People can't complain about high prices and them pay them without looking into alternatives.
Economists are an odd bunch. In their perfect theoretical world, everyone pays the most they are willing to pay for an item. The poor man buys a stripped Chevy Biscayne, while the wealthier man buys a nice Oldsmobile. Both are essentially the same car and cost about the same to make (and are often made on the same assembly line). One has a nicer "trimmed" interior, which costs a lot less than you imagine.
Consider the 1972 Olds Regency. The story goes that for Oldsmobile's anniversary, they wanted to make a special edition. They gave the designers a budget of a few hundred dollars per car (some say as little as $100!) to gussy it up. Simply by choosing different fabrics and trim materials, they made the inside of the car look on par with a Cadillac. And it worked, too - and the model became a regular part of the product line in subsequent years.
Cars, computers, food, housing, clothing, music - you name it - if there is a consumer product (and those are all consumer products) there is a wide range in pricing. There are also less expensive "alternatives" to most goods, if they are deemed too expensive. If enough people seek out alternatives, prices of the more expensive goods may come down. Supply and demand.
And sometimes this results in ridiculous outcomes. During the late 1970's and early 1980's, inflation was running 10% or more and interest rates for mortgages topped 14%. I was there. People turned to cheaper alternatives for food - the mac-and-cheese box was popular, as was peanut butter. The whole "generic" product craze took off (see above photo) and then fizzled within a couple of years.
So many people bought peanut butter that a shortage developed and the price went up as a result (supply and demand, right?). People took to hoarding it and bought even more, driving the price up further. It got so ridiculous that you could buy hamburger for less money. Well, maybe not exactly, but people lost sight of why they were buying peanut butter in the first place.
It reminds me, in a way, of the chicken wing craze. It was a part of the chicken often thrown away, so you deep fry it and douse it in a 50:50 mixture of butter (substitute) and hot sauce and wa-la, you have the perfect bar food - so cheap you could give it away and make back your money in beer sales. The fad took off and eventually the cost-per-pound for chicken wings exceeded that of breast meat, at least for a time. Supply and demand!
Even things that seem inelastic, like housing or health care, have alternatives. If you can't afford an apartment by yourself, get a roommate (or better yet, a life partner) and split the cost in half. Worked for me, for 36 years! (There are other benefits as well, of course). Younger people live with parents and save up for housing. There are alternatives to the "two bedroom, two bath" apartment that the Antifarts claim a person working at McDonald's should be able to afford (I guess the second bedroom becomes the gaming room).
Or health care. If you are poor or just don't like to spend money, you may look for cheaper or free alternatives, such as your local health department, which may provide free or low-cost care. Or, like an optician's assistant I once met, who flew his wife to South America for a two-week vacation and gall bladder operation. It cost $5000 or about 1/10th the cost of the procedure in America.
Of course, when the Ambulance arrives, you can't opt for a South American vacation. There are limits to economic theory.
But getting back to McDonald's I mentioned earlier, I experienced elastic or marginal pricing firsthand today. We were working on the camper in the storage shed and it was only 95 degrees out and 95% humidity. It was awful. So we took a break and thought, "let's grab something to eat!" We had a lot of choices. We could have had the foresight to make food ahead of time. Mark makes a chicken (or tuna) salad-salad by mixing a can of the meat with a pre-made salad mix, in the Cuisinart, with a little mayo. Serve it as a sandwich or spread on a cracker - less than $2 per person.
But we didn't have the foresight to do that. We could have gone to the Winn-Dixie for something, but their "grab-n-go" items are no real bargain. Mark suggested the Burger King located at a nearby Truck Stop. I walked in and was appalled to see that a medium french fries was $5. There were no "value menu" items or the two-for-$5 Whopper Juniors. So I left. Down the street was McDonald's.
A sandwich and fries and drink there was over $10 as a "meal" - but on the Kiosk under the "deals" were "McBundles" which included a double cheeseburger or chicken sandwich and a small fries and a four-piece McNugget and a small drink, for five dollars even. I ordered two, not realizing it included the McNuggets. Lunch for two for $10.70 or about what the people in the drive-thru were paying for one meal for one person.
50% off and all you have to do is take the time to explore the menu and look at alternative choices. When I walked out of Burger King (where there was quite a line and I suspect I would have been there for a half-hour as it was a dysfunctional BK) people were just standing there like deer in the headlights, with their wallets out, paying $15 for a fast-food meal. I just don't get it.
These are the same people bitching about high prices and saying "It's all Biden's fault!" No, it is not. So long as you pay top dollar for things you don't really need (and fast-food is not a need, but a want) then they will keep charging higher and higher prices until you stop buying. There is nothing in the economy that is causing these prices to go up - any longer, at least. Corporations are raking in record profits and CEOs are paying themselves staggering bonuses and stock options.
Because they can. So long as you go along with this, they keep making more money - at your expense.
Once again, it is the conspiracy of 330 Million people, just like back in 2008. No one put a gun to anyone's head back then and said, "buy this overpriced mini-mansion on a toxic payment-optional liar's loan!" No, people did this voluntarily and then laughed at me for having a modest "paid-for" house. When it all blew up in their face, they cried for government bailouts - and some even got them. Most did not.
As "consumers" we have more power than we think we do. Our spending choices on a daily basis drive the market, not vice-versa. That's why companies pay so much to put advertising in front of our faces - hoping to drive us to spend on things we don't need or want, that are overpriced.
I digress, but for some reason on all the streaming channels that show commercials, I am seeing ads for laundry detergents and air fresheners, all starring minorities, usually black folks. Am I missing something? Is there some fear they are tapping into in the black community that people are afraid they stank? Or are these soap companies being blatantly racist by implying they are? All I know is, the selling point is your house stinks and they never show white folks in the ads.
Then again, my router shows my location as "Atlanta, GA" so maybe the algorithm assumes I am black. Half the ads I get are on Spanish, and I think that is because I listen to Latin music on occasion. Great work, AI! You have me pegged as a Black/Hispanic man living in Atlanta, who fears his laundry smells bad. Companies are paying dearly for this accurate demographic information!
I am also seeing ads (again, usually with minorities, this time, Asians) touting the idea of using underarm deodorants all over your body, even in your private parts! They show you how! While I am eating dinner! Worse yet are ads for shavers for private parts, again with demonstrations on how to use! When did this become acceptable?
But I digress. Screw the algorithm!
It is possible to live with less. When the X5 hit 150,000 miles or so, we started looking for a replacement. And we bought a Nissan Frontier SV ("Special Value!") model, which was their mid-range model. It wasn't "trimmed" as fancy as the SX range, or indeed, our old X5, but it got us to Alaska and back and was (and is) a sturdy little truck. I still see it on the road from time to time, as a neighbor bought it.
The point is, we have choices. And while the King Ranch is nice and all, we could have spent less money on a more plebeian Lariat and been just as content. Today, I would be looking at a lesser-optioned model. At least we bought it used and before the prices skyrocketed during the pandemic.
Ah, yes, the pandemic - where all this "shortage" and "inflation" nonsense started. People panicked and started hoarding toilet paper and bottled water for some reason, and - supply and demand - prices went up. This did not go unnoticed by other industries. Creating a fake "shortage" or piggy-backing off a real one allowed companies to raise prices on everything from food to clothing to automobiles to - whatever. They even claimed there was a shortage of french fries! But I think that was made-up.
Prices are elastic and so is consumption. At Sam's Club, they had beautiful cherries for sale for $5.99 for two quarts. Mark bought some. We went back a week later and they were now $10.99! I guess they were hoping we would not notice. So he bought strawberries instead, for $5.99. There are alternatives, if you shop around and check prices and keep an idea of what is a "fair" price for various items, in your head. Today, with your cell phone, you can check competitor's prices (and availability) online. Few choose to do so.
Oddly enough (or not so oddly) we have a regular shopping routine that involves visiting a number of stores. We go to, say, Sam's Club for cheap coffee (whole bean) which you just can't get at Walmart (which sells only ground coffee or "Keurig" cartridges - ugh!). The local liquor store has a great price on Juame Sera Christalino (even the pink kind!) for $6.99 a bottle. Sam's Club only has sweet wines and $20-and-up decent wines. Walmart's "Winemaker's Select" is $5 and less for some pretty decent table wines, including a lightly sweet Cava. Dollar Tree has low prices on cleaning supplies and napkins - but not paper towels or toilet paper (Sam's Club for that). Walmart simply doesn't have seltzer, or if they do, at a staggering price. Winn-Dixie usually has it for far less - if you buy it by the case. We've learned, over time, where to buy what, where, and when. Not checking prices is simply not an option.
And sure, it is fun to splurge once in a while. We live in a resort community and they charge resort prices here. I was chagrined the other day when we stopped for an ice cream cone at the Jekyll Island Club and it was $9 a cone (!!). That is still better than the frozen yogurt place that charged by the pound, self-serve. You fill a bowl with this goo and put it on the scale and realize you just spent $20 on frozen sugar. We went once with out-of-town guests. It's for the tourists.
But we find fun things that others do not. They re-opened the beach pavilion, a run-down shack by the beach that just oozes Old Key West vibes. You can get peel-and-eat wild Georgia shrimp (caught right off the beach - you can see 'em do it!) and a cold beer for not too much money, And it ain't crowded, either. That's our new favorite dive, after they closed the Martini bar at the Holiday Inn. Gotta change with the times!
All that being said, I suspect the economy will take a turn in the coming months - and people will finally start looking more closely at prices, if they not already are. The fact that McDonald's offers these "deals" and Burger King has a two-for-five (at participating locations only!) is one proof that people are indeed, looking for bargains. But you have to look for them. They don't advertise them much!
And that is the point of elastic or marginal pricing schemes - a product priced for every purse and purpose!
If you want prices to come down, spend less!
