What is an item worth?

[Wazabi]

*snip*

Thanks for the article, it was a good read.

<off topic>
I won't debate the validity or take a morality stance on weather it is right or wrong for WalMart (WM)to pay lower wage and benefits to its workers. What I see however, is that there is a demand for low priced goods in the market, and WM found a way todeliver just that. If these workers could get a higher paying jobs by setting up or working in smaller stores, then why are they still working in a lower paying job? If the general public is willing to pay a higher price for their goods by shopping at somewhere else, then WM will be forced to change their corporate strategy. If its hapenning, good. If not, I couldn't really care much either. Someone is benefitting from WM now, and someone else is getting the shorter straw. If someone can show me a conclusive quantitative analysis on the net economic efficiency and deadweight loss, I'm all ears.

To me, it's just the market game, and as a trader/merchant/businessman, I need to determine how much is the market going to pay for a certian service/goods, and try to make that happen. When a new tech displaces a particular group of work force, yes, it encourages growth in another, but for those with the obsolete skill, their quality of life decreases as well...much like the WM case. If WM close shop tommorow due to the issues you've mentioned, I don't have any problem with that as well...just like my opinion towards displaced workers. It's a fact of life, it's survival of the fittest.

<on topic>
The game world is slightly different. To a certain extend, there are labors to exploit, mainly the gatherers...but you don't starve to death if you don't gather/craft. It also doesn't cost you anything but time to gather, which supplies the basic materials. Every item will have a cost...but the worth is debatable because it depends on each person's needs at different point in time...so there will never be a "worth" that everyone will agree about...and hence I think the act of trying to determine the "worth" of an item to be pointless.

Everyone has their own trading strategy...so whatever that works for them. Those that are better at trading will be able to guage the market sentiment, thus more likely to set a price that will clear the market. Couple that with inventory planning, business acumen and enterpreneur spirit, they'll how much to buy, how long to keep an item in their inventory, how much liquidity to maintain, and most importantly, have the balls to execute those trades. Those are the few key attributes of a successful trader/businessman...and a video game economy is far less complex to get these things right.

[Kazamoto]

@Nova, I agree with just about all of this ^ and we have both now said, there will always be buyers willing to pay 0, so to say "An item is worth what somebody is willing to pay for it. No more, no less." is not the whole story.

An Item is worth what someone will pay for it,
Unless
Someone will pay more or less for it,
Unless,
The seller wont agree to the price.

Thanks for the article, it was a good read.

<off topic>
If someone can show me a conclusive quantitative analysis on the net economic efficiency and deadweight loss, I'm all ears.

Try this perhaps: "Walmart wages are so low that many of its workers rely on food stamps and other government aid programs to fulfill their basic needs, a reality that could cost taxpayers as much as $900,000 at just one Walmart Supercenter in Wisconsin"

http://www.huffingtonpost.com/2013/0...n_3365814.html

Walmart has 4,118 stores currently in the US.

[Zigkid3]

Try this perhaps: "Walmart wages are so low that many of its workers rely on food stamps and other government aid programs to fulfill their basic needs, a reality that could cost taxpayers as much as $900,000 at just one Walmart Supercenter in Wisconsin"

http://www.huffingtonpost.com/2013/0...n_3365814.html

Walmart has 4,118 stores currently in the US.

That article solely focuses on a specific segment and does not represent the economy as a whole.

This starts getting into the debate of whether or not minimum wage should be raised.
You're trying to debate about workers wages which is not representative of an economy as a whole. Yes it is part of it, but not all of it.


If the minimum wage is raised, then the costs for a company would increase. If the costs for a company increase, it will either have to find other areas where it could cut costs or increase the price (and produce less). so now the prices have increased on a said product because it costs more to make, handle, deliver, etc... So now lets look at two types of consumers the minimum wage worker and the middle class worker. The minimum wage worker will have increased wages yes, but also an increased price on products either way it made no difference to them all you did was increase the numbers but proportionally its about the same. The middle class worker was already above minimum wage so their salary hasn't changed, but now they experience an increase in product prices, so the middle class worker loses out. Overall this bad.

This is because even though while wage might have increased, their real wage which is the amount of buying power they now have is actually different. So you have to look at Wage/Price (depending on the product(s) you're looking at) to see if the increase of wage was actually beneficial or harmful. to see if it is beneficial or not you will need to compare the increase in wage versus the Price x Marginal Production of labor. if W > PxMPL then it's good, if W < PxMPL then it's bad.
------------------------------------------------------------
Though I don't see your point in trying to bring up Walmart wages when wages don't really have anything to do with a game economy, the closest you could get to arguing that is the time investment that people make to gather/craft, but thats more subjective to each individual rather than a specific wage policy.

[Kazamoto]

---On topic ish---

the closest you could get to arguing that is the time investment that people make to gather/craft, but thats more subjective to each individual rather than a specific wage policy.

That's the exact point I was making earlier. In both FFXIV and Walmart's wage and employment policy, the labor is worthless.

Walmart will always have applicants and they can afford to replace any worker at any time.


---off topic---

If the minimum wage is raised, then the costs for a company would increase. If the costs for a company increase, it will either have to find other areas where it could cut costs or increase the price (and produce less).

This makes the assumption that the company is attempting to make revenue or profits a constant value. Every company is always trying to increase profits, so they already try to cut costs and increase market share. To suggest that a company would look at its ledger and say "yup, these profits are good, lets stop here" is silly. And with the two biggest, or at least most frequently complained about companies, McDonalds and Walmart, both could increase their employee wages and still have very healthy profits. There is no incentive for these companies not to do this, unless there is some outside force or requirement that they pay a living wage to their employees, they have no reason to, and would not.

So now lets look at two types of consumers the minimum wage worker and the middle class worker. The minimum wage worker will have increased wages yes, but also an increased price on products either way it made no difference to them all you did was increase the numbers but proportionally its about the same. The middle class worker was already above minimum wage so their salary hasn't changed, but now they experience an increase in product prices, so the middle class worker loses out. Overall this bad.

The Middle class worker already feels the increased prices through tax burden.
The low wage worker, in addition to surviving on government benefits is likely tax exempt, especially if they have children. The middle class worker is forced to pay higher taxes to cover the entitlement programs that keep the lower class workers alive.
(I'm going to skip going into upper class tax burdens because that is a whole different ball of wax)

This is because even though while wage might have increased, their real wage which is the amount of buying power they now have is actually different

This direct relationship is really only true if the only place they can buy from is Walmart (which granted, could be the case). When workers have more to spend, it increases demand for goods, and luxury purchases become a possibility. As is often said, a rising tide lifts all ships.

The only time an economic policy is truly bad, is when it stops or slows the circular flow of money. People who have limited means always have things they need or want to buy. A slight jab at wealthy people, they don't generally keep the money moving. They still need housing, and transportation. But if a person have 10x the average wage, do they consume 10x the goods? Do they buy or rent 10 houses? Do they buy 10 cars, eat out 10 times as often, buy 10 times as much clothing?
This is all possible, but what happens when that ratio hits the average hits 380 times their average employee's pay? Do they buy 380 times more goods, and produce 380 times more demand?

A strong economy requires people to be spending money, and a people need to have money to spend.

[Zigkid3]

This makes the assumption that the company is attempting to make revenue or profits a constant value. Every company is always trying to increase profits, so they already try to cut costs and increase market share. To suggest that a company would look at its ledger and say "yup, these profits are good, lets stop here" is silly. And with the two biggest, or at least most frequently complained about companies, McDonalds and Walmart, both could increase their employee wages and still have very healthy profits. There is no incentive for these companies not to do this, unless there is some outside force or requirement that they pay a living wage to their employees, they have no reason to, and would not.

If a company is going to have a permanent increase in cost in some way (increasing workers wages), a good company that wants to maximize profit will try to offset it in some way if possible.
I don't see how you interpreted my post as suggesting a company would say "yup, these profits are good, lets stop here" when i specifically stated that they would react to any large changes such as a change in the minimum wage.
Yes they could increase their wages and still have profits, however it won't be as much as it should have been, which is a loss in potential income. If their income statement shows lower performance compared to previous years (even if it's still a positive) it will cause investors to worry which will cause their stock to go down, which means their equity goes down which means their assets go down (since assets = liabilities + equity). So in short, a company will do what it can to maintain as high profits as possible, even if they'd still be well off if they just accepted the change like it was nothing, a company wants to be efficient and thus they will react to the change.

This direct relationship is really only true if the only place they can buy from is Walmart (which granted, could be the case). When workers have more to spend, it increases demand for goods, and luxury purchases become a possibility. As is often said, a rising tide lifts all ships.

I was talking about if the U.S. decides to increase the minimum wage since the Federal government sets a a minimum wage guideline while the States set their own minimum wages at or above the Federal level.
Walmart will just choose the legally lowest they can depending on the state of that store's location.

The only time an economic policy is truly bad, is when it stops or slows the circular flow of money. People who have limited means always have things they need or want to buy. A slight jab at wealthy people, they don't generally keep the money moving. They still need housing, and transportation. But if a person have 10x the average wage, do they consume 10x the goods? Do they buy or rent 10 houses? Do they buy 10 cars, eat out 10 times as often, buy 10 times as much clothing?
This is all possible, but what happens when that ratio hits the average hits 380 times their average employee's pay? Do they buy 380 times more goods, and produce 380 times more demand?

A strong economy requires people to be spending money, and a people need to have money to spend.

I agree on this point, though it has nothing to do what we were talking about in the first place.
(now we're really starting to get off topic though)

[Kazamoto]

If a company is going to have a permanent increase in cost in some way (increasing workers wages), a good company that wants to maximize profit will try to offset it in some way if possible.
I don't see how you interpreted my post as suggesting a company would say "yup, these profits are good, lets stop here" when i specifically stated that they would react to any large changes such as a change in the minimum wage.
Yes they could increase their wages and still have profits, however it won't be as much as it should have been, which is a loss in potential income. If their income statement shows lower performance compared to previous years (even if it's still a positive) it will cause investors to worry which will cause their stock to go down, which means their equity goes down which means their assets go down (since assets = liabilities + equity). So in short, a company will do what it can to maintain as high profits as possible, even if they'd still be well off if they just accepted the change like it was nothing, a company wants to be efficient and thus they will react to the change.

Where I said the "yup, these profits are good, lets stop here" part I was trying to imply that the actions you are talking about would not happen in a reactionary fashion, companies would always be cutting costs and trying to maximize profit. They may be slightly more agressive about it were minimum wages to go up, but there isn't much walmart doesn't already do to cut costs.

How many times have you been to a walmart where the lines are 10 people deep, but out of 20 checkout counters only 3 are open?

[Zigkid3]

Where I said the "yup, these profits are good, lets stop here" part I was trying to imply that the actions you are talking about would not happen in a reactionary fashion, companies would always be cutting costs and trying to maximize profit. They may be slightly more agressive about it were minimum wages to go up, but there isn't much walmart doesn't already do to cut costs.

How many times have you been to a walmart where the lines are 10 people deep, but out of 20 checkout counters only 3 are open?

Exactly, hence why the only other option would be to increase prices.

[Wazabi]

=off topic=

Try this perhaps: "Walmart wages are so low...

1. Why do they still want to work at walmart? Can't they find a better job? Or is there a low demand for their skill level? Where were they working previously?
2. Imagie you work for a company that tells you your annual bonus and pay increase has been donated to starving children in Africa.

There are many more arguments that I can make. Ultimately, it dwells down to this: If you are a low skilled worker, would you rather be unemployed or employed with however little wage you get? If there is a demand your your skill set, you will get a better wage. If you demonstrate that you can do more, you will get a better wage.

I deal with similar blue coller wage problem in my work...the pay is never enough...in the end...if you're still only capable of doing what you could do 5 years ago, then I'm paying you the same wage, adjusting for inflation.

I agree that low wage is a problem...and that needs to be addressed through other means than simply saying ban wal-mart. It's a naive and uneducated solution to a more complex problem.

Similarly as how Zigkid puts it, economic efficiency looks at a much broader picture and it involves some complex mathematical calculations fitting to be a PhD thesis. And in the case of a price level increase, wage level usually lag behind especially for unskilled labor. This price level increase hurts and perpetuates the poverty that they are in...and it is usually the unskilled labor that are in poverty.

=In-topic=

Value is subjective and trades are made on perceived value

You might also add that the value of a certain item has a concave utility curve: If you have none, you'll be willing to pay more for the first one...when you have a lot, you'll be willing to pay less for that.