Liberal problem solving
The story so far: some state politico goober decided to sue a gas station for price-gouging. Seems said station owner had the audacity to put up a big sign advertising his price and people agreed to pay it. You know, capitalism. Some smart ass blogger decided to, well, be a smart ass. Prompting another smart ass blogger to opine on the issue thusly in comments:
Funny. You say “reach an agreement on a price” as though there’s some sort of negotiation that went on, beyond “take it or leave it.”
Now, I dunno where Tom shops, but most retail establishments operate under that principle. I mean, they usually have signs that say something like Crocs $39.99 or my Sam Adams that I bought yesterday had a sticker on it that read $8.49 or something similar. I decided to test negotiating on the way home yesterday. The Mrs. calls and asks me to pickup a bale of straw so we can seed a portion of our lawn. I walked into Lowe’s and said I’d like one bale of straw. The cashier uses her ray gun to scan a bar code. She says: that’ll be $4.49.
I say: I’ll give you $3.
Her: Sir, it’s $4.49.
Me: You drive a hard bargain. $3.50.
Her: Sir, do you want the straw or not?
Me: Yes. But some hippie told me to oppose your take it or leave it approach to retail sales. So, I’m here to tell you I’m not gonna take it anymore. And, you know, speak truth to power and give peace a chance and all that. $4?
Her: [speaking into the microphone] I need management assistance to lawn and garden.
Me: Does he have the authority to negotiate price?
Her: [rolls eyes]
The line is getting backed up at this point.
Manager: May I help you, sir.
Me: Yes, I’m trying to negotiate a price for this bale of straw. $4.49 is too much. And I am tired of bourgeoisie having the gall to expend its capital and resources to dare bring me desired goods and services at a price that’s, well frankly, a few cents too high in my opinion. I mean, I don’t really know anything about straw production and its associated cost. But, dude, it’s dried grass. And you have some nerve trying to make a profit and do things in the best economic interest of your shareholders while providing your employees wages and benefits and stuff. It’s evil!
Manager: Sir, that’s the price.
Me: Take it or leave it, eh? Well, I guess I’ll take it or my wife will be mad and probably send me back under orders to pay the full price. I knew that woman was in with the bourgeoisie. Damn you, capitalism, you got to her too! Do you take Visa?
I paid and left.
OK, some of that might be made up. But I don’t know of many establishments other than car lots and maybe some mom and pop appliance stores where you negotiate a price any more. So, take that head of lettuce for $0.99 or leave it.
If you think predatory pricing and/or price gouging are bad, then you’re a dirty communist. Just thought you might like to know.
When you stop businesses from taking advantage of people and/or ripping them off, you’re destroying the American Way, comrade!
But it gets more amusing. Seems everyone plugged the addresses into Google Maps and, funny story, right next door was cheaper gas. And the original alleged price gouging was a mistake over diesel prices. So, obviously, we need to bring the power of the state government down on this evil price gougers! I mean, it’s not like customers could have gone elsewhere. Because that would be hard.
Man, that free market can be hard work. Clearly, we need government involvement when you’re too stupid to go across the street to save a buck.
Update: Related: I’m going to go out on a limb here and say that part of the problem is that at some time in our past, manufacturing jobs became considered “middle class”. It’s one thing for a job to provide a “living wage”, the term so beloved by the collectivists on the other side of the aisle. It’s another thing to think that putting bolts in holes all day should pay enough for a bass boat, two cars, a used Harley, and a time-share in Destin.
March 21st, 2008 at 10:04 am
Seems everyone plugged the addresses into Google Maps and, funny story, right next door was cheaper gas. And the original alleged price gouging was a mistake over diesel prices.
At the end of the day, that makes it stupid, not Communist. Well, that’s if one accepts any meaningful definition of “Communist,” as opposed to the libertarian definition of “anyone who doesn’t shit their pants in rage at every dumb thing government does, the way I do.” 🙂
March 21st, 2008 at 10:04 am
P.S. Now I’m a hippie? 😉
March 21st, 2008 at 10:08 am
Oh, and in case anyone’s too stupid to understand, my bringing up negotiation wasn’t because I believe that’s how it works or that’s how it ought to work, but to ridicule (in much the same manner you’ve just tried to ridicule me) your use of the term “reach an agreement.” In other words, you’re right, that’s exactly how most retail operation works, and nobody with even a basic understanding of the English language and how modern retail sales work would fairly describe that as “reaching an agreement.”
March 21st, 2008 at 10:24 am
Tongue was firmly in cheek for most of that, dude. I’d never call someone I like a hippie and mean it.
And it is an agreement. I announce via signage that my product is for sale for $x, when you bring it to the counter and offer to pay, you have agreed to a price.
March 21st, 2008 at 11:13 am
…whereas I would and do quite frequently. I’m a big meanie that way. 😀
March 21st, 2008 at 11:40 am
Thanks, I needed a good laugh this morning.
March 21st, 2008 at 12:33 pm
And it is an agreement.
Only by a strained definition of “agreement,” never mind the level of involvement in “reaching an agreement.” But whatever.
In any case, knowing what I know about people in the aggregate, I’m guessing they went to the gas station because that’s the gas station they usually or always go to, and most of them probably didn’t even pay much attention to what the price was. Doing something without really thinking about it is not the same thing as “agreeing,” at least not as I’ve ever heard the term used. Stupid? Maybe. Agreement? Not really.
March 21st, 2008 at 12:36 pm
P.S. Now I’m a hippie?
You do have your moments…
March 21st, 2008 at 12:43 pm
If by strained, you mean legal.
March 21st, 2008 at 12:59 pm
“Doing something without really thinking about it is not the same thing as “agreeing,” at least not as I’ve ever heard the term used. Stupid? Maybe. Agreement? Not really.”
An agreement? Yes. Stupid? Yes. It’s called a stupid agreement. Agreements can be both stupid and valid. Had they not agreed (stupidly, without considering other relevant information than what they usually buy), they would not have gas in their vehicle. While some may like first degree price discriminiation (price as negotiated by each individual customer), for most firms the implementation of such a system is so vastly inefficient you will not often see it. Take it or leave it (price non-discrimination, or some cases, third degree price discrimination) is the most efficient you’ll probably get, so take it or leave it.
March 21st, 2008 at 1:24 pm
“Doing something without really thinking about it is not the same thing as “agreeing,” at least not as I’ve ever heard the term used. Stupid? Maybe. Agreement? Not really.”
If that’s true, then can anything ever be said to be the product of an agreement? It seems that any agreement could be repudiated at a later time if it became too burdensome for one party merely by saying he or she did not REALLY think about it enough before appearing to agree.
March 21st, 2008 at 1:30 pm
TGirsch, count me among those too stupid to understand how posting a price in huge letters on the street advertising what you are going to charge for a good, and not putting a gun to anyone’s head in order to convince them to buy from you rather than taking their business elsewhere, is anything other than an “agreement” between the guy who said “take it or leave it” and the dude who chose to take it rather than leave it.
Oh, I get it. So if I sign a contract, negotiated or otherwise, without really paying attention to what I’m signing, I never really “agreed” to it and therefore have a right to re-negotiate the terms later if they turn out not to be in my favor. If those are the rules, doing something without really thinking about it doesn’t seem stupid at all; in fact, it sounds like a shrewd move.
March 21st, 2008 at 1:36 pm
“In any case, knowing what I know about people in the aggregate, I’m guessing they went to the gas station because that’s the gas station they usually or always go to, and most of them probably didn’t even pay much attention to what the price was. Doing something without really thinking about it is not the same thing as “agreeing,” at least not as I’ve ever heard the term used. Stupid? Maybe. Agreement? Not really.”
Ok, lets assume I have a car for sale and list it at $20K over value and someone decides to buy it “without really thinking” Once they’ve paid me and I’ve given them the car it’s a done deal, so long as I wasn’t intentionally misleading about the condition of the car.
I don’t know what world you live in where people can pay a clearly advertized price for a product and then demand a refund because they “weren’t paying attention and didn’t notice the price.” If a product is clearly advertised and you’re willing to pay the advertised price that is an agreement in every sense of the word.
You have every right to take your business elsewhere, in which case the business owner makes no money and has to lower the price to attract customers. He, as the business owner also has every right to charge what he wants for HIS product. If stupid people are too dumb to notice the HUGE SIGN WITH PRICES ON IT, that’s there problem not his.
March 21st, 2008 at 2:41 pm
Xlrq,
Exactly. That’s what’s up with the whole current subprime thing, for example. At the risk of putting words in his mouth, I’ll bet that’s tgirsch’s opinion.
March 21st, 2008 at 3:22 pm
Hmm, it was the Quakers who first introduced a fixed-pricing model in order to be fair to all customers, and yet they love speaking truth to power…
(Yes, they invented the phrase “Speak truth to power”. It has something to do with God.)
And since they’re pacifists, they’ve obviously given peace a chance.
March 21st, 2008 at 3:26 pm
Well there is always that legalese phrase “Meeting of the minds” when we talk about contract law, but I’m not even pretending to be of the lawyers guild on the interwebz, so i don’t know. I would assume a signature is at least a strong indication that there was consent.
March 21st, 2008 at 3:26 pm
Tgirsch’s already getting to the point of accusing the three stations of price gouging and collusion, although apparently not real collusion or price gouging as defined by statute but some vague standard of collusion or price gouging.
I thought KTK was supposed to be the token crazy guy.
March 21st, 2008 at 5:30 pm
Unk,
You paid for an item that cost $4.49 with a credit card – I may be a Commie, but, that, sir, makes you an asshole – I hate people who do that… 🙂
Yeah, at the end of the day, these people made a dumb decision. But, I wouldn’t say that the customers were trying to enforce a Commie revolution because they asked for a refund anymore than I would say that the business capitulating makes them a participant and, de facto, supporter therein.
Now, I’m assuming your comments about this event relating to communism was just some flame-baiting jest; and, I guess it worked to a degree.
But, hey, what do I know, the LL crew would probably vote me as token crazier than KTK guy…
BTW, Tam, the subprime fiasco wasn’t the same thing.
March 21st, 2008 at 5:50 pm
It’s not communism for people to ask for a discount or present a sob story. It’s not communism (and would be remarkably good capitalism, given how many Citgo stations were driven out of business by boycotts) for companies to provide refunds when economical.
But we’re talking about an attorney general threatening people to get them to do so.
March 21st, 2008 at 5:57 pm
digglahhh, i said part of it was made up. i paid cash. which is odd because I don’t usually carry cash.
Yeah it is. their signatures were affixed to checks their asses couldn’t cash.
March 21st, 2008 at 6:26 pm
Look, I’m not going to get into the whole thing, but the idea of predatory lending and related behavior have an inherent exploitive intent, and that alone makes the two things different.
People were being advised, by people who operate (by nature of their profession) as authorities in financial matters to enter agreements against their own best interest. They were purposely given bad advice by interested parties, which created a collusive dynamic.
Further, the lenders entered the agreements voluntarily as well. Half of the scandal in these types of situations lies in the fact that there’s a disparity of risk involved. The government isn’t going to bail you out after you write check you can’t cash – but, they’ll bail out a lender who signs the same contract and is unable to collect.
March 21st, 2008 at 6:34 pm
I didn’t say the lenders weren’t dirty. just that parties to a contract are greater than one.
March 21st, 2008 at 6:50 pm
Why is it that everyone thinks the man trying to sell them a $500 TV is a scummy ripoff artist, and the man trying to sell them a $5000 used car is a scummy ripoff artist, but the person trying to sell them a $500,000 mortgage is a financial professional and their bestest buddy?
March 21st, 2008 at 8:40 pm
“Look, I’m not going to get into the whole thing, but the idea of predatory lending and related behavior have an inherent exploitive intent, and that alone makes the two things different.”
Oh yeah. “Predatory Lending.” That’s another term that drives me up a wall, like “Gouging”.
These are made up terms. Either you’re at the table to skin the other fellow, or you’re a sucker.
Sure the game is rigged. But don’t let that stop you. If you don’t play, you can’t win.
March 21st, 2008 at 9:04 pm
You know the term that they used before “Predatory Lending”? They used the term “Redlining“. And no, the words are not synonyms.
March 22nd, 2008 at 12:25 am
What’s amazing to me is how the very same people who are going all lawyer on me with the definition of what constitutes an “agreement” — never mind the fact that my objection was to the phrase “reaching an agreement,” not with the word “agreement” itself — are the ones operating from a not-even-within-a-country-mile definition of the term “Communism.” The vernacular is good enough for thee, but not for me, I guess. Suffice it to say that from where I sit, an implicit agreement is a far damn cry from “reaching an agreement,” and I stand by that assessment.
As to Xrlq’s example of someone signing a contract without reading it, it is only in the legal sense of the term that one can fairly say that the signer “agreed” to its terms.
As to the subprime thing, I don’t hold the people who took out the loans blameless, but I assign at least an equal part of the blame to the lenders, and probably a substantially larger share. They’re the ones operating from the position of power (“you need money, I have it”), and they knew that what they were selling was against the best interests of the person they were selling it to, but they sold it anyway. The hell of it is, at least in the case of the subprime mortgage thing, those most responsible knew what they were doing was unsustainable and sold the loans off to other companies/suckers. So even with all the foreclosures and whatnot, the worst offenders will have made out like fat rats, and won’t suffer in the slightest.
But again, as I mentioned in my original post, there’s absolutely nothing wrong with that, in small-government libertarian fantasy land. That’s just the American way. Rip off as many people as you can, and get it while the gettin’s good! And if the government tries to stop you from ripping people off, then they’re just dirty commies trying to infringe upon your fundamental and guaranteed freedom to rip off people dumb enough to fall for your bullshit.
(Of course, if we had anything like sane regulation of banking and lending, at a minimum, the lenders would have been required to approve borrowers based on whether or not they could afford to make the highest payment possible under the terms of the loan, not based on the payments during the teaser rate. But I digress…)
Meanwhile, after all this hubbub and digression, my original point — that no matter how stupid or wrong you might think the incidents SayUncle and Tam were complaining about are, they’re nowhere fucking close to “Communism” — still stands.
NOTE: By responding to this comment in any fashion, the responder agrees that I’m right on all points of detail.
There’s my big sign. Take it or leave it. 🙂
Tam:
Why is it that everyone thinks [yada yada yada]
Because for better or for worse, I’d venture to say 99.9% of the general population is nowhere near as cynical as you are. 🙂
March 22nd, 2008 at 9:58 am
*ignores fine print, apparently making tgisrch a predatory poster*
A notable percentage of defaulted loans included incorrect statements that may have been fraudulent, up to 70% in a BasePoint Analytics study. Most of those included (probably statutory) fraudulent statements of income.
I suppose it’s possible that the people selling these damned things either knew about it or could have been the ones making the potentially fraudulent statements, but unless they were planning to retire in a year or two (at which point they’d be open to prosecution by three or four different groups). That said, while it’s possible, it seems a far bit less likely than the alternative.
March 22nd, 2008 at 10:39 am
Wow, we are way off topic, but the first regulation I would enforce is requiring lenders to list there loans in a manner that allowed investors to accurately gauge the value of the company,instead of letting them pull an Enron and hide bad debt with creative accounting. That isn’t exactly standard Libertarian dogma, but I differ in that I believe that goverment created entity such as a corporation doesn’t have rights and ought not be allowed to lie.
Do that, and the lenders won’t stray much from the classic 20% down payments, 36% DTI and a 30 year fixed mortgage.
There is no way Bear Sterns went from “Everything looks rosy” to bankrupt and taken over in 3 days. They pulled an Enron for as long as they could.
I don’t know exactly what Ben and the Fed (Federal Reserve, as in not Federal and no Reserves) is trying to do, but it seems that by whipping up some inflation, they’re trying to get everyone a boost up to that magic 36% debt-to-income ratio (prices for everything go up, so employees demand higher wages, etc…)
With (from what I hear) 10% of homeowners upside down on their loans, I’m not sure we should keep calling this a “subprime meltdown”.
March 22nd, 2008 at 11:18 am
Tell you what, walk into any lender and ask him what the rate is on loans. S/he’ll likely say something like 5.8%. Now ask for the formula for exactly how they calculated that figure, so you know, they don’t raise the price on the loan from the time you are preapproved until the time you actually find a house to buy. The 30 year fixed (at least used to) tracks the 10 year T-bill, but tell me what you get back from your lender, I’m sure they won’t willingly reveal the secret formula that they use, because that would let you objectively compare lenders.
Then there are the surprises that always show up as closing costs. Federal law requires lenders to make a good faith effort to provide accurate figures three days in advance. My closing costs were within a few hundred of predicted, (guess which way), but I put my foot down. My agent may have been some help, he was eager to get rid of me because we had been looking for over 18 months. He wanted his check too.
I suspect that many no-so-savvy people get screwed on both an “untimely” up tick in their mortgage rate and taken to the cleaners on closing costs. There’s also the “prepayment penalty” mischief that keeps people from getting out of a bad loan by refinancing.
I read a stack of books half as high as myself before buying the biggest purchase of my lifetime (and no, it’s not the house, the biggest purchase is that 30 year fixed)
March 23rd, 2008 at 3:37 am
I simply didn’t buy a house I couldn’t afford, even if shit went south for me. I am happy with it. 20 acres, four bedrooms, two baths, no neighbors I can see, and a good price with a fixed rate mortgage. Since my heart started dying, I haven’t made the kind of money we were used to, but we still can afford to keep our place. I wasn’t a professional of any sort in the financial or real estate world, but dammit, I can read.
March 24th, 2008 at 11:29 am
A commenter at my site stated my case better than I did:
[Some comma misplacement corrected]
March 24th, 2008 at 11:38 am
A notable percentage of defaulted loans included incorrect statements that may have been fraudulent, up to 70% in a BasePoint Analytics study. Most of those included (probably statutory) fraudulent statements of income.
And this undermines the “the bank shouldn’t have made the loan in the first place” argument how, exactly? Most of this fraud could have been discovered, and loans denied, with even the most basic level of due diligence on behalf of the lender.
In any case, I’m not really impressed with the 70% figure, because it only looks at mortgages through 2006. The bubble didn’t even begin to burst until 2007.
March 24th, 2008 at 12:15 pm
Since we’re playing fast and loose with definitions, what you call comma misplacement, TG, I like to call “charm.” 🙂