Gyroscopic Investing

Meh, reefer madness will bring the country to it's knees.

Under the new legislation, the price of marijuana will be set at one dollar per gram, aiming to undercut the current price of $1.40 on the illegal market. The sale and production of the drug will be regulated by a specially-set-up government body which will administer a database of adult citizens registered to consume marijuana.

Oh, good.  Legal pot AND more government.

WildAboutHarry wrote:

Under the new legislation, the price of marijuana will be set at one dollar per gram, aiming to undercut the current price of $1.40 on the illegal market. The sale and production of the drug will be regulated by a specially-set-up government body which will administer a database of adult citizens registered to consume marijuana.

Oh, good.  Legal pot AND more government.

How ridiculous. Setting a price floor doesn't undercut anything. I know government officials are stupid and uneducated about economics but they can't be that dumb. They can assume the population is that dumb though and lie to them.

The price floor is just to pay the mafia (government) their cut. Thanks mafia!

Kshartle wrote:

WildAboutHarry wrote:

Under the new legislation, the price of marijuana will be set at one dollar per gram, aiming to undercut the current price of $1.40 on the illegal market. The sale and production of the drug will be regulated by a specially-set-up government body which will administer a database of adult citizens registered to consume marijuana.

Oh, good.  Legal pot AND more government.

How ridiculous. Setting a price floor doesn't undercut anything. I know government officials are stupid and uneducated about economics but they can't be that dumb. They can assume the population is that dumb though and lie to them.

The price floor is just to pay the mafia (government) their cut. Thanks mafia!

My understanding is that the legal outlets are going to sell pot at $1/gram, which is less than the black market price. If so, this will indeed undercut the black market price.

Libertarian666 wrote:

Kshartle wrote:

WildAboutHarry wrote: Oh, good.  Legal pot AND more government.

How ridiculous. Setting a price floor doesn't undercut anything. I know government officials are stupid and uneducated about economics but they can't be that dumb. They can assume the population is that dumb though and lie to them.

The price floor is just to pay the mafia (government) their cut. Thanks mafia!

My understanding is that the legal outlets are going to sell pot at $1/gram, which is less than the black market price. If so, this will indeed undercut the black market price.

But what if a free pot market would price it at 50 cents per gram?

Libertarian666 wrote:

Kshartle wrote:

WildAboutHarry wrote: Oh, good.  Legal pot AND more government.

How ridiculous. Setting a price floor doesn't undercut anything. I know government officials are stupid and uneducated about economics but they can't be that dumb. They can assume the population is that dumb though and lie to them.

The price floor is just to pay the mafia (government) their cut. Thanks mafia!

My understanding is that the legal outlets are going to sell pot at $1/gram, which is less than the black market price. If so, this will indeed undercut the black market price.

Yes but is that a price floor? Free market competition lowers prices, not price fixing. $1.00 is less than $1.40 but it's not the fixing that drops the price, it's the lower cost of operating without the risk of getting put in a cage.

The government setting the price at $1 makes the price HIGHER than it otherwise would be with a free market. Otherwise someone would come along and charge $.99 and so on until the price was set by supply and demand. It would of course be lower than the price floor set by the government.

The government can't have the price be set by the free market because they want to steal what they see as their share of the profits. They are now like the drug dealers except that they will just go around collecting from the franchisees rather than do any of the work themselves.

MediumTex wrote:

Libertarian666 wrote:

Kshartle wrote: How ridiculous. Setting a price floor doesn't undercut anything. I know government officials are stupid and uneducated about economics but they can't be that dumb. They can assume the population is that dumb though and lie to them.

The price floor is just to pay the mafia (government) their cut. Thanks mafia!

My understanding is that the legal outlets are going to sell pot at $1/gram, which is less than the black market price. If so, this will indeed undercut the black market price.

But what if a free pot market would price it at 50 cents per gram?

Yes preceisly. Price floors keep prices artificially high, they don't undercut anything.


From wiki:

A price floor set above the market equilibrium price has several side-effects. Consumers find they must now pay a higher price for the same product. As a result, they reduce their purchases or drop out of the market entirely. Meanwhile, suppliers find they are guaranteed a new, higher price than they were charging before. As a result, they increase production.

Taken together, these effects mean there is now an excess supply (known as a "surplus") of the product in the market to maintain the price floor over the long term. The equilibrium price is determined when the quantity demanded is equal to the quantity supplied.

So if the free market price is above $1 then the price floor is not relavent but if it's lower the result is artificially high prices and wasted resources (oversupply)

Kshartle wrote:

MediumTex wrote:

Libertarian666 wrote: My understanding is that the legal outlets are going to sell pot at $1/gram, which is less than the black market price. If so, this will indeed undercut the black market price.

But what if a free pot market would price it at 50 cents per gram?

Yes preceisly. Price floors keep prices artificially high, they don't undercut anything.


From wiki:

A price floor set above the market equilibrium price has several side-effects. Consumers find they must now pay a higher price for the same product. As a result, they reduce their purchases or drop out of the market entirely. Meanwhile, suppliers find they are guaranteed a new, higher price than they were charging before. As a result, they increase production.

Taken together, these effects mean there is now an excess supply (known as a "surplus") of the product in the market to maintain the price floor over the long term. The equilibrium price is determined when the quantity demanded is equal to the quantity supplied.

So if the free market price is above $1 then the price floor is not relavent but if it's lower the result is artificially high prices and wasted resources (oversupply)

If the free market price would be above $1 and the official price that you can buy it at the legal stores to be $1, then everyone will buy it at the legal stores, so the theoretical "free market" price will be irrelevant. This of course doesn't apply if the restrictions at the legal stores are strict enough to prohibit a major segment of the consuming public from buying there, but I don't think that is likely to happen.

Would I prefer no restrictions? Of course. However, this new law will greatly improve the situation over the previous situation, where there was no legal way to buy it.

Libertarian666 wrote: If the free market price would be above $1 and the official price that you can buy it at the legal stores to be $1, then everyone will buy it at the legal stores, so the theoretical "free market" price will be irrelevant. This of course doesn't apply if the restrictions at the legal stores are strict enough to prohibit a major segment of the consuming public from buying there, but I don't think that is likely to happen.

If the free market price would be above $1 and the official price is only $1 then we now have a price ceiling. The free market price is still relavent. What we'll have now is a shortage. Less pot will be grown/sold than otherwise and the pot will purchased as soon as it gets to the shelf or whatever since the price is now less than what the public is willing to buy it for.

The only way to avoid the shortage will be for the government to make up the losses suffered by suppliers with subsidies (thereby also raising the cost indirectly of everything else).

It sounded to me like this was a price floor, implying that business can't sell BELOW $1/gram vs. not being able to sell ABOVE $1/gram. I didn't read the article though. If it's just $1 no matter what then we'll have to see if we have a shortage or a surplus and that will tell you where the free market would be, above or below a buck.

Kshartle wrote:

Libertarian666 wrote: If the free market price would be above $1 and the official price that you can buy it at the legal stores to be $1, then everyone will buy it at the legal stores, so the theoretical "free market" price will be irrelevant. This of course doesn't apply if the restrictions at the legal stores are strict enough to prohibit a major segment of the consuming public from buying there, but I don't think that is likely to happen.

If the free market price would be above $1 and the official price is only $1 then we now have a price ceiling. The free market price is still relavent. What we'll have now is a shortage. Less pot will be grown/sold than otherwise and the pot will purchased as soon as it gets to the shelf or whatever since the price is now less than what the public is willing to buy it for.

The only way to avoid the shortage will be for the government to make up the losses suffered by suppliers with subsidies (thereby also raising the cost indirectly of everything else).

It sounded to me like this was a price floor, implying that business can't sell BELOW $1/gram vs. not being able to sell ABOVE $1/gram. I didn't read the article though. If it's just $1 no matter what then we'll have to see if we have a shortage or a surplus and that will tell you where the free market would be, above or below a buck.

I doubt there will be a shortage because the actual cost to grow is far less than that, once the legal risks are eliminated. And people can grow their own if they wish, so that should take care of the rest of any potential shortage.

Libertarian666 wrote:

Kshartle wrote:

Libertarian666 wrote: If the free market price would be above $1 and the official price that you can buy it at the legal stores to be $1, then everyone will buy it at the legal stores, so the theoretical "free market" price will be irrelevant. This of course doesn't apply if the restrictions at the legal stores are strict enough to prohibit a major segment of the consuming public from buying there, but I don't think that is likely to happen.

If the free market price would be above $1 and the official price is only $1 then we now have a price ceiling. The free market price is still relavent. What we'll have now is a shortage. Less pot will be grown/sold than otherwise and the pot will purchased as soon as it gets to the shelf or whatever since the price is now less than what the public is willing to buy it for.

The only way to avoid the shortage will be for the government to make up the losses suffered by suppliers with subsidies (thereby also raising the cost indirectly of everything else).

It sounded to me like this was a price floor, implying that business can't sell BELOW $1/gram vs. not being able to sell ABOVE $1/gram. I didn't read the article though. If it's just $1 no matter what then we'll have to see if we have a shortage or a surplus and that will tell you where the free market would be, above or below a buck.

I doubt there will be a shortage because the actual cost to grow is far less than that, once the legal risks are eliminated. And people can grow their own if they wish, so that should take care of the rest of any potential shortage.

Then the free market price is lower than $1 most likely. Not allowing it to drop means oversupply or a better term would "inefficient use of resources". Since people don't want to pay the artificially high price they either won't consume as much as could be produced or they will waste resources growing it at home when it would cheaper to just buy it at a free market price.

Imagine if the price of a dozen eggs was set at $20. There would be almost no major producers anymore. People would start raising chickens for eggs and this would be a huge waste because it's so much less efficient. And very very few would be buying at the price producers would be allowed to sell at leaving all those eggs to rot until the commercial chicken farmers either dropped out or the government used tax dollars to buy up the excess eggs and hand them out in return for votes.

I can't imagine they would set the price higher than the market price and allow people to grow their own. That will cut deeply into the government's cut. Why set the price at all then. Clearly it's not to undercut the dealers if it's above the market....it's just to steal their profit not to make the people better off.

Again, I'm not saying this is better than complete non-intervention in the market; it obviously isn't.

What I'm saying is that it is enormously better than the "normal" approach of making the product in question illegal, thus raising the price and the gross profit margin immensely due to the risk of legal apprehension.

I doubt very much that there will be any negative effects from the new approach relative to that "normal" approach, no matter how inferior the new approach would be relative to an actual free market for the product, which has not existed anywhere for nearly 100 years.

Libertarian666 wrote: Again, I'm not saying this is better than complete non-intervention in the market; it obviously isn't.

What I'm saying is that it is enormously better than the "normal" approach of making the product in question illegal, thus raising the price and the gross profit margin immensely due to the risk of legal apprehension.

I doubt very much that there will be any negative effects from the new approach relative to that "normal" approach, no matter how inferior the new approach would be relative to an actual free market for the product, which has not existed anywhere for nearly 100 years.

Some freedom is better than no freedom I guess.

Agreed.

Still I never sign any petitions for "decrimilization" of medical marijuana here in Florida on principle. I consider that begging and degrading. I won't beg for my freedom. Others can do that and I appreciate any success they acheive.

Libertarian666 wrote: Again, I'm not saying this is better than complete non-intervention in the market; it obviously isn't.

What I'm saying is that it is enormously better than the "normal" approach of making the product in question illegal, thus raising the price and the gross profit margin immensely due to the risk of legal apprehension.

I doubt very much that there will be any negative effects from the new approach relative to that "normal" approach, no matter how inferior the new approach would be relative to an actual free market for the product, which has not existed anywhere for nearly 100 years.

Are referring to a truly free market in general, or one in marijuana?

Just curious.

moda0306 wrote:

Libertarian666 wrote: Again, I'm not saying this is better than complete non-intervention in the market; it obviously isn't.

What I'm saying is that it is enormously better than the "normal" approach of making the product in question illegal, thus raising the price and the gross profit margin immensely due to the risk of legal apprehension.

I doubt very much that there will be any negative effects from the new approach relative to that "normal" approach, no matter how inferior the new approach would be relative to an actual free market for the product, which has not existed anywhere for nearly 100 years.

Are referring to a truly free market in general, or one in marijuana?

Just curious.

For marijuana, as that is what we were discussing.

I'm in favor of truly free markets for everything, but the market for "drugs" has been more distorted than most others, so it's pretty easy to improve that particular one.

I was talking about the 100 years you were referring to, if that wasn't clear... I'm definitely aware you're in favor of a 100% free market .

Don't let the perfect be the enemy of the good, Kshartle.

A completely free market is nothing more than humans engaging in purely voluntary interaction with each other and resolving differences without violence or the threat of it. To be against that concept...........takes a special type of person or a tremendous amount of brainwashing. I would argue we have 1% of the former and 99% of the latter or some ratio close to that.

Pointedstick wrote: Don't let the perfect be the enemy of the good, Kshartle.

I prefer...the enemy of the great life is the good life.

Your point is taken, but I really couldn't live with myself at this point if I preached about a feast but settled for table scraps.

Kshartle wrote:

Pointedstick wrote: Don't let the perfect be the enemy of the good, Kshartle.

I prefer...the enemy of the great life is the good life.

Your point is taken, but I really couldn't live with myself at this point if I preached about a feast but settled for table scraps.

I think one country finally getting the nerve up to decide that they should not be throwing people in jail for growing, buying or selling a plant is more than table scraps. I think it's a nail in the coffin of all drug laws.

Libertarian666 wrote: I think one country finally getting the nerve up to decide that they should not be throwing people in jail for growing, buying or selling a plant is more than table scraps. I think it's a nail in the coffin of all drug laws.

Ditto. And it was done by not letting the perfect be the enemy of the good. If those freedom-minded Uruguayan legislators had voted no because the legalization nonetheless added taxes and price controls, pot would still be illegal today.

In politics, incrementalism is the name of the game. You can almost never just jump straight to your preferred outcome.

Libertarian666 wrote:

Kshartle wrote:

Pointedstick wrote: Don't let the perfect be the enemy of the good, Kshartle.

I prefer...the enemy of the great life is the good life.

Your point is taken, but I really couldn't live with myself at this point if I preached about a feast but settled for table scraps.

I think one country finally getting the nerve up to decide that they should not be throwing people in jail for growing, buying or selling a plant is more than table scraps. I think it's a nail in the coffin of all drug laws.

I hope that's true. I think the human story is moving us towards the respect for the rights of the individual since it's true and the collective or societal rights are a lie. It's two steps forward and one step back at times. We're stepping back here in 'merica. I mean look at the creature the 'mericans elected.

I hope you're right but I suspect they did not "come to their senses" about right and wrong but instead about what would make them rich and more powerful. Now they will really get to control the drug trade.

The power to regulate and tax is much more lucrative than the power to outlaw.

Maybe I'm just a bit cynical that they haven't "found religion" down in Paraguy.

Pointedstick wrote: In politics, incrementalism is the name of the game. You can almost never just jump straight to your preferred outcome.

Yes........that definately is the name of the game and they can never just jump straight to their preferred outcome.

Kshartle wrote:

Pointedstick wrote: Don't let the perfect be the enemy of the good, Kshartle.

I prefer...the enemy of the great life is the good life.

Your point is taken, but I really couldn't live with myself at this point if I preached about a feast but settled for table scraps.

Kshartle,

What qualifies as "settling?"  Eventually, I'm assuming you log off the internet, forget about your plight, and enjoy your family and friends, correct?  Is that settling?

Eventually, you might vote for Ron Paul. Is that settling?

We all settle.  The question is, how much do we try to change something we can't, and (more importantly) make ourselves miserable in the meantime, before we put down our verbal axe and focus on our own lives, and how we can improve them.

Those who spend their whole lives trying to change things they can't settle for FAR less than those who try to do the best with what they have.

Sorry if this is all a bit preachy... I'm trying to speak for HB as if he was here... by no means do I claim this perspective as my own wisdom.  I'm just borrowing someone else's.