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Flubber
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With a view of the Rockies
Aug 2000
time: 22:29
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quote:
Originally posted by Kidicious
Interesting, and I mean that. It still doesn't dispute the fact that the basic way to decide about undertaking a project is to examine the forcasted risk and return. You pursue the project if the return outways the risk. They profit that you make if you are successfull it over and above the risk. So I like your figures here, but I'm just wondering if you still disagree with my general assessment. |
hmmm actually you sound more and more like you are adopting what I said all along.
What you don't seem to get is that a risk assessment is used even if there is ZERO chance of loss. If we went to management with a project with an 80% chance of a 2% return, an 18% chance of a 4% rate of return and a 2% chance of a 25% rate of return, it would not be approved.
Why ? Assume that the riskless rate of return you can get is 6% (nowadays it may be lower but its just an example). Then a company has its overhead which may mean that it needs an additional 2% for all the headquarters costs that will be there regardless. Then the project has to compete with all the other available projects. Different managers promote different projects and the reality is that most companies have more projects possible than they have capital in a given year. So for a project to get done it needs not only meet certain minimum thresholds but it must be more attractive than other projects.
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Flubber
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With a view of the Rockies
Aug 2000
time: 22:29
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quote:
Originally posted by Kidicious
I understand that completely. That's why I'm making my claim. If there is no risk and profit is made then how can profit be compensation for risk taking. |
Because there are essentially riskless investments that earn a profit. So the base case is not merely profit but a return that equals that. Lets say that riskless investments yield 5% annually. Thats the beginning point. Then say that the company requires an additional 2% return for overhead amounts. So thats a return of 7% thats needed for any investment decision before risk gets factored in.
In an oil company, risk is high. wells are routinely drilled that have a 1 in 5 chance of finding commercial quantities. So the possible upsides on those projects must be high (80% chance of a ZERO return will do that)
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Kidicious
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Diety of Kidiverse
Mar 2003
time: 21:29
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quote:
Originally posted by aneeshm
Plese define negotiating power . Both have the power to simply end the discussion and move out , not agreeing to any deal whatsoever . The worker's circumstances are no concern of the employer , and the employer's circumstances are no concern of the worker .[b] If the worker did not think he was better off than before , the deal does not happen .[/b[ Do you agree ?
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No I don't agree, and if you don't know what negotiating power is do a google search or read a book.
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Define society , and how it is capable of valuing anything .
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I'm not going to bother to define society, and we all value things by comparing our needs.
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Anything that does not agree with your worldview is propoganda , it seems . Even economic behaviour that has been repeatedly and conclusively proved . There's not much I can say after this ( actually , there is , but if you won't listen , why waste my time saying it ? ) . |
 There are no proven economic behaviors. This is exactly the problem I have with people who have only taken economics 101. You know nothing about economics.
edit: Here's someting for you to look at actually about negotiating power
quote:
Power Relationships and Negotiation
by Paul W. Barada
Monster Salary and Negotiation Expert
One of the most interesting, and often the most overlooked, dynamics in the negotiation process is the power relationship that exists between the negotiating parties. Power relationships aren't like a game of blackjack, but there is one parallel: Who has the better hand?
Like the dealer, the employer has the better hand, because he has something the candidate wants -- the job opening. Because others want to play the game, the employer can pick and choose from multiple candidates, all of whom want the same job. But if the candidate has unique skills that are in high demand, the power-relationship dynamic shifts from the employer to the candidate. To use the blackjack analogy, the candidate's deck is stacked in his favor.
Economics 101
The law of supply and demand also plays a role in power relationships. For example, the healthcare industry is facing a national nursing shortage. Because the demand for nurses exceeds the supply, qualified RNs are in a far more powerful position to negotiate a better salary and compensation package than if there were a glut of equally qualified nurses competing for jobs. The reverse can be seen in other sectors where there's a greater competition for a small pool of opportunities. Given supply exceeds demand, candidates competing for these jobs aren't in a good position, power-wise, to negotiate a better employment package.
Generally speaking, the higher the level of skill and experience required to do a job, the more equal the power relationship between the employer and the job seeker and, therefore, the more room for meaningful negotiation. The reverse is true for jobs that require low skill levels and little experience.
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Last edited by Kidicious on 27-01-2005 at 22:48
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Whaleboy
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Please make all cheques payable to Whaleboy
Jan 2003
time: 05:29
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quote:
Nothing has an inherent value. Things only have value in relation to human beings. Value is thus socially determined (at least the type of value we are discussing).
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Bang. You need an extra context to tap into some spurious sentimentality in the buyers market, in otherwords say that the blood, sweat and tears of the workers went into making these defective furbies, which accordingly increases the demand and thus the value. Still means that value is a function of supply and demand of course. And remember that social determined value, as you have it, I assume you mean want in that respect, is simply a function relative to what other people have, so no dice on both fronts.
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No, value is separate from price. Prices can rise or fall above an item's "real" value, in which case you will see an abnormality in the market, either a run on underpriced goods or people ceasing to buy overpriced ones
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Is this not obvious to you? If something's value is defined by supply and demand to sum, where demand is different value will differ per context, hence why price can fluctuate (as far as the context of price is concerned, price = value, while in a bigger context the value differs, which you might call a frame of reference).
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No, I don't. I just don't see any point in stating certain basic assumptions, like human beings have to exist or exchange is a precondition. A commodity is an item created for the purpose of exchange, hence I shouldn't have to explain certain simple basics.
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You contradict yourself if you deny that yours is not an essentialist argument. If a commodity is not created for the purpose of exchange (or ownership, or use), then it has as much economic value as a piece of elaborately carved horse dung. And you're pushing things out majorly if you say that that dung now has more value by virtue of the effort that has gone into it. But no, you will undoubtably say, the value is defined in relation to human beings, in other words, there is no want for the dung, hence, there is no demand, and hence there is no value. Quad erat demonstrandum  .
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And for what could you exchange it? Social value, exchange value, is not the same thing as emotional value. You're too smart to play semantic games.
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Semantic games can be fun at times, but only if the opponent doesn't try to subtly move the goal posts. The end of exchange, while it can be a motivating factor, is not the only one in want, or demand. Why might someone want to decorate their home, or satisfy their desire for some form of artistic, intellectual or personal stimulation? Why is the oldest economy on Earth that of prostitution? Demand exists and it needn't necessarily imply exchange, though of course exchange is a sufficient condition for demand, and would naturally occur in any acquisition, but this should be obvious.
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Be excellent to each other.
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Deliberate naivity isn't going to cut any ice if you want to discuss human nature and how it relates to economics  .
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chegitz guevara
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Ft. Lauderdale, FL Communist Party of Apolyton
Jun 2000
time: 00:29
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quote:
Originally posted by Whaleboy
You need an extra context to tap into some spurious sentimentality in the buyers market, in otherwords say that the blood, sweat and tears of the workers went into making these defective furbies, which accordingly increases the demand and thus the value. |
No labor, no furbie, defective or otherwise. With the exception of the raw matierals, which are extracted using human labor power, all any commodity is, is a congealed amount of human labor.
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Still means that value is a function of supply and demand of course. |
People don't necessarily value something more or less because there is a lot or a little of something. Undrepriced goods aren't underpriced because of supply, but because they aren't priced in accordance with their social value. If supply and demand determained value, than nothing would ever be under or over priced.
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If something's value is defined by supply and demand to sum, where demand is different value will differ per context, hence why price can fluctuate |
Okay, let's try another way. Value is one of the factors determining demand, along with price. If the value exceeds the price, demand will rise. If price exceeds value, demand will fall. If supply is short, the value of an item will not increase, but the price can increase, because some people will still be willing to purchase it, despite the fact that it is no longer at a "fair" price.
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If a commodity is not created for the purpose of exchange (or ownership, or use), then it has as much economic value as a piece of elaborately carved horse dung. |
A commodity, by definition, is an item created for exchange. If you create soemthing to use for yourself, i.e., you build your own motorcycle, which you do not intend to sell, it is not a commodity. You cannot have a commodity that was not created to be exchanged. Your statement is nonsensical.
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And you're pushing things out majorly if you say that that dung now has more value by virtue of the effort that has gone into it. |
Artistically shaped dung may have a value, specifically because some effort has gone into making it. Quite a bit of African art uses dung, and I recall a Madonna image made with dung a few years ago. They certainly have some value. It certainly has more value than a peice of dung lying on the ground.
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But no, you will undoubtably say, the value is defined in relation to human beings, in other words, there is no want for the dung, hence, there is no demand, and hence there is no value. |
You put the cart before the horse. If people don't value something, there will be no demand for it. Demand does not precede value.
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The end of exchange, while it can be a motivating factor, is not the only one in want, or demand. |
But it's the only important part of a discussion of commodities. Items made to be used immediately do not concern this discussion because they don't concern the capitalist economy. Capitalism is about making things to sell them. Since we're discussing capitalism, victory gardens don't come into the picture.
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Deliberate naivity isn't going to cut any ice if you want to discuss human nature and how it relates to economics . |
Naivite, and human nature is far more flexible and multifaceted than you seem to want to allow for. Humans are self-interested but are also capable of engaging in acts which are opposed to their self-interest in order to help others. Humans can be loving and hating, selfish and sharing, good and bad. Capitalism assumes that humans are solely motivated by greed, despite voluminous data to the contrary. You seem to wnat to declare any interest a human has as self interest, whereas most people wouldn't define with thus. Most people consider a self-interest as one which helps that person.
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Whaleboy
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Please make all cheques payable to Whaleboy
Jan 2003
time: 05:29
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quote:
No labor, no furbie, defective or otherwise. With the exception of the raw matierals, which are extracted using human labor power, all any commodity is, is a congealed amount of human labor.
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Hence salary.
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People don't necessarily value something more or less because there is a lot or a little of something. Undrepriced goods aren't underpriced because of supply, but because they aren't priced in accordance with their social value. If supply and demand determained value, than nothing would ever be under or over priced.
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Well define over or under priced? If you're saying that I'm denying that prices can be artificially inflated or deflated of course that is not true, but all you are really doing there is reiterating my point about different factors affecting demand.
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Value is one of the factors determining demand, along with price. If the value exceeds the price, demand will rise. If price exceeds value, demand will fall. If supply is short, the value of an item will not increase, but the price can increase, because some people will still be willing to purchase it, despite the fact that it is no longer at a "fair" price.
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Again define your fair price? Your earlier point there has no relevance to your labour-contrived value notion.
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A commodity, by definition, is an item created for exchange. If you create soemthing to use for yourself, i.e., you build your own motorcycle, which you do not intend to sell, it is not a commodity. You cannot have a commodity that was not created to be exchanged. Your statement is nonsensical.
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Again shifting the goal posts. I can't be arsed to reseach "commodity" to play semantic games but if we go by yours, we can say then "product", "item", "commodity" or whatever but the same logic applies. If you want to ascribe a particular function to each term I can accept that but I think you're complicating matters irrelevantly.
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Artistically shaped dung may have a value, specifically because some effort has gone into making it. Quite a bit of African art uses dung, and I recall a Madonna image made with dung a few years ago. They certainly have some value. It certainly has more value than a peice of dung lying on the ground.
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Methinks you're missing the point . Something into which has gone effort undoubtably, but there is no social or individual want for it.
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You put the cart before the horse. If people don't value something, there will be no demand for it. Demand does not precede value.
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They want it, but want is just a function of what other people have, whereas need is more absolute to each person, it is still predicated by want (i.e., "I want to live therefore I need to..."), so really it is predicated simply by competition and the self as opposed to inherent value. (though I commend your thinking there).
Remember of course how the individual ascribes value to things (self -> want -> demand -> value) which will lead to a chicken and egg situation which you correctly point out, this is a more existential take on how it occurs. Needless to say, social want is just an obvious bastardisation of individual.
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But it's the only important part of a discussion of commodities. Items made to be used immediately do not concern this discussion because they don't concern the capitalist economy. Capitalism is about making things to sell them. Since we're discussing capitalism, victory gardens don't come into the picture.
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You have a different take of capitalism then me, to me it is an inescapable consequence of any society of 2+ humans, an existentialist economic princible of supply and demand; to you it is an avoidable political system so I don't think we're going to see where the other is coming from on this.
Re. naivity, I was referring to yours on moral philosophy and the kind of blind humanism (that humanity has to mean good) that seems to pollute the very air of thought in the post-Enlightenment era... it's own private delusion.
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Most people consider a self-interest as one which helps that person.
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Upon which lies your problem with my position but you are misinterpreting it as consequential and prescriptive whereas it is categorical and descriptive, more a logical principle. As for the data to the contrary, volume is irrelevant since no example I can possibly thing of escapes this principle. And as far as society is concerned a categorical and descriptive approach is called for, whereas yours might work better in personal relationships where trust, "charity", sharing and love is called for, to base a society on such things is absurd if you accept that humans are categorically self-interested.
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27-01-2005 10:18
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