This is impossible unless a business has perfect information. Even in the macro, this is impossible. Individually, a business owner could not know how much money his consumer base has. He can have some sort of idea, but his consumers could be all kinds. They could be ones where they love to spend money, vs those who are very tight and calculated in spending their money(hell, at gamestop, I’ve heard stories of people saying they don’t want to save money). No business can know all of their customers and how much each person is willing to pay. quantity demand is subjective as well. Hell, my quantity demand for a new car is $5000. But alas, a new $5000 car is very rare, therefore, a new car is scarce. That certainly is my “economic demand.”
In a free market place, “power” is nothing more than the likelihood of having someone else offer you what they have in exchange for what you have. Do you honestly believe that people would rather have $1 instead of 1000 cans of corn? If you prefer $1 over 1000 cans of corn, I will trade $1 for 1000 cans of corn from you every minute of the day; heck, I will start off with $100,000, and trade for 100,000,000 cans of corn from you.
BTW, if you really believe money, however minute amount, is that much more valuable than substantial amount of food, shouldn’t you be modifying your earlier assertion about food self-sufficiency to allowing “excess food” to be traded for money instead of mandatory local storage? In real life, surplus food in a local area is routinely traded for money, but only at a rate that has a reasonable chance of trading back to food when needed. For example, if I have 1000 cans of corn that I don’t have immdiate need for, I may be willing to let go for $500; then later on, when I need corn, I may be willing to buy them back for $5.5 per 10 cans (i.e. at the rate of $550/1000). The $50 difference would be less than the storage cost of 1000 cans of corn at my location, not to mention chances are that the corn might be past expiration date if stored locally by the time I get to half of them. The $50 difference may be sufficient profit for the trader (if not, nobody would be available as counterparty to the two transactions until the spread is wider), and more importantly the corn will help alleviate corn shortage somewhere else in the world while I do not have an immediate need for them. Then when I have a shortage of corn, the trader will come back and sell me some corn produced somewhere else. That’s how free trade works. The exact exchange rate between dollar and corn is to be decided by the market discovery process.
When the two guys meet to exchange, the 100 cans of corn are not brought into the play; only the dollar, and as many cans as the dollar can entice. The guy with the dollar might very well walk away from the deal. The guy with the corn wants the dollar more than he wants the corn. The corn is not scarce. The dollar is. The guy with the dollar is more powerful in this transaction. Certainly the guy with the corn will through many such exchanges become much more powerful towards other exchanes, but always in the cash transaction, the guy giving the dollar has the upper hand.
I’m not sure that I follow your argument here. That the employer is the one giving the cash in the transaction means that he is the one with the power. It isn’t even his cash yet, but he still is the one with the power, just with the promise of the paycheck. In almost all small businesses, the product of labor is sold before the paycheck is written.
Again, I’m not sure what your argument is, or what it is against. Yes people act for their own reasons. The economy reacts for reasons. Correlations demand causality.
Not true. First of all, the guy with the dollar wants the corn more than the dollar. And the guy with the corn, wants the dollar more than the corn. If the guy with the dollar valued the dollar more than the corn, then he wouldn’t make the exchange. The amount of corn plays a factor in the exchange. The corn is scarce…simply because you are trying to put a price on it. But simply because you have more money, does not mean you are more “powerful.” I say a can of corn has much more uses than a dollar. You can’t eat a dollar.
Yes, in terms of paying wages, the laborer earns their wages before it is paid to them. But earlier, you said the one giving cash is the one with power. I commented that consumers have more power than businesses, and you never responded to that claim. I am guessing you believe that is true then. Secondly, just because somebody is giving cash, does that mean they have the upper-hand. If cash is limited, then so are goods, since that is what cash represents. The question is then..is cash scarce? If yes, then goods are scarce.
Also Arman, I am surpised that this was the only comment you could respond to in that long post Jim wrote. Are you avoiding the bulk of his argument and just answering the insignificant questions like these?
It is an instance of real scarcity. I say that economists should garner their observations from reality, rather than conceptualizing thought experiments.
Talking about what really happens isn’t good??
Yeah.
No. The grocer is bidding for limited factors.
Semantics is key to comprehension. I say you guys don’t understand economics. I am trying to elucidate. The semantics are extremely important in this endeavor.
Jim, like you, has a tendency to mental meanderings that are completely out of touch with the point I am trying to bestow on you. Trying to keep you two on any focus is my task at hand. You think I should be more easily distracted?
Yes yes, limited, whatever you want to call it, same bloody thing. Use the term however you please, just don’t expect anyone to take your little semantics games seriously.
oh, so I guess the idea of bringing your logic to its extreme conclusion is “mental meanderings?” You avoid many points we make…and then say we are “out of touch with your points.” Out of touch as in, we disagree with the points you are making?
Arman, I would like to prove a point to you since you like to play semantics. First off, limited and scarce are synonyms of each other. I have proof using the website you use to find your definitions.
“http://thesaurus.reference.com/browse/scarce”
From the website:
| Main Entry: | scarce |
|---|---|
| Part of Speech: | adjective |
| Definition: | insufficient |
| Synonyms: | deficient, failing, few, infrequent, limited, occasional, rare, scant, scanty, seldom, semioccasional, short, shortened, shy, sparse, sporadic, truncated, uncommon, unusual, wanting |
So if you believe there is no scarcity with goods, then goods are unlimited.
Economists do garner their observations from reality. There are some instances where that is false(like game theory…since you can not place a number on value), but economic laws do come from reality. The laws of supply and demand certainly do. You have yet to prove these false. You just simply say “they are wrong because they come from economists” without giving any rational reason besides “OMG, economists suck”
http://thesaurus.reference.com/browse/scarce
I want you to look at this Arman. It seems limited and scarce are synonymous. They share the same meaning.
Arman, I appreciate the discourse, but I think it’s time for me to move on. Xevec, I suggest you do the same. Unless I’m just really compelled to respond or get some sudden flash of insight, I shall move on.
I wish Arman and everyone else, the best. [:)]
When the lobbyist says, “The economy works on limited abundance, and so government should help this company combat the limited abundance,” what is understood is far different than when the lobbyist says “The economy works on scarcity, and so government should help this company combat scarcity.” I thoroughly object to the demands made here that these sentences should mean exactly the same thing.
Can you please tell us Arman when any of us have ever supported government usage of combating limited abundance? Because as of now, you are supporting it through government providing “excess food.”
The use of the word “scarcity” has an emotional impact on the public. Supporting the use of the word gives licence to the politicians for monkeying in the market. Trying to combat scarcity is a laudable endeavor. Trying to use up excess is not. Your demands that these are the same things is preposterous.
The government does not provide anything at all except at times protection. As of now, government tends mostly to try and protect its own power structure. Should not be mandated at all. Governments often work to protect this company or that company from ruin. Should not be allowed at all. Protection of food excess should be a government priority, but they are thoroughly distracted into protecting this industry or that for absolutely no reason whatsoever..
So, I want my 1000 cans of corn from you, and I have $1 ready for you. Heck, I have $100,000 cash ready for you, give me your address, so I can pick up 100,000,000 cans of corn from you. The guy with the dollar might well walk away from the deal? Isn’t that the samething as saying the guy with the corn refuse to sell to the guy with the dollar at a price point that the latter wants? You are not saying corn is free and the guy with the dollar refuse to take delivery, are you? If you are, I want free corn from you, a thousand tons of it for free, and I can arrange shipping.
What’s the deal with your “power” trip? In a free market, “power” is nothing more than likelihood of finding someone willing to give you what you want for what they want and you have. 1000 cans of corn is a far greater inducement than $1.
And that’s from someone who attempts to redefine what “scarce” and “scarcity” means in econmic discussion. IMHO, your action so far has only succeeded in helping us redefined what “mindless stubborn stupidity” is.