Gentlemen,
If this forum will tolerate it, and if members find it to be of some educational or entertainment value, I intend to post up from time to time, some of my writings on economic issues. Long-term members of this forum already know that I am an armchair economist as that was my primary focus in graduate school and a passion of mine today. I believe most of what I write is embedded in the gut of most successful individuals although they may not have thought the issues through in a formal way. Chiponomics 101, posted about three weeks ago, I will consider the first installation. Today’s article, Chiponomics 102, concerns the rants of Team Shelby members who are upset about a Ford dealer advertising a new Shelby GT350 for sale at a substantial premium above MSRP. I appear to be swimming against the tide as those members almost universally feel that dealer pricing above MSRP should be illegal. The following quoted post is representative of most members feelings concerning ADM (additional dealer markup).
I will keep politics out of these posts and although I welcome any members response to what I write, either positive or negative, I ask that you leave politics out of this as well.
Gentlemen,
I don't know why this type of thing upsets people??? This is still America and price-fixing is generally illegal (at least for now). We all love it when we pay a dealer substantially less than MSRP and in some cases less than dealers cost. We love it when the free market system works in our favor and we sell a 1966 GT350 that we bought for $30,000 15 years ago for $200,000 at Barrett Jackson today. We love it when the home we purchased 20 years ago for $55,000 brings $300,000 today.
The laws of economics are as certain as the law of gravity and as such, there are only two ways to allocate any limited commodity. And that is with a price, or with a line. When items are allocated with a price they are always available for sale and demand is matched to supply by that price. D flawless diamonds are both very rare and very desirable, but you can walk into a jewelry store and buy one without any wait today. 1965 Shelby GT350 Mustangs are very rare, but I can buy one within the next 30 days because they are always available...... at a price.
Perhaps we should fix the price of all 1965 GT350s at $50,000. Nobody would be able to sell one for more than that amount. Demand would immediately overwhelm the available supply and a waiting list stretching to the horizon would form. The few successful purchasers would pay less, but those savings would be overwhelmed by the wasted time and lost opportunities that would result by hoards of people standing in that line. Fixed prices for commodities and extremely long lines were the norm in the Soviet Union. Back in the 1970s during the gas crisis, gasoline prices were fixed by our government resulting in the same disastrous long lines.
Most of the cars advertised on eBay by private individuals have "buy it now prices" that are ridiculous. Most of the cars I see advertised in auto trader by private individuals also have idiotically high and unrealistic prices. Stupidity is not illegal either.
The dealer who ran this ad will not fetch $110,000 for his $75,000 GT350. His ad is a waste of time and bandwidth. I was able to secure a chassis from Tom Glockner at Santa Margarita Ford at a discount. Anybody else can do the same. If you buy a new GT350 and want to turn around and advertise it for $300,000, you are free to do so. If I am stupid enough to pay you $300,000, I am free to do so. But I wouldn't bank on that.
Our entire free market system is under assault. Capitalism has made this the wealthiest nation in the history of mankind. With all of its flaws and all of its warts, the cumulative buying and selling decisions of 300 plus million people results in an efficiency of pricing and distribution unmatched by any other system that's ever been deployed. Every time I hear an American say, "That should be illegal", I cringe. Because every new law making something illegal strips us all of a measure of the freedom that we previously enjoyed.
Guard that freedom, and cherish the liberty that rewards good decisions and punishes bad ones. In this manner, all Americans cumulatively decide who succeeds and who fails. When we lose faith in ourselves and wish to rely upon decisions imposed upon us by our political masters, those same overlords will pick and choose the winners and losers. And we all become subservient pawns to those rulers who were once public servants themselves.
God bless America.
Chip Beck
If this forum will tolerate it, and if members find it to be of some educational or entertainment value, I intend to post up from time to time, some of my writings on economic issues. Long-term members of this forum already know that I am an armchair economist as that was my primary focus in graduate school and a passion of mine today. I believe most of what I write is embedded in the gut of most successful individuals although they may not have thought the issues through in a formal way. Chiponomics 101, posted about three weeks ago, I will consider the first installation. Today’s article, Chiponomics 102, concerns the rants of Team Shelby members who are upset about a Ford dealer advertising a new Shelby GT350 for sale at a substantial premium above MSRP. I appear to be swimming against the tide as those members almost universally feel that dealer pricing above MSRP should be illegal. The following quoted post is representative of most members feelings concerning ADM (additional dealer markup).
I will keep politics out of these posts and although I welcome any members response to what I write, either positive or negative, I ask that you leave politics out of this as well.
Gentlemen,
I don't know why this type of thing upsets people??? This is still America and price-fixing is generally illegal (at least for now). We all love it when we pay a dealer substantially less than MSRP and in some cases less than dealers cost. We love it when the free market system works in our favor and we sell a 1966 GT350 that we bought for $30,000 15 years ago for $200,000 at Barrett Jackson today. We love it when the home we purchased 20 years ago for $55,000 brings $300,000 today.
The laws of economics are as certain as the law of gravity and as such, there are only two ways to allocate any limited commodity. And that is with a price, or with a line. When items are allocated with a price they are always available for sale and demand is matched to supply by that price. D flawless diamonds are both very rare and very desirable, but you can walk into a jewelry store and buy one without any wait today. 1965 Shelby GT350 Mustangs are very rare, but I can buy one within the next 30 days because they are always available...... at a price.
Perhaps we should fix the price of all 1965 GT350s at $50,000. Nobody would be able to sell one for more than that amount. Demand would immediately overwhelm the available supply and a waiting list stretching to the horizon would form. The few successful purchasers would pay less, but those savings would be overwhelmed by the wasted time and lost opportunities that would result by hoards of people standing in that line. Fixed prices for commodities and extremely long lines were the norm in the Soviet Union. Back in the 1970s during the gas crisis, gasoline prices were fixed by our government resulting in the same disastrous long lines.
Most of the cars advertised on eBay by private individuals have "buy it now prices" that are ridiculous. Most of the cars I see advertised in auto trader by private individuals also have idiotically high and unrealistic prices. Stupidity is not illegal either.
The dealer who ran this ad will not fetch $110,000 for his $75,000 GT350. His ad is a waste of time and bandwidth. I was able to secure a chassis from Tom Glockner at Santa Margarita Ford at a discount. Anybody else can do the same. If you buy a new GT350 and want to turn around and advertise it for $300,000, you are free to do so. If I am stupid enough to pay you $300,000, I am free to do so. But I wouldn't bank on that.
Our entire free market system is under assault. Capitalism has made this the wealthiest nation in the history of mankind. With all of its flaws and all of its warts, the cumulative buying and selling decisions of 300 plus million people results in an efficiency of pricing and distribution unmatched by any other system that's ever been deployed. Every time I hear an American say, "That should be illegal", I cringe. Because every new law making something illegal strips us all of a measure of the freedom that we previously enjoyed.
Guard that freedom, and cherish the liberty that rewards good decisions and punishes bad ones. In this manner, all Americans cumulatively decide who succeeds and who fails. When we lose faith in ourselves and wish to rely upon decisions imposed upon us by our political masters, those same overlords will pick and choose the winners and losers. And we all become subservient pawns to those rulers who were once public servants themselves.
God bless America.
Chip Beck
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