Joey thinks about prices

     The other day I was shopping somewhere... I can't recall anymore, I just remember looking at prices with my friends and one of them said, "These prices are so unfair, this is wrong."

I'd never pay so much for shoes.  Why, these aren't worth the gold they're made of!

     This attitude that its somehow immoral to charge a high price for things really bothers me.  For almost every product or service there is going to be people who say that they charge too much and its immoral to line their pockets while gouging people for their hard earned cash.  There's four problems with this attitude.  I'll tackle them in order of relevance (least to most).

     First: people tend to confuse two things when they're talking about unfair prices.  The first is the cost of production.  The second is the actual value of the item.  People believe they shouldn't have to pay anymore for an item than the retailer did.  And at face value, that seems fair and right.  But lets explore deeper.  First of all, the only correlation between cost to the buyer and cost to the seller is this: the cost to the buyer can never be cheaper than cost to the seller (this isn't actually always true, with fire sales and stuff, but for anyone trying to make sustainable money, this is a fact of life).

     People don't want to pay more than the seller paid, and that's an understandable reaction.  However, there are costs totally independent of the cost of buying the item.  For instance, a retailer has to pay their staff, their rent and utilities, their property and business taxes (Its ironic that most people who are gung-ho about high prices being immoral are for bigger government, when our huge government causes the prices of everything to go up immensely.  This is a tangent, but I once explained to my friend that the loaf of bread he purchased had already been taxed more than ten times by the time he paid the sales tax on it.  Just imagine if Uncle Sam hadn't taken its eight percent cut ten times).  Basically their are hidden costs to the sellers, so its unfair to just scream too high without knowing anything about their business.
     There are items for sale that literally cost the seller nothing, but go for hundreds of thousands of dollars (I'm thinking stuff like signed baseballs, historical documents passed down through families, that sort of thing), and we don't declare that immoral.  After all, who's buying it?  Another rich guy, so we think its fine.  Basically, an items value is determined by what we, the consumer will pay for it.  In the case with my friend saying the item was too expensive, she still bought it.  It was clearly worth that much.  She just wanted it for cheaper.

        Second: I think its human nature to always want stuff cheaper, regardless of whether its a fair price or not.  I work at a thrift store, and, I kid you not, I have people routinely try to haggle the price of things that are going for literally less than a tenth of their new value.  These items are generally in good shape, with small amounts of ware, but people want them for cheaper.  People try to haggle ten dollars down to five dollars.  Five to four and will walk out without a deal if I don't capitulate.  "Fifty cents?" they say, "How about twenty-five?"  I hate these penny pinches.  I feel like screaming at them, "Is this argument we're having worth twenty-five cents!  AAAUUUUGGGGHHH!"  But, that aside, people always want to pay less.
     I say its human nature, but I'm not so sure anymore.  I think a lot of these people are part of the entitlement crowd.  They think they deserve to have everything for free or cheap, because they're poor.  That's some kind of messed-up, ass-backwards logic.  Where I come from, poor people have less, and that's the primary motivation to get off your butt and make some money.  I'm straying off topic, but that's one of the things I hate most about useless entitlement programs.  They don't address anyone's problems, they don't make them healthier, or provide anyone who's starving with food (Okay, I will concede in a very, very tiny minority this isn't the case), they just make them more comfortable in their poverty.  Which makes them more, not less, likely to stay poor their whole lives.
     Anyways, the point I was trying to make here was this: no matter what anyone charges, someone is going to complain its too much.  So that alone should invalidate most of those complainers.

 Third: at what point did it become immoral to make money?  Don't we all go to work to make money?  "Yes," you say, "but we only make enough money to live on.  They gouge others so they can live like kings!"
     "Alright," I say, "you're telling me you donate all your extra cash, and turn down raises when they're offered?  To do otherwise would be immoral, right?"
     Flustered, you say, "Well, its all a matter of degrees!  I make enough to keep myself fed and clothed, and a bit more for a tiny amount of luxury.  Its nothing compared to what those filthy-rich scumbags rake in."
     "A matter of degrees indeed!" I reply.  "There are people in west Africa who literally starve to death every day, to them, you live like a king.  Your argument holds no water.  Just like your cup.  You're soaking wet!"
     *You're soaking wet*  "Damn!  You've foiled me again, Joey!  Someday I'll defeat you, despite your wild handsomeness and unbridled, rugged charm!"
   
     Fourth: so in the beginning of this article my friend said the prices were too high, and it was wrong.  My reply?  "You don't think they have the right to charge what they want for their products?"  Guess what?  That shut her up.  Beyond anything else, to say that an individual or a company doesn't have the right to charge whatever they think their products are worth is not only misguided, its evil.  Its a creeping, insidious evil, because, like many of the devils best work, it seems good at face value.  It seems like you're standing up for the little guy.  In truth you're appealing to the government (or even worse, the ignorant masses) to assault someones right to act as they choose.

     Now, I know I'm going to get a lot of people who bring up two things.  First will be evil monopolies who gouge people for life's necessities and beggar those who can't keep up.  I'm not talking about those.  That's a straw-man argument and everyone should know it.  I'm against monopolies, but guess what? There are no monopolies in America-except the government, and it kind of shows with high prices and crap service.
     People will also bring up the pharmaceutical companies who charge an arm and a leg for prescription medicine.  While it costs them just pennies to produce the pills.  I actually just read an email forwarded by my dad about how over-inflated their prices are and how generic brands aren't any better.  I haven't anything to say about the generic brands except "see above article."  I do, however, have a very clear perspective on expensive prescription drugs.
     First off.  There is a myth that pharmaceutical companies gouge the patients because it makes them rich.  Ha ha.  Your ignorance at once delights and enrages me!  It turns out, Every Jackass Who Blithely Passed Along This Misinformation Without Doing Any Research Or Due Diligence, that pharmaceutical companies barely, and I mean by tiny margins, make their money back from the drugs they sell.  "Oh, but Joey, it costs them pennies to produce a bottle of drugs that they charge three hundred dollars for."
     That's true.  However, the real cost to the pharmaceutical companies is developing those drugs.  Forbes has a great article on this, explaining how most pharmaceutical companies are actually losing money each year. The average cost to develop a new drug is four billion dollars.  They have between six months and seven years of exclusivity to sell their drugs before the generic guys can make their own.  Then they make only a fraction of what they were making.
     They aren't making bank in this business.  They're barely surviving.  And the next time you think about criticizing them for gouging cancer patients who've already drained their bank accounts to pay for operations, why don't you ask yourself this: "when's the last time I developed a drug to help cancer patients?"