site banner

Culture War Roundup for the week of November 14, 2022

This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.

Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.

We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:

  • Shaming.

  • Attempting to 'build consensus' or enforce ideological conformity.

  • Making sweeping generalizations to vilify a group you dislike.

  • Recruiting for a cause.

  • Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.

In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:

  • Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.

  • Be as precise and charitable as you can. Don't paraphrase unflatteringly.

  • Don't imply that someone said something they did not say, even if you think it follows from what they said.

  • Write like everyone is reading and you want them to be included in the discussion.

On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.

12
Jump in the discussion.

No email address required.

Why does much of the public feel strongly entitled to below-market pricing for certain luxury goods and services? And on the flip side, why do some companies seem to intentionally yield profit to scalpers? Why not dynamically price every premium product/service in today's day and age?

Case study A: Taylor Swift is making the news for selling record amounts of tickets for her upcoming tour. The internet in response has been raging against Live Nation's monopoly, corporate greed, price gouging, bots, scalpers, and Citizens United over both the expensiveness and the lack of availability of her tickets. The brouhaha predates TS--over the past few months, it seems like every time a popular musician launches a tour, the same headlines resurface about greed, price gouging etc.

Case study B: Nvidia's 4000 series graphics cards have been catching flak for their pricing. Same talking points as above, minus the monopoly part because there is real competition in graphics cards.

All this seems silly to me:

  1. Concert tickets, like most everything else, and especially like luxury goods and services, are fundamentally priced by supply and demand. The internet is livid that TS tickets are both expensive and then resold for even more, and directs its anger at TS, LN, and scalpers, arguing that real fans are being cheated somehow. But I don't understand how any of it is actually unfair. Is a concert goer a fake fan if s/he buys from the secondary market at a higher price rather than waiting in 8-hour-long virtual queues the moment tickets go on sale? Super Bowl tickets routinely sell for thousands or tens of thousands. Are your average working class fans being cheated somehow because they cannot afford that? And if the NFL set up a buggy virtual queuing system that allowed people who otherwise cannot afford it buy Super Bowl tickets at a hefty discount (maybe that's exactly how it works. Idk--I've never once thought of trying to buy SB tickets), should society be critical if they then turn around and resell said underpriced tickets for a profit, and then presume to spend the money on goods and services that deliver them more utility? It's not like there is anything particularly virtuous about making sure people who buy tickets to a ball game are committed to attending rather than being free to change their minds or profit from gross pricing inefficiencies.

  2. Nvidia's 3000 series ran into extensive problems with extremely mismatched supply and demand for something like two years, and this of course led to plentiful scalping, which if nothing else is a huge waste of resources considering all the time and money spent on shuffling products to and from middlemen. For the 4000 series, Nvidia smartly priced its products substantially higher than before, which should reduce the mismatch and get inventory to people who want it the most. They can then cut prices and offer discounts once sales slow down in the coming months/years.

  3. Live concerts and premium graphics cards are luxury goods and services. The songs themselves remain extremely affordable through streaming services, and graphics cards released 5 years ago can handle the vast majority of games so long as you do not insist on playing on max settings. It's hard for me to see anyone's rights are deprived because their desire to go to a live concert or play games at the highest settings cannot be met. All the outrage that that either TS or LN is price gouging just sounds so stupid--it's a concert, people. If you don't like the price, don't go. We're not talking about overcharging for gasoline prices when a hurricane is about to hit.

But ultimately, the above is all noise to me. The simplest solution seems to be just to price all luxury goods and services dynamically. Consumers understand that airline and hotel prices are heavily dependent on supply and demand--traveling the Wednesday before Thanksgiving will cost far more than the Wednesday a week later, and flying first will cost substantially more than economy. Hotels on weekends when large conferences are in town will be priced significantly more than otherwise, and suites cost more than standard rooms. There is no scalping that happens for either product because, aside from the TSA, tickets are priced using algorithms that adjust automatically so there is no need to scalp.

So why not do that? Why not dynamically price every luxury good in high demand? Disney does it for its parks. I didn't look too closely into it, but it seems like maybe TS opted into dynamic price this time around, but clearly it's not dynamic enough if there are any scalpers who still make a profit. As for graphics cards, I think the world is better off if Nvidia prereleases the 4000 series online a few weeks ahead of public releases (since traditional retailers can't dynamically price as easily); and during that prerelease period, use algorithms to fully satisfy demand at the market clearing price. Like I mentioned, scalping is a waste of resources and productivity for all, so get rid of it. If Nvidia can retain the vast majority of profits and recapture waste from middlemen shipping and handling, that capital can be redeployed to R&D or paid back in dividends, which then can be invested in other productive enterprises.

I think one piece missing from your analysis which you need to factor in, is that scalpers distort the market through their actions. The very act of buying up tickets/GPUs/whatever means that there won't be enough to fulfill demand, which drives the price up. Even factoring that in, maybe the original sellers should charge more - but I think you need to account for that as well.

That said, the biggest problem people have with scalpers isn't some kind of desire for below market pricing. It's that scalpers are purely parasites. If Nvidia chooses to charge me $1000 for a graphics card, I can accept that they made it so they get to decide what they want to charge. I won't buy at that price, but I'm not mad. When a scalper buys up all the cards for $500 and then sells them for $1000, they are "solving" a problem of their own making. They are simply scum who want to profit off others without doing anything to deserve it. People would have just as much of a problem if you did this with literally any product, it isn't just luxury goods.

The very act of buying up tickets/GPUs/whatever means that there won't be enough to fulfill demand, which drives the price up.

But they need to sell them too, into the original pool of sellers, who still have the same willingness to pay. Outside of things like price discrimination / monopoly pricing it doesn't "drive the price up" any more than the price would've been if nvidia priced it higher.

When a scalper buys up all the cards for $500 and then sells them for $1000, they are "solving" a problem of their own making.

They're redistributing the cards from people with lower willingness to pay to higher willingness to pay - which can be valuable if it's e.g. a gamer who wants slightly better graphics than the last generation to exactly zero gameplay effect bidding against an AI company, or not matter much at all if it's a concert ticket (but that's because concerts themselves don't matter much). Although - for a variety of reasons, in the past sometimes 'intentionally partly disabling some lines of your product so that you can price discriminate better' but often reasonably, AI chips and gaming chips aren't great substitutes.

This is not really correct. Scalpers, by definition, have no interest in the goods they're scalping -- they don't want them. Their only objective is to arbitrage the price people are willing to pay and MSRP. If there wasn't demand for the products at the price the scalpers were asking then they wouldn't sell and they'd be forced to lower their prices. There is no scenario where scalpers are "distorting the market", they correct pricing errors and make the market more efficient.

But I don't value market efficiency. Market efficiency is only useful as a means to an end. If nvidia were to charge more, they could at least use that money to make more graphics cards. When a scalper does it, they just increase the price for the consumer. They're worse than the people who drive into disaster areas and sell bottles of water for $50; even if it would be better for the disaster victims to get water for cheaper or free, they're at least generating some value by shipping it in and distributing it. Graphics card scalpers just generate value for themselves while lowering value for actual consumers and being net neutral for producers. As @SubstantialFrivolity says, they're parasites, unhelpful to anyone but themselves.

Yes, I'm in complete agreement with you there. The existence of scalpers is a strong signal that the original price was too low and I'd much prefer the counterfactual world where Nvidia raised its own prices 30-50%, generating more profits (thus delivering more value to shareholders). I can't blame scalpers, though -- their actions are not wrong any more than picking up a $20 bill from the sidewalk is wrong -- it's Nvidia's pricing error that they're taking advantage of, so it's Nvidia's fault. Personally I find the people complaining about Nvidia's higher prices to be more infuriating than scalpers. As you say, at least when Nvidia charges more, that value is going to R&D, manufacturing, stakeholders, etc.

When a scalper buys up all the cards for $500 and then sells them for $1000, they are "solving" a problem of their own making

They're shifting allocation from customers that will spend time to customers that will spend money. You might not value that, but it actually is solving a coordination problem that would otherwise exist.

If anyone's to blame for the scalpers getting a cut, it's the initial seller for using inefficient allocation methods.

If anyone's to blame for the scalpers getting a cut, it's the initial seller for using inefficient allocation methods.

The company doesn't randomly put lower prices on its goods; it puts lower prices on its goods because this brings it benefits that are not directly measurable, but are still real. This isn't an "inefficient allocation method" because it's not inefficient after taking the not directly measurable benefits into account.

it puts lower prices on its goods because this brings it benefits that are not directly measurable, but are still real

which are?

You might not value that, but it actually is solving a coordination problem that would otherwise exist.

That is not actually a problem that exists.

If anyone's to blame for the scalpers getting a cut, it's the initial seller for using inefficient allocation methods.

Nonsense. Those scalpers are responsible for their own scummy actions. Nobody makes them behave badly, they choose to.

The “problem” solved is converting time-preference into money preference. In theory this ensures the cards/tickets go to the “best” end users, because all the factors which might make use of them can be distilled into money.

I don’t find it very morally compelling, because outside of economic use, I’m skeptical of how well money converts end-user consumption. As largely recreational luxury goods, graphics cards (sigh, not for crypto) or concert tickets are basically sinks of value. Given that the user will not produce anything with them, that makes discussion of “efficiency” moot.

So it would be more accurate to say scalpers are allocating luxury consumables to the lucky/hardworking. Yay.

No I get that, but that's already a solved issue. Just like with every other instance of someone who wishes to spend money instead of time, you pay someone to spend the time for you. The order of operations makes a huge difference here. Hiring someone to stand in line for you is fine, someone getting tickets purely to resell is not.

Its no longer about waiting in line. Its about running custom scripts and having multiple tabs open on multiple computers. I say this because thats why my friend had to do to buy UFC tickets yesterday where all tickets were sold out online in minutes.

Of the 15 tabs he had open, only one got through to seat selection. He was lucky, but the average consumer won't have the technical skills to compete against bots in online ticket purchase release.

Buying tickets from a scalper who stood in line for you is economically equivalent to paying the scalper to stand in line for you.

But not morally equivalent. Nobody has a problem with scalpers on economic grounds.

Not true - they are reducing demand on the tickets they hold, thereby making tickets available where there wouldn't be. If the tickets have to be $500 they're all sold and you can't buy one. If scalpers are reselling for $1000, now you can. The market prefers "can buy this for an expensive price" over "can't buy this," and that's why it pays scalpers.

Scalpers can buy, and actually have bought, tickets, sold some at high scalping prices, and discarded the rest.

It's entirely possible that pricing the tickets higher results in fewer people in total buying them. At best, the market is maximizing direct measurable cash income. It certainly is not maximizing number of tickets sold, as you imply here. If 600 people would buy tickets at $1000 and 1000 people would buy tickets at $500, raising the price has reduced the number of tickets sold.

And this doesn't even consider cases where the market is just irrational. The market eventually takes care of irrational people, but not before they cause a lot of damage. If someone buys up all the tickets and charges so much that nobody will buy any from him, he'll go broke--the market will punish him. But he's going to go broke after a whole lot of people have experienced not being able to get tickets.

Scalpers can buy, and actually have bought, tickets, sold some at high scalping prices, and discarded the rest.

This would fall into price discrimination / monopoly pricing. But how common is that? If there are multiple scalpers, one scalper doing this gets outcompeted by another selling at 'market price' (and both get outcompeted by the original ticket seller selling at 'market price').