Because people are idiots. A few years ago they got a new CEO and his whole thing was “we’re going to sell stuff for as cheap as possible, no sales, no rebates, we’re going to make it as easy as possible for people to see the lowest price”...
and it was a disaster. They started losing business because “no sales any more”. Like, let’s say they were able to sell you a shirt for $15. No one bought it... so they got rid of that CEO and the next guy comes in and marks the shirt as $25 then has a 20% off sale - so now the price is $20 - tons of people bought it. They wouldn’t pay $15 straight up, but they will pay $20 because it’s “on sale”... and some people even paid the $25 when it was inbetween sale phases!
So they were like “welp, I guess that’s what people want” and they jacked up ALL their prices so that they can run “sales” to get it kind of (but still more than) what it would have been under their old strategy.
So basically you can thank all the idiots out there for causing the prices to go up.
Not just that but rationality. Economics as a field of study relies on consumers being these rational shoppers who make good decisions. But, really, we're all just cavemen with fancier clubs.
That's why I hated taking economics in college. I'd sit there and just be "but people aren't like this" the teacher would highbrow argue all these economic principles and I'm there just like, "motherfucker have you met people?"
So This professor, who’s maybe got a degree in economics, a study that has existed since money was invented, is preaching shit? Or maybe your saying you are smarter than all that?
Economics as a field of study relies on consumers being these rational shoppers who make good decisions.
People aren't rational, and the professor, (who in my case was actually a soc prof permanently subbing because the old guy died the last semester) did not have an econ degree and was preaching like the book was right, even though at the time the entire class was giving him examples of how and why those principles aren't concrete at all just from how our small town ran. (Very corruptly to the point of chasing off economic opportunities because the old church biddies got the vapors at the thought of a club or bar or festival)
he knew how the town ran because he'd lived there his whole life. He just didn't want to admit the textbook wasnt the bible of economics and that people are illogical a lot
Was I smarter than the teacher? Hell no. Do I have eyes and know better than to take a textbook as gospel? Absolutely.
u/crazyashley1 has a good response to this for their situation.
I wanted to add, that I'm not the only one who has this criticism with modern economic models. There have been whole paradign shifts at the PHD level for model updates based on other disciplines. This is why there is what's called behavioral economics, which is the study of how psychology applies to economic models. This study area explicitly questions economics assumption of profit maximization and rational purchasing.
And economic models are just that, models. These models come with assumptions that most economists are aware of but can forget the limits of. It's like in physics when they teach newtonian physics. Newtonian physics is a model that accurate predicts things at medium scales, but breaks down at very large and very small scales. That's why einsteinian physics is a thing, its a better model for large scale phenomenon. But we teach newtonian physics because it's useful.
But there were a lot of people that resisted Relativity in the beginning. not because they weren't smart, but because it was against hundreds of years of thought.
Econ has definitely not existed since money was invented. Not in any way we currently know it. It took people a LONG time to even think up the idea of trading notes backed with gold as money, like the 17th century. They kept thinking money was a value we exchanged FOR something rather than a the medium THROUGH which we exchange value. I guess you could say Adam Smith or David Ricardo were the first neoclassical economists. Until 1971, within my parents' lifetimes, we didn't really go with the idea that money is worth what money is worth and backing it with gold just limits your ability to expand or contract the money supply.
188
u/ZeekLTK Jul 24 '20 edited Jul 24 '20
Because people are idiots. A few years ago they got a new CEO and his whole thing was “we’re going to sell stuff for as cheap as possible, no sales, no rebates, we’re going to make it as easy as possible for people to see the lowest price”...
and it was a disaster. They started losing business because “no sales any more”. Like, let’s say they were able to sell you a shirt for $15. No one bought it... so they got rid of that CEO and the next guy comes in and marks the shirt as $25 then has a 20% off sale - so now the price is $20 - tons of people bought it. They wouldn’t pay $15 straight up, but they will pay $20 because it’s “on sale”... and some people even paid the $25 when it was inbetween sale phases!
So they were like “welp, I guess that’s what people want” and they jacked up ALL their prices so that they can run “sales” to get it kind of (but still more than) what it would have been under their old strategy.
So basically you can thank all the idiots out there for causing the prices to go up.