes, and tell everyone to go get their own health care. They choose not to do it this way.

Scratchy
2008-Oct-14, 03:38 PM
Remember the Good old days? We need to get back to that.

I do. They weren't so good.

Neverfly
2008-Oct-14, 03:45 PM
I double-wrong your 'wrong'. The reason we go to, say, Taiwanese manufacturers for resistors, caps, etc is precisely because we *can't* compete with them. A few electronics manufacturers still fab here in the states but essentially no electronics you own would exist sans the Asian electronics market. And the cost of producing what the produce here is outlandish - hence WE DON'T DO IT.

Same goes for car parts. Many, many, many parts on cars produced today are not manufactured in the US. Why? Free market. It costs too much to produce here so we go elsewhere - end result is the average person can afford to buy things. Thanks to the free market in which we trade with other countries. Closing off those markets would not keep things affordable here. It would simply shoot the price of everything so high that no one could afford anything.


WOW_ way off.

No, it's not unaffordable or outlandish.

Labor costs are cheaper there. So we transfer our Customer Call centers and Shoe makers and whatever else there to save a few bucks- while they continue charging us the same price they charged when making them here. We can make everything we import here- Just Fine.

Either way- that's irrelevant as to whether or not we MiMic or ImItate the systems in either Asia Or Europe.
There is no reason for us to care or do like they do in Europe.
The comparison is a moot point.
I get tired of hearing about how we should lower our standards because Europe doesn't whine about it. Whatever.

C'mon!

LotusExcelle
2008-Oct-14, 04:06 PM
i made no mention of lowering standards. And if you think goods would cost the same if the things I mentioned were produced here than you know little of economics and even less of cost of production.

I'll use this example though it isn't ideal: Granite. It costs a local company I'm familiar with LESS to buy granite from China and have it shipped here than it costs to buy the granite from a quarry in the US. If they were to stop buying from China and start buying from the US suppliers their costs would nearly double from granite. As most companies' profit margins are in fact pretty slim this would raise their costs and thus their final products' costs. Do this in aggregate and the final cost is absurd.

Can we make everything here? Yes. Our workforce is excellent. Can we afford to? not even close. Hence: we don't.

Gruesome
2008-Oct-14, 05:44 PM
A few Ayn Rand quotes for youse folks....

America's abundance was created not by public sacrifices to the common good, but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. They did not starve the people to pay for America's industrialization. They gave the people better jobs, higher wages, and cheaper goods with every new machine they invented, with every scientific discovery or technological advance- and thus the whole country was moving forward and profiting, not suffering, every step of the way. -- Capitalism: The Unknown Ideal

Every government interference in the economy consists of giving an unearned benefit, extorted by force, to some men at the expense of others. -- C: T.U.I.

Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action. -- The Voice of Reason.

Fazor
2008-Oct-14, 05:46 PM
I'll use this example though it isn't ideal: Granite. It costs a local company I'm familiar with LESS to buy granite from China and have it shipped here than it costs to buy the granite from a quarry in the US. If they were to stop buying from China and start buying from the US suppliers their costs would nearly double from granite. As most companies' profit margins are in fact pretty slim this would raise their costs and thus their final products' costs. Do this in aggregate and the final cost is absurd.

Ah, but are you taking into account that the US granite's price is affected by the lower demand that is caused by the availability of cheap Chinese granite, and that by stopping the import of said Chinese granite, the demand for US granite would increase and the price would (or rather, *could*) decrease?

LotusExcelle
2008-Oct-14, 05:54 PM
my understanding is the demand for US granite is still pretty high. The cost is due mostly to labor costs. This nearly runs the board for why certain things just aren't commonly sourced from the US. I keep picturing capacitors and even motherboards as prime examples. They are affordable precisely because they cost less to produce elsewhere. You could try to produce them here but labor costs alone would pretty much mean you wouldn't have a market.

I am trying to think of one US capacitor or motherboard manufacturer, that uses purely US parts and I can't. I'm not saying it can't be done. I'm saying that things like caps and such REQUIRE a cheap workforce to keep the product cost-effective in our market. move the manufacturing over here and your overhead raises the end-product cost beyond the scope of the market.

Click Ticker
2008-Oct-14, 05:55 PM
Ah, but are you taking into account that the US granite's price is affected by the lower demand that is caused by the availability of cheap Chinese granite, and that by stopping the import of said Chinese granite, the demand for US granite would increase and the price would (or rather, *could*) decrease?

The availability of Chinese granite could be the only thing keeping the domestic supply prices in check. Take away that alternative, and the increase in demand from domestic suppliers would drive the price up, not down.

LotusExcelle
2008-Oct-14, 05:58 PM
Spock - that was a complexity of economics I didn't want to get into but its a good point.

Fazor
2008-Oct-14, 06:01 PM
my understanding is the demand for US granite is still pretty high. The cost is due mostly to labor costs. This nearly runs the board for why certain things just aren't commonly sourced from the US. I keep picturing capacitors and even motherboards as prime examples. They are affordable precisely because they cost less to produce elsewhere. You could try to produce them here but labor costs alone would pretty much mean you wouldn't have a market.


So it's purely a cost to produce issue. I don't have any figures to dispute this (not that I necessarilly disagree anyway). But if that's purely true, then isn't the US economy doomed to fail, since there's no way that we'd allow the kind of cheap labor that is provided overseas?

How do you combat "Economy Leeching" without driving up the prices of goods in your own country?

LotusExcelle
2008-Oct-14, 06:09 PM
Well we'll jump to cars as an example, Fazor. Many/most of the components (and you have to also think in small terms... engine computers, sensors) are outsourced from our shores. "Made in the US from Mexican parts" kind of a thing. We start getting into really big complex issues but with cars it amounts to this: we have a really skilled workforce and a great infrastructure that allows us to do final-assembly on cars from outsourced parts and still turn a profit. If we were to turn to making *every single component* in a car from purely US made parts the final cost of the car would be beyond market value of a competitive car from, say, Japan. (and as a side note for even more complex reasons distilled to skilled labor and marketing many off-shore car companies now have factories here in the US)

Affordable end products that we are used to *require* cheap outsourced labor. our workers would not accept the wages required to bring all of that manufacturing here and still keep goods affordable. I don't just mean end products but supplies and such even.

If it were possible it would already be happening. As our workforce becomes more skilled/higher-paid we *have* to ship some production of goods offshore.

Gruesome
2008-Oct-14, 06:10 PM
my understanding is the demand for US granite is still pretty high. The cost is due mostly to labor costs.

I'd agree.

This brings up the unmentioned, but nevertheless necessary, aspect of the "Price-Locking" concept offered in the OP. In order to fix prices, one must also fix labor costs. Then what we'd get is the government completely controlling the means of production, which is......oh, what's the word for it?....I forget. Let me just say it's a terrible idea.

Fazor
2008-Oct-14, 06:14 PM
If it were possible it would already be happening. As our workforce becomes more skilled/higher-paid we *have* to ship some production of goods offshore.

Yes, what I'm saying is that diminishing jobs due to outsourced labor is a major factor in the failing economy. If the outsourcing is necessary, what's the solution to the problems it causes?

Every dollar that goes overseas is a dollar that's taken away from our economy. I'm not saying we shouldn't deal in overseas business. But how do you pick up the cost of that lost dollar soas not to take it away from the US?

(I'm not being argumentative, btw. Just asking questions)

LotusExcelle
2008-Oct-14, 06:23 PM
I would disagree that outsourcing labor is a major factor. It may contribute... tweak things... but I (personally) believe our economy and standard of living would be much worse if many things weren't outsourced.

Let me flip your "every dollar" statement around. Let's say a US worker gets 10/hour to make a Humfracker. The Humfracker, total, costs 1 dollar to produce. After overhead the company making Humfrackers (Humfracker Ltd.) turns a profit of 2 dollars.

Let's say they find a new supplier overseas for the frigibidly-gog. Now it costs them 50 cents to produce. All other things being equal they now can make a 2.50 profit. They are now spending some of their money overseas but *making* money in doing so. Same goes for labor. the company making the frigibidly-gog component decided to move overseas because making a frigibily-gog in the US was driving their prices so high no one would buy from them.

Okay that's hard to understand. But it amounts to this: a dollar going out does not equal a minus a dollar here. In most cases of those dollars that would be going out were spent here they'd be worth practically nothing.

Why did Bethlehem Steel go under? Because it cost to much to make steel here. Sure let's start them back up and buy america-only steel. It would cost three times as much as everyone else's and thus drive the prices of everything that uses steel up accordingly - making anything with steel in it unaffordable.

Fazor
2008-Oct-14, 06:29 PM
Makes sense. Basically going overseas does not cost the US, it just shifts profit away from [x company that just closed] to [y company that's now making more profit]. We'll ignore the possibility of decreased sales leading to lower profits (based on higher unemployment leading to less spending), because like you, I'm not sure how much of this has a major role in the current economic conditions.

So the US has more money, but it's distributed to less companies (the assembly companies prosper while the manufacturing companies die out). Does this new disparity create economic unstability? (Old saying "Rich get richer, poor get poorer")

edit: Heh... shows where my mind is today. I said we'd ignore the effect of profit-shifting, then immediately pose a question about the effects of profit shifting. Yay for Fazor.

LotusExcelle
2008-Oct-14, 07:00 PM
Its a complex issue so i can't blame you for bringing up things you said you weren't going to.

But essentially as the workforce and products increase in complexity the small components have to move offshore. We *can* still do those things but we would have to pay absurdly low wages to keep costs down or pay current wages and drive prices up too high.

Price-locking as per OP would send a shockwave that would economically ruin the nation rather than fixing it. End-user price increase is a symptom of other things not the cause of. Fix prices and those other things are still there. Cost to produce and how much something costs you to buy are two different things entirely. Fix the price at the end and as cost to produce increases the profit margin dwindles - wages would drop making those fixed price things effectively cost more.

Fazor
2008-Oct-14, 07:06 PM
It
Price-locking as per OP would send a shockwave that would economically ruin the nation rather than fixing it. End-user price increase is a symptom of other things not the cause of. Fix prices and those other things are still there. Cost to produce and how much something costs you to buy are two different things entirely. Fix the price at the end and as cost to produce increases the profit margin dwindles - wages would drop making those fixed price things effectively cost more.
I agree.

Argos
2008-Oct-14, 09:19 PM
Labor costs are cheaper there. So we transfer our Customer Call centers and Shoe makers and whatever else there to save a few bucks- while they continue charging us the same price they charged when making them here. We can make everything we import here- Just Fine.


Well, my shoes, they come from Singapore
My fleshtight's from Taiwan
My tablecloth's from Malayisia
My belt buckle's from the Amazon
You know, this shirt I wear
comes from the Philippines
And the car I drive is a Chevrolet
It was put together down in Argentina
By a guy making thirty cents a day.

Well, it's sundown on the union
It was made in the USA
Sure was a good idea
'Til greed got in the way.


;) :)

Ara Pacis
2008-Oct-15, 12:35 AM
Of course, out-sourcing isn't a permanent solution. Globilization opens up a race to the bottom, but what is sometimes ignored is what happens when it hits bottom. As workers in other countries become more affluent, they want a higher standard of living and this drives an increase in wages. This can be alleviated by dumping these workers and moving to a place with even cheaper labor. Eventually, there is nowhere to go that has cheaper labor.

On top of this are variables such as fuel for transportation and distribution, which may become critical as we suffer from the economics of peak oil. Not only will shipping from out-sources become more expensive, but fuel will become an issue for workers themselves, which could drive up wages.

On top of this is health insurance. If countries have a universal health insurance system (or none) then that is effectively a subsidy for employers. In countries, such as the US, that have employer paid healthcare, it's a portion of the overhead and compensation structure that must be recouped in the final price of a good or service. Another interesting note on healthcare is an indirect link to pollution. Employers in the US may have higher costs due to pollution regulations, but a lack of pollution controls could see higher healthcare costs which could raise taxes (and therefore costs) on employers in countries that have a universal or employer-based healthcare systems.