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originally posted in:Secular Sevens
5/4/2013 11:49:50 PM
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Low prices are only worth it if wages are at a decent level. They are not.
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  • They're decent in a lot of cities. Don't take the job if you don't like the pay. Many people would be jobless without Wal-Mart.

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  • That's true, I'm not denying it. But Wal Mart is a luxury for a big country, because of economies of scale.

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  • Agreed, though some towns like this one I know of in West Virginia became massively improved when a Wal-Mart came to them.

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  • Edited by Diplomat: 5/5/2013 12:24:32 AM
    The point of the article, however, is that individuals that have low wages are able to get the products they need [i]at[/i] Walmart. It's an example of market self regulation, where businesses adjust their prices to match the consumer's buying habits. Since low income families are frugal, Walmart intentionally prices all of their products low to attract customers. A basic economic principle is that prices are neutral, meaning they favor neither the seller or the buyer (there's maybe one or two exceptions I can think of). Low prices are worth it, because people who aren't getting decent wages are able to get goods. Besides, problems revolving around the minimum wage are overinflated at times. Only 2% of workers are paid minimum wage, and most of those are third or fourth earners in a household well above the poverty line (i.e. teenagers). Raising the minimum wage won't do a whole lot, you need to give people skills if you expect them to get out of poverty (our infrastructural demands should be enough to get people out of poverty, since most are lower to middle class jobs). Technical schools are really the way to do this. And college, to a lesser degree.

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  • [quote](there's maybe one or two exceptions I can think of)[/quote]Curious, what did you have in mind with this?

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  • Mainly pharmaceutical companies and health insurers. Since their services are so inelastic, they are free to set the price to nearly whatever they want and still make a ton of money. In theory, competition should drive down their costs to a level that makes it more affordable for the consumer, but that isn't happening.

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  • [quote]Mainly pharmaceutical companies. . . [/quote]I might be totally wrong, but I'd think that that would be because pharmaceutical companies sometimes have an easy time monopolizing certain products via intellectual property. I've seen instances of that happening, but I have no clue how prevalent that is. As for the issue with health insurers, is that just a problem with health insurance or also other types of insurance (if the former, why?)?

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  • Edited by Diplomat: 5/11/2013 8:03:33 PM
    Sorry about my delay, Math. I've been busy prepping for my AP test next week. [quote]but I'd think that that would be because pharmaceutical companies sometimes have an easy time monopolizing certain products via intellectual property. I've seen instances of that happening, but I have no clue how prevalent that is.[/quote] You're absolutely right. [quote]As for the issue with health insurers, is that just a problem with health insurance or also other types of insurance (if the former, why?)?[/quote] In my opinion, the problem is most prevalent in the healthcare industry. I attribute this problem to two reasons. First, the necessity of healthcare insurance surpasses that of other forms of insurance (except auto, because it's legally required). You need medical care to survive, and you're much more likely to incur an injury requiring a hospital stay, or medication for an ailment, or some sort of doctor's check up than you are to have, say, your home destroyed. The prices that they can charge because of this on the middle and upper classes cover losses from not having customers in the lower classes. Secondly, health insurers practice [url=http://insight.kellogg.northwestern.edu/article/an_unhealthy_market_for_competition]discrimination[/url] unopposed. Companies that are more successful are charged higher premiums.

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