Posted by Sterling Luttrell [99.58.180.94] on Monday, September 16, 2013 at 11:56:42 :
In Reply to: What's wrong with our money? posted by Chris H. In Wash. [67.142.167.24] on Sunday, September 15, 2013 at 22:10:10 :
I live in midland texas which has the most millionaires besides somewhere in connecticut last time i checked. The median income is 65,000 dollars. What does this all equal...Price gouging. I went to auto zone in midland and anti freeze was $12 buck a gallon. Then i was in a small town 2hrs away with lots of low income citizens and it was about $9 per gallon. Businesses discriminate prices on many characteristics. But what it all boils down to two concepts:
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"Maximize profit" and" maximize share holder value"
Publicly traded companies cannot simply charge a good profitable price for there goods because there earning would be poor compared to that of there competition . There for they would lose investor interest which would hurt them further. There for they have to suck every dime out of someone that they are willing to pay. Anything left on the table is called consumer surplus. aka WHat the consumer was willing to pay minus what they actually payed. Marketing specialist do tons of research to try and close the the consumer surplus gap as much as possible.
Companies must maximize profit to compete with other companies which do the same. Its all about building there product at satisfactory quality at the cheapest price possible AKA Price minus cost= Profit. This leads to a whole new can of worms dealing with outsourcing of labor ect..
My point of all this being one organization does something that gives them a competitive edge and the rest must follow suit to compete. The problem with all of this is that were all jacking the price up on each other. say various organizations raises there price on five goods that people need say fruit and vegetables, gasoline, tires, clothing, medical. The person incurring these raised prices then has to make more money to compensate for the cost of living increase so he raises the price for the service he provides. The person receiving his service incurs a bigger chunk out of there budget so on and so fourth.
However i think the biggest reason that people today struggle with finances is because marketing has gotten so good, so accurate, and so segmented down to each individual that they can advertise to our vulnerabilities. One day i was googling radar detectors and later on i kept getting ads for radar detectors. To be financially stable one must really discipline themselves. The field superintendent for our drilling company is someone that i have a lot of respect for. He has made a middle class income his whole life. He lived in a trailer and saved money. He lived in the trailer the entire time his house was being built and payed as he goes and when he moved into his new house it was paid for. He paid cash for a really really nice home. His cars are paid for, he grows his own vegetables and cuts cost where he can, and at age 40 he was a millionaire. Ok so being a millionaire isn't what it used to be but for a guy making $50,000-$60,000 most of his life not bad. He makes good money these days. around a $100,000 but he's
got enough money if there was an economic downturn and lost his job he could survive it. Im young and not nearly as disciplined but im working towards it. I know i kinda got on a rant there but the topic resonated with me for some reason.
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