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Originally Posted by JKDS
Why does labor follow that rule?
Because everything with a cost follows that rule, regardless of what it is.* The supply curve is the foundation behind the theory of economics itself, which attempts to evaluate all resources that have a supply or demand, and it does so through prices and costs.
Isnt it true that some goods are uneffected by price changes? Because they are necessities?
Excellent question! The answer is no, things being "necessities"** do not mean they are unaffected by price changes. Even the world's greatest necessity, water, is bounded by supply and demand. The demand for drinking water is generally constant (albeit not inelastic), and if the supply increases its cost will decrease while if the supply decreases its cost will increase. The lay tend to think demand for something like water is inelastic, which is why people tend to hate the idea of price gouging in disasters. But even water is not truly inelastic. There is a good deal of waste in all sorts of situations. Even in disasters where water is scarce, the demand is not inelastic since every individual applies a different value to water at any given point in time. A simple example of this is seen in differences in what you yourself would pay for water based on different scenarios. If you already have a few jugs, you will pay nothing. If you are dying of thirst, you will pay a lot. There are an uncountable different situations in which the price you put on a bottle of water changes, and this value you and every other person place on water has a macro effect of giving it price. So, in a disaster, if you already have a couple gallons and somebody else has none, they are willing to pay much more for water than you are because they value the purchase of it more. Yet if the water was "free", you would probably get more of it, which would end up being at the expense of those who need it more than you. Prices are the tool that allocates resources to the people who need them most. Laypeople tend to think that regulations are this, but they're not. Regulations are the opposite because they make it harder for those with need to address the need.
The layperson says "but the person with no water may not be able to pay and the solution to this problem is to make water free", and the real-world final result of making something "free" is shortage. All resources are finite and so the "free" water still has a real cost. On the macro scale, extracting prices from a resource and making it "free" increases the amount of waste and results in depleted levels of water. A good example of this waste is in California's drought. Because water is not a market good, a gigantic portion of California farms grow almonds. Well, almonds soak up gigantic amounts of water per calorie relative to other crops. If water was priced on a market, there would be no shortage in the first place because farmers would not have been so heavily subsidized to grow so many almonds in the first place.
In a water market, there would instead be a drive towards new abundance since any company or individual that did that would gain more from doing so than they would gain from not doing so. So next time somebody talks about California's drought, just tell them that our "free" water policies subsidize our almond-eating at the expense of every Californian. What a complex disaster this is, all with just one simple, unforced-error: price regulation.
There wasnt a minimum wage during the industrial revolution, yet tons lost jobs as they were replaced by machines. Thats gonna happen again as soon as labor isnt necessary. But the fact is, you cant sell burgers unless you have someone flipping the patties.
You also can't sell burgers if the flipper costs more than the revenues generated from selling burgers. Other than that, I'm not sure what you're getting at here.
* One of the main political gripes that economics-minded people have is that most voters ignore costs. They support regulations and welfare virtually entirely because of this. For example, Medicare policies increase costs of healthcare disproportionately, but voters tend to not account for that because they believe that when somebody else is taxed to pay for it, the costs "aren't real" or something. They believe that the value of a good or service can't be measured. But that simply isn't true. Economics is about measuring the value of anything. The bottom line is that every dollar in tax and every dollar spent incurs a cost. The same is true of every regulation. Voters tend to say "we need more healthcare for the elderly because healthcare is good", yet what's really happening is that because Medicare is fundamentally inefficient compared to the market, healthcare costs more than it otherwise should, and the elderly end up receiving less and lower quality care than if the voters wielded cost discipline. Renton tends to call people ignoring the inherent cost of anything and everything the something-for-nothing idea.
** I put "necessities" in quotes because the vast majority of what we consider necessary is not necessary. Yes, food is necessary, but there are an uncountable number of variables about food that are not. Eating too much is not necessary, eating unhealthily is not necessary, eating just one of many sufficient diets is not necessary. Prices affect all of this.
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