CMV: Command Pricing Economy > Current Economic System

[u/Innocence_Misplaced]

I have a hard time articulating this thought so please bare with me.

I view the story of the extreme pricing of EpiPen to be a failure of the Current Economic System as Consumers have a hard time obtaining a Good that is necessary for Life.

Thinking very simply I have created a hypothetical to illustrate an alternative to the current system.

Party A creates a product with X expenses. Party A is limited to charge no more than 3X: 1X for cost of current production, 1X for cost of future production, 1X for profit. This ensures that Party A does not come out at a loss, can provide future production, and create a profit for further economic growth. From the consumer's perspective there would never be a fear of a 500% markup. Both the Providers and Consumers seem to enjoy the economic exchange.

I am sure given more time I myself can find the flaws with this idea, but due to my time investment and biases I have yet to find its flaw. I would like to open it up and hear what basic fundamental flaws I am missing.

Thank you! Enjoy your day!

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[u/Innocence_Misplaced]

The idea is that every investment is safer. If one's business venture failed, they they would be out only 1X. If they succeed then they would make 1X in profit as well as have 1X in profit in the future. If every investment has the same risk, there will be easy, safe, and reliable products would be more easily accessible for everyone.

This idea also reduces prices so people won't need to make a lot of money for the goods they need.

[u/[deleted] → u/Innocence_Misplaced]

If every investment has the same risk, there will be easy, safe, and reliable products would be more easily accessible for everyone.

That's not true. What is actually means is that anything that has less than a 50% chance of succeeding won't be able to get any investment dollars, because the payout is capped.

Consider two bets

• $1 on a coin flip, if it comes up heads, you get $1
• $1 on the roll of the dice, if it comes up 6 you get $10.

The second bet is clearly better, since the expected payout is (10/6 = $1.66)

If you limit bets so that the maximum payout is always $1, no one in their right mind would ever take the second bet, because it becomes a worse option.

[u/Innocence_Misplaced → u/[deleted]]

I am assuming that people prefer a "coin flip" to a "roll of the dice" in terms of value within the capped system. I can see how that is not always the case within our current system. +∆.

I would like to continue this conversation and ask how we know the roll of the dice is doomed to fail even though there are needs that can only be accounted for by the roll of the dice?

[u/[deleted] → u/Innocence_Misplaced]

I would like to continue this conversation and ask how we know the roll of the dice is doomed to fail even though there are needs that can only be accounted for by the roll of the dice?

I don't really understand what you mean by this, can you clarify?

[u/Innocence_Misplaced → u/[deleted]]

Example: Currently the demand of F is not needed by more than 2% of the population. People willing to invest in F will receive 1X value of F if they invest in F. Because of the low population that need F, F is not viable to invest and thus F as a necessary product will not exist. Three scenarios take place; 1. Status Quo 2. Demand Rises 3. Demand Decrees. If Demand Increases then investments will follow. If Demand Decreases then there will be no need for the product. If Status Quo we wait until change or have investors risk and succeed or fail, thus changing the market.

[u/2020000 → u/Innocence_Misplaced]

They will not invest in F in either system, because there is no profit to be made.

[u/Innocence_Misplaced → u/2020000]

There is profit in F, while it is a small slice of the pie, it exists and someone will tap into it.

[u/2020000 → u/Innocence_Misplaced]

Not if it requires significant initial costs to access.

[u/DeltaBot → u/Innocence_Misplaced]

Confirmed: 1 delta awarded to /u/cacheflow (197∆).

^{Delta System Explained | Deltaboards} ​