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The "right price"

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John James Posted: Fri, Apr 13 2012 2:52 PM

I gotta hat tip Gero for linking this, but I felt this could use it's own thread.

 

US sues to lower prices of e-book best-sellers

[...] The Justice Department and 15 states sued Apple Inc. and major book publishers Wednesday, alleging a conspiracy that raised the price of electronic books. They said the scheme cost consumers more than $100 million in the past two years by adding $2 or $3, sometimes as much as $5, to the price of each e-book. If there was price fixing, even the e-book version of the hot-selling Walter Isaacson biography of Steve Jobs, the late genius behind Apple computers, may have cost too much.

 

Multiple times in this article they talk about how "the scheme added $2 or $3 dollars to the price of a book" and the books "cost too much". 

I'm sorry, the Justice Department knows the "right" price for an e-book?  Just pray tell what is the "right" price?  This is just baffling that people go along with this.  It's a great illustration of busybodies who need to create justification for their bullshit jobs, and an ignorant public—(mis)educated in the busybody's government schools—who buy into it.

 

For some nice economics discussions on this, see:

What's Cost Got to Do with It?

What's Cost Got to Do with It? 2

(and this thread)

 

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And the people in the comments sections of the articles on this topic are worse.

 

To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process.
Rabbi Lapin: "Let's make bricks!"
Stephan Kinsella: "Say you and I both want to make a German chocolate cake."

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Clayton replied on Fri, Apr 13 2012 3:54 PM

I almost started a thread on this and then I realized that most Americans will think this is a good thing. Then I lost all willpower and went on to something else.

Clayton -

http://voluntaryistreader.wordpress.com
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Aren't you glad there exists a place where not only people would actually post about how ridiculous it is...but it has over a thousand active members and receives 40,000 views a day?

smiley

 

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Wheylous replied on Fri, Apr 13 2012 8:20 PM

The right price? Well, the marginal cost to produce is near 0, so the demand curve intersects the cost all the way to the right, so we should have very large quantities for free!

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Wheylous:
Well, the marginal cost to produce is near 0...

Evidently you didn't read the accompanying articles.

 

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Wheylous replied on Fri, Apr 13 2012 8:57 PM

No, I didn't. I just wanted to make an Econ 101 welfare analysis dead weight loss joke.

Also, I am baffled how one can take a look at the progression of events and sue these companies:

At first, there were only physical books. Some cost a moderate amount, some much more, due to all the processing needed to make them.

Then came eBooks, which are quite a bit cheaper.

But suddenly, let's sue the companies with the cheaper books because they're not cheap enough!

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I too saw this on cnn.com looking for the current spot price on gold. I thought about posting it, then I thought "John James probably beat me to it already."

Hey John, are those 40K unique? and, in your opinion, what percentage of those are like us (part of the choir) and what percentage are people who need some convincing. I love this forum, and everyday I am happier I joined, but i wonder...Are we just preaching to the choir most of the time or do you think our posts specifically make that big of a difference. Judging from the comments on that article, it makes me worry. But then I see Ron Paul and his growing listeners and think "maybe this whole mess has a chance of turning around one day (for a time at least).

 

I donno, I'm just blathering, but I would like to get you guy's opinion on this. Is there a way to track regularly visitor views vs new timers?

"If men are not angels, then who shall run the state?" 

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Meistro replied on Sat, Apr 14 2012 1:52 AM

These e-books are extremely over priced.

Do you see why?

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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Meistro replied on Sat, Apr 14 2012 9:13 AM

I think the poster who joked about how little the books cost to produce was actually correct.  These e-books benefit from a state granted monopoly - copywrite and thus are artificially raised in price.  Anyone who has a copy should be able to make more copies and sell those at whatever price they wish.

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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Wheylous replied on Sat, Apr 14 2012 9:20 AM

Are we just preaching to the choir most of the time or do you think our posts specifically make that big of a difference

Probably a choir for a large majority of the time, but I wouldn't call it preaching.

Rather, think of it like a martial arts class. Yes, the master teaches his students and not the public at large, but once the students master the techniques, they will be able to apply them to the real world.

Okay, that sounded better in my head.

What I mean is that I use this forum not to convince you guys of stuff but to improve my knowledge of economics, history, and rhetoric.

That way when I need to I can use these facts in the world.

the poster who joked about how little the books cost to produce

I have a name crying

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Meistro:
These e-books are extremely over priced.  Do you see why?

No, please tell us!

 

I think the poster who joked about how little the books cost to produce was actually correct.  These e-books benefit from a state granted monopoly - copywrite and thus are artificially raised in price.  Anyone who has a copy should be able to make more copies and sell those at whatever price they wish.

That doesn't explain your position.  Please tell us, what is the "right price", and how you know it.

 

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The Texas Trigger:
Hey John, are those 40K unique?

I'm not completely sure.  I just remember seeing that number somewhere.  I'd have to look for it.  Here's an old thread with some data and links on overall site traffic...which is really encouraging.

 

what percentage of those are like us (part of the choir) and what percentage are people who need some convincing.  I love this forum, and everyday I am happier I joined, but i wonder...Are we just preaching to the choir most of the time or do you think our posts specifically make that big of a difference.

That's virtually impossible to tell...but just realize you were lurking for 3 or 4 years before making an account and posting.  And if you run a search for something like "welcome mises forum" you'll see plenty of threads from newbies.  They come in all the time.  (And we'd probably get even more if there wasn't a "welcome" screen encouraging new visiters to join the "new community" instead...but of course I doubt the powers that be care much.)

It would be nice if all those visits were people like us, but I think there's no way that's the case.  So instead we get the next best thing...newbies who are looking for some insights and answers.  (So of course, either way, traffic is good).

And even if you're "part of the choir", I think there's always something to learn and skills to sharpen.  I think the conversation can help with that. 

"Human understanding is marvellously enlightened by daily conversation with men, for we are, otherwise, compressed and heaped up in ourselves, and have our sight limited to the length of our own noses." -Montaigne

And I know plenty of people like to use the "circle jerk" accusation and claim that everyone gathers in a place like this just to reaffirm their "bias" and tell each other they're right, and avoid any criticism or opposing views.  I think anyone who spends any time here would see that's certainly not the case in this forum.  Hard questions are asked all the time...sometimes so much that people get fed up with newcomers asking the same ones...indicating the people aren't interested in dealing with the same stuff they've already dealt with and are comfortable with, but in fact are more interested in new and challenging things.  And disagreements happen all the time.  Things are debated plenty.

And I think people definitely learn.  I've had multiple people come out of nowhere and say they enjoyed reading posts of mine and have learned things.  People who virtually never participate in the forums...meaning we'd never know they were there.  But they are.  People do read this stuff.

It's a lot like the Mises Dailys I think.  If you do a google search for almost any economic topic, odds are a Mises Daily on the subject comes up in the results.  That's largely how I found the Institute.  There's always some insight on the very question you're looking for.

 

Judging from the comments on that article, it makes me worry. But then I see Ron Paul and his growing listeners and think "maybe this whole mess has a chance of turning around one day (for a time at least).

Oh yeah, no question there are millions left to teach.  It can get a little distorting if you spend enough time in places like this and around likeminded people...you can start to lose a realistic sense of where the country is as a whole.  But.  The movement does exist.  And it may very well have reached a tipping point already.  Paul's numbers are doubled and tripled from 4 years ago.  Something is happening.

 

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Wheylous replied on Sat, Apr 14 2012 12:42 PM

a tipping point

People need to stop citing that study by Rensselaer. I find it perplexing how easily people have fallen into its trap. It's some bs algorithmic study of supposed idea propagation which uses some made-up model about how people communicate information. They're essentially trying to mimic the job of a socialist central planner, only in the field of sociology.

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Wheylous:
People need to stop citing that study by Rensselaer. I find it perplexing how easily people have fallen into its trap. It's some bs algorithmic study of supposed idea propagation which uses some made-up model about how people communicate information. They're essentially trying to mimic the job of a socialist central planner, only in the field of sociology.

If you say so.

 

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Meistro replied on Sat, Apr 14 2012 3:21 PM
"That doesn't explain your position.  Please tell us, what is the "right price", and how you know it."
 
The current price is unjust because it results not from market activity but from a position of monopoly priviledge.  The right price is what would occur absent the monopoly. 

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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Meistro:
The current price is unjust because it results not from market activity but from a position of monopoly priviledge.  The right price is what would occur absent the monopoly.

...So basically what you're saying is everything that falls into an "IP" category is "overpriced", and you know this because you assume the price of every single item in that category would be different than what it currently is?

 

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Meistro replied on Sat, Apr 14 2012 3:42 PM

In the market place competition drives prices down.

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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Meistro replied on Sat, Apr 14 2012 5:23 PM

Artificial state monopolies drive up the cost of a good or product.  Since the cost of making another one of these e-books is zero, the market price would be zero or close to zero.  AFAIK 0 is > what these books are selling for currently.

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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I appreciate the dance, but could you answer the question please?

 

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I started reading these forums after Ron Paul suggested mises.org in one of his books(that was a little over a year ago). This website played a large part in my transition from a minarchist to an an-cap. So while I can't say for sure how many of the 40,000 visitors are a part of the "choir", I'd guess that there's a good number of people like me reading these forums on a frequent basis.
 

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Meistro replied on Sat, Apr 14 2012 5:53 PM

Yes I will answer your question.  My answer is no.

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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bloomj31 replied on Sat, Apr 14 2012 6:34 PM

Has anyone been able to find the actual court documents?

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No, I didn't. I just wanted to make an Econ 101 welfare analysis dead weight loss joke.

Also, I am baffled how one can take a look at the progression of events and sue these companies:

At first, there were only physical books. Some cost a moderate amount, some much more, due to all the processing needed to make them.

Then came eBooks, which are quite a bit cheaper.

But suddenly, let's sue the companies with the cheaper books because they're not cheap enough!

What it does show you is that for once the government's glorious quest for just pricing isn't motivated by the victim-company's competitors - if that were the case, they'd be saying the ebooks are too cheap!

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...So basically what you're saying is everything that falls into an "IP" category is "overpriced", and you know this because you assume the price of every single item in that category would be different than what it currently is?

Would the price of any given ebook be higher or lower if there were no IP? Clearly it would be lower, and since the free market-price is the correct price, one can say that ebooks are overpriced.

Do you favor IP? Is that your point?

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Levon replied on Sat, Apr 14 2012 8:54 PM

Same here, but it was listening to the Lew Rockwell podcasts that introduced me to Mises and the community last year. It just doesn't make sense to me that the state has any validity to intervene on the price of eBooks, but I would imagine that if the prices were too high, their sales would suffer and profits would fall, so they probably know how to read the market better than the Department of (in)Justice, adjusting prices accordingly. I still mostly read the forums, only recently starting to get involved in the conversation. I look forward to having those with more insight and experience correct me so I don't get too lost in the information. Look at the Mises Academy as well for lots of good resources.

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John James:
Meistro:
The current price is unjust because it results not from market activity but from a position of monopoly priviledge.  The right price is what would occur absent the monopoly.
...So basically what you're saying is everything that falls into an "IP" category is "overpriced", and you know this because you assume the price of every single item in that category would be different than what it currently is?
Meistro:
My answer is no.

So can you please explain how what I said isn't the case?  I don't quite see the difference between what I said and what you said.

 

Minarchist:

...So basically what you're saying is everything that falls into an "IP" category is "overpriced", and you know this because you assume the price of every single item in that category would be different than what it currently is?

Would the price of any given ebook be higher or lower if there were no IP? Clearly it would be lower

Clearly?

 

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Minarchist replied on Sat, Apr 14 2012 10:53 PM

Clearly?

Yes, clearly. If Company X holds the exclusive right to publish ABC book, the price of ABC book will tend to be higher than if there were free competition in the production of ABC book. Would you be any less skeptical if I said "the price of a widget given a monopoly widget-producer will tend to be higher than if there were free competition in the production of widgets." Economics 101 John James, you know this, so what is your objection? I take it you're trying to make some point about IP in particular? Well, make it.

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Minarchist:
Yes, clearly. If Company X holds the exclusive right to publish ABC book, the price of ABC book will tend to be higher than if there were free competition in the production of ABC book.

"tend to be"...meaning it might not be?

 

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TANSTAAFL replied on Sun, Apr 15 2012 8:50 AM

Reminds of the current lefty meme about speculators causing the price of a barrel of oil to me $X higher than it otherwise would be.

 

I want to see the mathematical proof when I hear people talking such nonsense as a price is too high or some perentage of the price is caused by Y.

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Meistro replied on Sun, Apr 15 2012 9:08 AM

Speculators do often increase prices.

 

... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock

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John James replied on Sun, Apr 15 2012 10:53 AM

Meistro:
Speculators do often increase prices.

That's like saying "drunk drivers do often wreck cars".  (And to make it even more accurate, it would be like if that fact was used to ban drunk driving...and probably drinking in the first place...and maybe even driving at all.  Or at least heavily regulating all of those things.)

That doesn't explain why all cars break down eventually, nor does it account for all wrecks.

See here.

 

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Meistro replied on Sun, Apr 15 2012 11:00 AM

Drunk driving should be banned.  AFAIK the goal should be to minimize car crashes, not maximize them.

 

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John James replied on Sun, Apr 15 2012 11:15 AM

Meistro:
Drunk driving should be banned.  AFAIK the goal should be to minimize car crashes, not maximize them.

Sounds like the argument IP advocates make in favor of the monopolies you seem to dislike..."AFAIK the goal should be to maximize profit and innovation...not minimize them."

 

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"tend to be"...meaning it might not be?

That's correct. If there were no IP law and every publisher could publish ABC book, the price of the book will tend to be (will likely be) lower than if there is a single monopoly publisher. Is it possible that the price would remain the same even without IP? Sure, it's possible that the other publishers choose not to take advantage of their ability to publish the book, and it's possible that they manage to form a voluntary cartel to keep prices up. It's also possible that price controls won't cause shortages, or that printing money won't cause prices to rise, or that a business will choose to go bankrupt rather than pass on rising input costs to consumers, or that a socialist government will happen to guess the correct resource allocation and overcome the calculation problem. Those are all possibilities.

If your point is that there is no absolute certainty in economic predictions of this kind, then bravo, thanks for pointing out the obvious.

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Minarchist:
That's correct.

I thought you just said "Clearly it would be lower". 

You might also want to explain the existence of ebooks in the Mises Store, sold at a price, where they are simultaneously offered on the exact same website for free download.

 

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I thought you just said "Clearly it would be lower". 

I did. And?

You might also want to explain the existence of ebooks in the Mises Store, sold at a price, where they are simultaneously offered on the exact same website for free download.

Why?

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Minarchist:
I did. And?

"Clearly it would be lower" ⇒⇐ "will tend to be (will likely be)"

 

Why?

Because it's existence doesn't seem to jive with your claims (but then again, we see you've made contradictory claims already anyway, so I suppose there's no use).

 

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