Asklemmy

I think we're seeing large scale price gouging.

https://www.npr.org/2023/03/03/1160849446/why-price-gouging-can-seem-obvious-to-consumers-but-hard-for-economists-to-ident

I find it funny that the four major categories of spending you chose are: housing, computer parts, food, and tws earbuds.

Prices don't make sense because you, as a regular person, don't see the overwhelming majority of what contributes to them.

For instance, I figure you aren't particularly familiar with the output quantity of various semiconductor factories around the world, the overall percentage that are good enough for high end computers, and how many different companies around the world need them for their products, and in what quantity. Or even on the consumer end, how different use cases effect demand, along with how the various brands stack up against each other in their current offerings.

Put the cost of things into terms of hours you would need to work to cover its cost. On an individual basis, you know very well how to gauge an hour of your working time, and inflationary effects will become apparent when there is something you used to buy routinely and suddenly find you have to work two or three hours to cover its cost.

Product pricing actually has very little to do with what the actual product costs to make, other than to determine whether it is financially viable to produce.

Rather, the aim of a seller is to maximize their profit by choosing the most efficient selling price for a specific demand. For a house, demand has greatly outstripped supply, and a buyer requires a place to live, so prices are high. Similarly, during the pandemic, the utility of computer parts was high and demand was high since many had to work from home, so prices went high.

It certainly gets more complicated than my (ECON 101 level) explanation here, but companies have just been taking advantage of a high demand for things and for people's needs (e.g. housing and food) there is little to no pressure to reduce costs as demand is poorly correlated with price (inelastic).

If you're looking for a rule of thumb to decide if something is worth the price, I have a basic method that helps me:

Don't think about the thing itself, think about what it provides to you. Say you are thinking about buying a GPU to play games on your computer. The one that seems like the best fit costs $400.

What will that GPU provide you? You will get to play the games you want for about 5 years on average before the card starts to become too old to give you solid performance anymore. Or maybe you're not too picky on framerates and settings, so it will last you 7-10 years before your next upgrade.

Consider how many hours of enjoyment you will get by playing games for the next 5, 7, 10 years. 5 hours of gaming a week, 52 weeks a year, 5 years gives you 1,300 hours of enjoyment. Now divide the original cost by that number. In our example, that's roughly $0.30 per hour of enjoyment.

Does that feel like a good price for fun to you? If you could go to a magic vending machine, pay 30 cents, and feel enjoyment for an hour, would you?

That's how I think about purchases, and it helps me quantify the value better and make purchases that are likely to be a good value to me. It also encourages me to use things a lot for a long time to get an even better amount of value out of them, which in turn is more environmentally friendly and helps me avoid the traps of rampant consumerism. Win win win.

Hope that helps!

No doubt there is no value to buying a home in a lot of areas rn.

I rent a 2 br townhouse for 1800/mo. I have a detached garage. I have a basement with washer and dryer. I have about about 1200 sqft plus the basement which is unfinished. Utilities combined is 200/mo. Heat is included.

A similar unit would be about $300k. I'd get probably 8% interest with a 750 credit score. I'd have basically the same mortgage as I have for rent. Plus I'd be responsible for stuff I'm not right now, like heat, water, sewer, trash, recycling, lawn care, and literally any maintenance.

It's a way, way better deal to be renting right now I many areas.

well if you want a basic idea of how prices work, then study some economics, as that's a big part of the fundamentals economists learn. Essentially a bunch of funny curve shapes that try to guess how much people will want to pay for something. Those curves change shape based on interest rates, how necessary an item is, how easy or cheap it is to make a lot instead of a little, and so on and so forth. We can use them to predict stuff but so much of economics is ultimately unpredictable because it relies on human factors.

In terms of how you behave, there's a few elements to it. With events, the window of opportunity is limited, while you can put off a new device purchase, you can't postpone the concert as an attendee, so you can't wait for a sale and FOMO is strong. Many things where you tend to impulse buy are presented as an offer you "can't put off til later", so you have to step back to see if you really need it now. Best way to try to even it out is to budget before you start checking current prices and see how they compare.

It's a combination of people taking advantage of things, peoples' hands being forced, and trying to make sure only certain people get the stuff.

I remember there was enormous backlash because people keep raising the prices on medical supplies such as insulin and inhalers. One day I discovered there was actually one place a friend of mine could get medical supplies for a reasonable price, but alas, people who didn't even have the medical condition would buy it all in bulk... all before selling it at a separate location for the normal insane price.

It's clear that you cannot totally follow both prosperity and freedom.

1. Some people know people will buy what they have to offer, so they ask for more in return. I will say what I object to is people killing the competition, for example the same YouTube we currently know was responsible for the Tiktok gossip.

2. If money is a priority, you take your mind off a lot of subtleties. Going back to the topic of medicine, the mafia tried selling insulin cheap in some places, at least before they ran out and started selling unassuming random assortments in it. This trend, which you can actually blame Reddit for, didn't last.

3. The biggest thing to remember is this thing we call currency is regulated and is dependent on uniqueness. It must be balanced with things like population and conflict. And note a part of this implies how non-automatic its existence is. If I began a civilization somewhere, the closest I'd do is go commodity, possibly with a services system, which I can already hear people bringing up my currently-faulty subreddit in response to (needs a few systemic fixes, I know).

No matter what country anyone mentions here, there's a 100% chance it has a system that doesn't work. If it's not equal opportunity, it's an unequal opportunity, and if it's not flexible/independent, what you describe is inevitable, and things snap in two or get dragged down.

Somewhat related, you can still get SSDs pretty cheap due to the oversupply of NAND flash (supply greater than demand = prices go down). That'll clear up in the next few months though, with manufacturers like Samsung reducing production and increasing prices of NAND flash.

Well, a lot of labor goes in to making things like electronics. The supply chain and regulatory compliance are very complicated, and the margins are very thin (highest I've seen is 15%, maybe exceeded by some exceptions like Apple but usually it is less).

So small changes to the hard costs, distribution, tax status, labor costs, shipping costs, duties, or regulatory burdens would affect the end price. For electronics at least, it's a pretty complex equation.

Anyway, I've got good news! You've got it relatively easy. Here in Vietnam, land prices are much higher. Want a reasonably modern house 90 minute drive from HCMC? If you are university educated, and so is your partner, and you have no kids, and no luxury expenses... I worked out you could afford it, if you save for about 40 years and prices don't go up. No yard or anything -- just a 100 square meter plot fileld to the brim with a concrete house.

Food is cheap here, at least! You would be shocked at land prices in Asia though.