Sunday, August 16, 2015

Starbucks, prices, politics, life extension

People who get markets understand where prices come from and why they are essential. Many others who do not get markets are sure that prices are somehow "wrong" -- and that they know what they should be (some kind of cost mark-up) -- and who should fix them. Guess who. Much of the politics (and "policy discussion") we have is because of the latter.

Today's NY Times includes "Cheap Coffee and the Starbucks Premium ... Why Starbucks raised price on some brewed coffee even as the price of beans fell globally." That does sum it up. They raise prices because they can: the "premium". Those crazy consumers. But who better? (Figuring out when and how they can is not so simple; price adjustments happen often; they are called "sale", "clearance", etc.)

To be sure, the Times piece mentions that Starbucks announced on July 6 that its costs were rising.  Announcements like these accompany all price hikes because sellers understand the public's grasp of pricing.

We hear all the time that more and more people have gone to college -- and more have been through econ 101. But if the simplest of lessons about prices were to be taught and learned, just imagine how much of the rhetoric and how much of the politics would disappear.  Imagine how much time would be made available. It would be like life extension. Imagine.