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Hard Drive Shortage Relief Coming In Q1 2012
MojoKid writes "According to new reports [note: source article at DigiTimes], global HDD production capacity is getting ready to increase to 140-145 million units in the first quarter of 2012, or about 80 percent of where it was prior to when the floods hit Thailand manufacturing plants. HDD production was sitting around 175 million units in the third quarter of 2011 before the floods, after which time it quickly dropped to 120-125 million units. Since then, there's been a concerted effort to restore operations to pre-flood levels."
It's great that HDD production is about to increase again, but I think the recent "crunch" was also a good thing in a way. Perhaps it encouraged some end users to get more creative with data storage techniques, resulting in more efficient systems that can do more with less bulk storage capacity. At least I can hope so.
Write failed: Broken pipe
This is kind of old. I'm a college professor in a computer science department. Our students were affected at the beginning of this term (we offer free external hard drives on which to keep their work). About four weeks in, the supply opened back up. We initially issued 16GB flash drives, and now they all have their 320GB USB drives.
Microsoft leads to Bluescreen; Bluescreen leads to downtime; downtime leads to suffering.
Granted, the drop in supply was more abrupt than the restoration of supply, so one would expect prices to follow the same curve.
It may be too much to hope that this leads to more geographic diversity in manufacturing, but I hope it's at least produced some lasting acceleration toward solid-state storage.
It's not all their fault, really. MSPaint doesn't have JPEG support in Windows 98.
What's so relieving about:
Due to increased costs of components and materials, HDD prices are likely to rise 30-40% from the level before the floods by the end of 2012, the sources indicated.
-- FTFA
...but, what's keeping 4TB internal drives off the market?
The 4TB Deskstar has been out for a while...where are Seagate and WD?
The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky
I can't wait til Q1 2012 finally comes!
Uhhh... unless they're using some new calendar I'm unfamiliar with, the first quarter is about two-thirds over. The fact that they're using the future tense for something which is already mostly gone makes me wonder just how well informed this article is.
dragonhawk@iname.microsoft.com
I do not like Microsoft. Remove them from my email address.
...how does a production shortfall of less than 50% result in a price hike of *over 300%*??
This curve should explain it: http://en.wikipedia.org/wiki/Supply_and_demand
"I zero-index my hamsters" - Willtor (147206)
Panic?
Has there been any data published about the reliability of the drives coming off of the assembly line now? When the drive makers reduced their warranties, there was concern that production after the flooding would have a drop in quality. Has this been borne out, or was it unfounded speculation?
Depends on the slope of the supply-demand curve.
Econ 101.
1. Big OEM contracts agreed long in advance takes priority, so everything had to be absorbed by the spot market which is much smaller.
2. If you don't have a HDD, you practically can't sell a new machine and for many commercial services not buying is not an option.
3. As smart people in the market realize what was about to happen, they made sure to buy now "just in case" emptying the market.
4. Even OEMs started to fear the shortage and started buying HDDs in the spot market as insurance.
Sum of all of the above = it probably took a 300% price hike until sales dropped 25% to match supply. Spot sales probably had to drop 50-80% for that to happen.
Live today, because you never know what tomorrow brings
The floods caused, what, hundreds of millions of dollars worth of infrastructure damage? Who's ultimately going to write the final checks that pay for all the repairs (and likely upgrades)? Don't we know who? It will be every person and company that buys those products and the population of Thailand. Ultimately the entire global economy pays the bulk of the cost. The One Percenters who control those factories damned sure aren't gonna foot much of the bill. So... don't be a fool and expect prices to return to where they would have been otherwise. That will take a decade.
(It's exactly how recessions work: One Percenters feel a pinch in their ability to concentrate wealth, and in a perverse reversal of the Trickle Down theory they make all those they employ suffer instead so that they regain the full extent of that ability. The only difference in this case is that the proximal cause is an obvious natural disaster. Economists have been feeding us lies about such things for decades.)
I was starting to feel spoiled with how low hard drive prices were before the floods. But now, even months after the floors 1TB drives are still more than I paid for 2TB drives before the floods, I don't feel spoiled anymore.
... and in the DRM, bind them.
I wish I had mod points. I was practically screaming at my monitor about parent being modded +4 insightful. I'm holding back on making a political statement regarding economics at this point.
I did #2 I bought a handful of terabyte Hitachi drives...on sale at some less than agile big box retailer. I repeated that a couple times till the hammer fell.
I like the drives, they are quieter than seagate.
I'd go on a Vegan diet but the delivery time from Vega is too long. --brownkitty
How much will you pay for the air you need if there was a shortfall of 20%?
Right now it's free. So it'll be a price hike of infinity percent.
Just to elucidate, a x% reduction in amount of HDDs does not translate into an x% increase in price (which is impossible since the units are different). It results in an x% reduction in number of people who can buy HDDs.
Pretend that 100 people want to buy one HDD each. If there are only 50 identical HDDs, that doesn't mean that the price goes up 50% (or 100%). It means that only 50 people can buy HDDs. The other 50 have to go without.
Sort everyone by how much they're willing to pay for a HDD, from lowest to highest. Then the highest price that the 51th person is willing to pay for a HDD is the new market price. If he's willing to pay just 10% more, then the price for HDDs goes up 10%. If he's willing to pay 300% more, then the price for HDDs goes up 300%. His price is higher than the first 50 people are willing to pay, so they choose simply not to buy a HDD at his price. Consequently there are only 50 people left who want to buy HDDs, and only 50 HDDs for sale.
>If anything, economies of scale would have seen to the dramatic drop in production costs and not an increase.
Have you missed the last few decades of decreasing costs for computer hardware? This price increase is just a blip, and it isn't the first time this sort of thing has happened.
>We should all be running 2TB SSD drives by now but instead the greedy HD manaufacturers just want to squeeze every bit of dough out of the old mechanical HD market instead.
This looks like a non sequitur.
Even if all the hard drive companies were fixing prices, what does that have to do with all of us not running 2TB SSDs? If anything rising HD costs would encourage us to seek alternatives.
Solid state storage just costs more per byte than hard drive platters, plain and simple. There is still a huge market for slow HD storage and there will be for years to come. HD companies aren't just going to stop selling hard drives to "make room" for SSDs or whatever when they have huge investments in HD production and willing buyers.
Anyway, eventually we will be running 2TB SSD. I'm on my way there: I have 240GB, at work we just bought 800GB.
I.e. a simple hedging strategy.
The other part (which the GP obliquely touched on without calling it this) is Supply Chain Management theory. If you don't know anything about SCM, it's a lot more mathematical and complicated than you might imagine.
Thanks for a great explanation. BTW, this is also exactly why markets are fundamentally unfair and flawed systems. When there is a resource shortage, the richest person can *always* get an item, and the poorest person can *never* get an item. It's just a system of entitlement and privilege based on numbers in a bank account.
Skyrocket the moment they think supply is threatened and then fall back down glacially while waiting for the next disaster or crises. Supply may increase as production ramps up but I'm betting that the middle men and manufacturers will keep prices high for as long as they can. Some manufacturers apparently didn't suffer the same losses but jacked prices up too so this should be no surprise at all...
Build it, Drive it, Improve it! Hybridz.org
unfair and flawed? Everything is limited... what other way do you know of that's more fair to divy 50 drives between 100 people?
Unfair? How would you like to apportion them?
In a resource shortage, yes, the very wealthy can always get what they want. Here's a hint: the very rich can always get what they want, period. They're rich. In the worst-case scenario, they can bribe whoever is in charge of things. Hard drives, however, are both a consumer product and a business product. Business products are valued much more highly, for good reason - they are the tools you use to make money. Practically, the price increases led me to use a spare 1 TB HD to build a DVR, instead of buying a 2 TB drive. In a year or two, I'll get a 3-4 TB drive for a price I feel is fair, and in the meantime someone's company has gotten a 2-3 TB drive to use for their database.
Yes, we'd be in a much worse one.
For example, there's the round robin method. Put 100 people in a queue. The person at the front gets served and must go to the back of the queue afterwards. So the first time there's a shortage, people #1 to #50 get the drives. The second time there's a shortage, people #51 to #100 get the drives.
Another method is to pick 50 people out of 100 randomly and let them have the available drives. This doesn't require to implement a queue, but has a small chance of overlap in repeated allocations.
The point here is that fairness requires that all individuals are served equal amounts over their lifetimes, which can't happen in a market as the OP showed.
If you think about it, this problem also shows up in all modern operating systems. There are limited resources like CPU, memory, disk, etc, and the process scheduler has to decide how much time to give to each running process. How do they do it? They certainly don't use markets. What if they did? You'd have "rich" processes that hog all the CPU time, and you'd have "poor" processes that couldn't get any CPU time at all. It would be a crazy fun Linux kernel patch, though :)
Another funny thing about markets is how they invariably get replaced by rationing when the survival of a nation is at stake. When the German U-boat blockade of England in World War II prevented supplies coming in, the lowly, suboptimal, rationing method was more reliable and fair than free markets (Incidentally , it also prevented rioting and a civil war. What do you think would have happened if half a million of the poorest British subjects suddenly were unable to buy any food *at all*?)
Your other post approved round-robin. That just pushes the competition into the secondary market, where people realize that they got a hard drive worth $200 for $100. So they resell the drive, the cost to the business remains the same, but the transaction cost goes up. Great! UPS, FedEx, and the Postal Service win!
Rationing for survival is not more "fair" than a market. It means that the state provides goods at a price lower than their actual cost in order for the poorest to be able to purchase them. It's just another form of welfare, and is no more or less legitimate or fair for being so.
Sorry, I meant to reply to this. That point is somewhat irrelevant. The unfairness I'm talking about isn't that the rich are privileged. To be sure, it's distasteful, but not a fatal flaw on its own. The fatal flaw is that in a resource shortage, the very poor never get anything (in a free market economy). A fair system has to ensure that all the participants regularly get access to everything that's being traded.
Your example illustrates this perfectly. You forego access to a new 2TB drive, which leads you to change your behaviour, while a company with more money to spend on hardware isn't inconvenienced in the same way. But you implicitly accept that because you have faith that the prices will come down, and your projects are merely deferred in time. You expect to get something you want eventually, so you feel this is fair.
'Fairness' should factor in importance of the drive. Funnily enough, increasing prices does that quite effectively.
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
Not at all. There's nothing inevitable or deterministic in your suggestion. The secondary market isn't relevant to all the participants of the primary round-robin system. Most participants will use the hard drive they got for their own projects (that's why they joined the round-robin queue in the first place). A small fraction only will decide to defer their projects, and sell their drive on a secondary market.
The secondary market is more expensive, but clearly it's a fallacy to postulate that the secondary market somehow overrides or replaces the primary round-robin allocations.
Heh. Let me decode what you seem to be saying. The state ensures that all the population is able to obtain access to goods, and that is exactly as fair and legitimate as letting people die in the streets? Moreover, your argument seems to confuse the meanings of price and cost. In a free market, the price is determined by supply and demand, so actual cost is irrelevant. Why should the actual cost be suddenly such a big deal in a rationing system? You can't have it both ways. If you criticize rationing on the grounds that prices don't reflect actual costs, then you *must* criticize free markets on the same terms, namely that the prices determined by supply and demand don't reflect actual costs either. Finally, if *survival* is at issue, I'd say that rationing is a lot more rational than a free market alternative, irrespective of fairness, welfare or legitimacy.
You're thinking too short-term. Say the government forced manufacturers to keep HDDs at their original price and sell them via lottery. The 50 HDDs would sell out. The manufacturers would look at the how much money they're making per HDD, and conclude they don't provide enough profit for them to repair their factories. Consequently, next month when the next batch arrives, there are 50 HDDs again, and 150 people (the 50 who didn't get one last time + 100 new people) wanting to buy them.
Your attempt at fair HDD distribution means there's a constant shortage. Then one day, some of the poorer people who got a HDD suddenly realizes that he can resell it for a lot more than they paid for it. A black market appears. Lots of other people who don't need HDDs realize the price differential between your fixed price and the true market price provides an arbitrage opportunity, and they enter the lottery for HDDs. Now you have 50 HDDs being produced per month, and 5000 people wanting to buy them. So of the 50 HDDs you're selling via lottery, only about 5 end up in the hands of people who actually need a HDD, the other 45 go to resellers flipping them on the black market for a profit. So most of the people who need HDDs are actually paying the higher price despite your price fixing, and the extra money is going to flippers instead of the manufacturers so there's no incentive for them to fix your real problem - a shortage of HDDs.
OTOH, if you allow the market price to increase, it provides the manufacturers the resources and the incentive to repair their factories and increase supply. Other companies who used to make HDDs but scaled it back look at the higher price, and say hey, there's a lot of money to be made, we should start making HDDs again. Next month they make 60 HDDs, and the price creeps down. Next month they make 85 HDDs and the price drops some more. And the next back they make 110 HDDs. The 10 extra means people who didn't get a HDD in previous months gradually get theirs. Eventually everyone who previously wanted a HDD gets one. Next month there are 100 new people who want HDDs.
Now the reverse of the previous situation happens. There are only 100 people who want HDDs, but the manufacturers are still making 110. There's an oversupply. The manufacturers cut their prices below the 100-drive level to try to sell out their drives before their competitors can. The market price now settles at the lowest price the 100th seller is willing to sell for. The extra 10 HDDs carry over to the next month and now there's a 20 drive oversupply, driving the price even lower. Eventually some of the manufacturers see their dropping profit, cry uncle, and scale back production. The manufacture of HDDs stabilizes again at 100 per month, exactly matching demand.
This isn't a system which favors sellers over buyers. It treats both the same. Sellers are at an advantage when there's a shortage. Buyers are at an advantage when there's oversupply (which is the state the HDD industry has been in most of the time - why IBM sold off its storage division to Hitachi, who is now trying to sell it to Western Digital). The price fluctuations are the feedback mechanism which cause manufacturers to produce more or fewer drives in response to demand. Eliminate it and you break the economy.
you implicitly accept that because you have faith that the prices will come down, and your projects are merely deferred in time.
Well, no, there are just some things I will never be able to afford. A hard drive isn't likely to be one of those things, courtesy of Moore's Law, but if it turns out that large hard drives always cost more than I want to spend, then I suppose I won't buy any large hard drives.
A fair system has to ensure that all the participants regularly get access to everything that's being traded
No, it need not do that at all. If you're talking about starvation, then I would be totally on board with providing a food subsidy to people who can't afford to eat - but I want to be honest about it. Price controls are a way for governments to screw over people who own valuable assets. Subsidies are a way to let those people reap the benefit of their good investment decisions.
Opportunistic capitalism.
Greediness.
How many times alleged production decline increased enormously DRAM price?
See also: greed.
I'm also betting you that prices won't ever come down to their pre-shortage levels unless a glut develops
The only shortage of air is caused by pollution.
Which industry gets away with doing for free.
Let's take the steps again, but more slowly and carefully. The lottery system is the official market for the HDDs (or if you like, whoever administers the lottery system has a long term contract with the manufacturers already). What does this imply? It means that during contract negotiations, the manufacturer was guaranteed to get a certain number of orders, and the lottery operator (it might be the state) can rely on a guaranteed supply for a number of years, thereby ensuring bulk pricing.
Since the manufacturer knows what's going to be required for a long time, his factory is built, fixed and/or upgraded to satisfy the expected orders, money for operating expenses is set aside, and the rest is guaranteed profit.
What if demand for HDDs skyrockets in the lottery system? Since the manufacturer already knows how much profit will be available, this can be used for increasing output without the risk involved in large free market price fluctuations. So the manufacturer talks to the lottery and they amend the contract. In the lottery, the supply goes from 50 to 100, and the manufacturer still has a guaranteed number of orders and associated profit.
Now in the lottery system, the increasing demand might be legitimate, ie people who really need the HDDs, or it might be intended for the black market. If there's real demand anywhere in the country, that demand will go into the lottery system, where it is visible by the operator, who can plan contract amendments with the manufacturer. That's because it's cheaper than the black market prices. The arbitrageurs find that the black market is relatively small and limited, and there's no explosion in demand at high prices.
As a result, the demand in the lottery reflects the real demand in the country fairly well, and the lottery is justified in allowing/requiring increased supply by talking with the manufacturer some more.
The problem with your example is that it's well documented that there was a thriving black market in Britain during the second world war, and those willing to pay the butcher the price he wanted for the "extra" sausages he had acquired would eat better than those who couldn't.
You really need that explained? Or are you just trying to get me to say something so you can make a speech about what the word important means?
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
It assumes the following logic: If it is more important to you than to someone else, you'd be willing to pay more for it.
The fairness of this then is inversely proportionate to the gap between the rich and the poor. In absence of any regulation or mitigation this results in effect that the rich people are more important than the poor people.
In democracies if this is too blatant it can be dangerous for the rich, since the poor people out-vote the rich people. But in many places the poorer people are ignorant and badly educated, and they and their children would likely be stuck in their "caste".
Extrapolation from this: there is a limit to the amount of resources the Earth has. So who decides how the wealth and resources should be distributed and what is fair?
Are you saying that you believe it is fair that there are some experiences in life that can never have because the number of zeros in your bank account is too small?
Leaving aside the starvation issue on which we agree, I consider price controls an allocation mechanism. In fact, I dislike the term price control for this, as it suggests that "price" is somehow an important part of all allocation mechanisms. It is really only important in a free market context, which is only one of many resource allocation models. Similarly, when you say that people who are being subsidised reap the benefit of (I assume you meant the others') good investment decisions, you are implicitly setting up prices or investment returns as a central concept for resource allocation, which I disagree with.
My point is really that, while human beings need resources to exist and pursue their goals, there's no reason why some resource allocation methods are off the table, let alone all allocation methods that don't happen to be based on an ordering derived from the number of zeros in an individual's bank account.
Given that this is a discussion, it seems obvious that I'm likely to disagree with your position and that I shall argue against your explanation. But I assure you this isn't personal, I'm only interested in the ideas. Although perhaps the AC has already said most of what should be said.
That's seems a remarkably stupid way to allocate limited resources.
We have 15 units of wheat seeds. In order to not starve to death (and replinish seed stocks) we need to plant at least five. There are 6 farmers who could each plant a unit. There 5 bakers who would rather just use the wheat as is to make food. There are 5 artists who would like to make some wheat seed art. There are 15 storers who would like to store the seeds for future planting. There's one crazy guy who wants to burn them. We should randomly allocate them? We should use a round-robin so this year we'll make some art, and next year we'll grow some food?
And in this fair world of yours how do we decide what to produce in the first place? It finally got to be my turn to use the factory for the year. How do I determine if I should use it to make hard drives, or RAM, or CPUs, or chess pieces (lets pretend factories can swap and choose...)? I have no price information telling me I'll make more money making hard drive due to a shortage after all.
No, that's just crazy!
We should give one unit to an artist, one unit to each of the five bakers, one unit to the crazy guy, one unit each to two farmers, and the remaining six units each go to a different storer.
An excellent explanation of how markets drive prices, and why a functioning market achieves better results than the imposition of price controls.
(Why is it that I never have mod points when they'd be useful?)
the communist method.
everyone orders the car and the plumber and they'll arrive 10 years from today, for the price they are today.
sure, the market system isn't fair, but it's fair to the seller - and the normal people who got the disks from some random queue would be selling them on ebay or black markets anyhow if they had higher value than what they paid for.
world was created 5 seconds before this post as it is.
That's not strictly true. Percent are percent, and are dimensionless.
However the reason percentages (or relative changes, delta-Q over Q) are used in elasticities is to make the result the same regardless of whether the prices are in Dollars per hundredweight or Lira per kilogram.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
It assumes the following logic: If it is more important to you than to someone else, you'd be willing to pay more for it.
The fairness of this then is inversely proportionate to the gap between the rich and the poor. In absence of any regulation or mitigation this results in effect that the rich people are more important than the poor people.
I wish I had mod points right now!
Many economics-oriented people don't seem to want to think about that notion about the gap when it comes to fairness.
yeah, bro. I want a free Lamborghini. Obama owes me one. I hope you're ready to buy it for me. they're expensive.
Not at all. There's nothing inevitable or deterministic in your suggestion. The secondary market isn't relevant to all the participants of the primary round-robin system. Most participants will use the hard drive they got for their own projects (that's why they joined the round-robin queue in the first place). A small fraction only will decide to defer their projects, and sell their drive on a secondary market.
Only very briefly. Then the bureaucrats responsible for running the system, or the guys driving the van that delivers them, will realise that they can make life much better for themselves by "losing" half the supply and selling it on the secondary market. Go look at the USSR for what happens when you try and run a society on something like round-robin.
The state ensures that all the population is able to obtain access to goods, and that is exactly as fair and legitimate as letting people die in the streets?
Yup. It ultimately depends on how you define fairness - whether the fair way to get more resources is to work for them, or to have more children and have the government confiscate them for you.
Finally, if *survival* is at issue, I'd say that rationing is a lot more rational than a free market alternative, irrespective of fairness, welfare or legitimacy.
You'd have to look at the results, and I'm not aware of any proper studies on this. Maybe a free-market system would have let more people starve initially, but also mean the people most vital to the war effort were better-fed and thus able to work harder, ending the war sooner and thus saving more lives overall.
I am trolling
if it's important for you then you pay xxx amount of money for it. the only reason you'd buy a drive is that it's important to you, the more important it is the more you're willing to pay and not use the money for something else you think of as important. that doesn't mean a market is a flawed system for distributing non-essential goods which will not cause a riot if in short supply(AND in such a case that it would cause riots it would be just as well to just distribute everyone equal amounts of _money_ in the first place rather than distribute the goods to people by some system, that however crashes the value of the money, but it does make the rich less rich if their wealth is based purely on money, and in such case butter etc. replace the money in payments).
it's only about the fairness of the first sale anyways, if the price out the door isn't the actual market price you'll have a second market form up pretty quickly, which is why I think concerts that sell out in 3 minutes are silly, they should just sell them at higher price for the first week of the tickets being available and then drop the price. would be much fairer than trying your luck with fucking ebayers. it would be MUCH, MUCH fairer and more transparent system than trying your luck with the phone-in queue when the tickets go on sale.
world was created 5 seconds before this post as it is.
OK, so everyone in the world should have their own personal Boeing 747. But they don't make themselves. So the only way for everyone to have one is to get lots of people to build them. Even if we put everybody in the world to work building them, I doubt they could produce enough for everyone to have one each.
And of course, if everyone is busy building jet planes nobody's growing food or sanitizing telephones and everybody dies, one way or another.
In short: resources are finite, therefore it's impossible for everyone to have everything.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
The key point is that supply isn't guaranteed. I know we're reaching the realms of fantasy here, but imagine that a factory gets destroyed by a natural disaster.
In addition, if there wasn't a shortage, why would we need your cockamamie lottery anyway?
It would be anyway. As a brewer I don't need to know which individuals are drinking & how much, but I can see how much the pubs (& supermarkets) are buying. Demand pulls through the system, one way or another.
Why is it cheaper? Because the lottery is free to enter? If that's the case 1) can't you see the obvious flaw there and 2) stop using the word "demand" in conjunction with it, because it's then meaningless in the economic sense of the word.
Finally, what use is a cheaper price if there aren't any available? If there are 500 people wanting disks and there's only 300 disks, then 200 people aren't going to be affected by the price in any way.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I had never seen this (for want of a better description) "fallacy of unit elasticity" until someone brought it up here back when this HDD crisis started.
Now it seems every story has some clown repeating it, and other clowns modding them up.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Let's not be hasty. *You* aren't worthy to have one. Paris Hilton however, is.
No, in short: the opposite of "there are some experiences in life that [you] can never have because the number of zeros in your bank account is too small" is "there are some experiences in life that you can only have if your bank account is sufficiently large".
It's ok to believe that last sentence is fair, and that you aren't worthy like Paris. It's a free country and everyone's opinion counts, more or less.
Supply is never 100% guaranteed. Distribution is not evenly guaranteed in a free market. Instead it is skewed towards those who have the most money to spend. Other systems, such as a lottery, have different properties, like a distribution without wealth bias.
No. Because the purpose of the black market is to resell goods at a higher price. The actual price in the lottery system is irrelevant. The black market price is always higher.
There's no claim whatsoever that a lottery system would give a cheaper price than a free market price. It might for reasons outlined earlier, but there's nothing forcing such an outcome. Higher or lower prices are really not the issue at all. The issue is distribution.
To take your beer example. Say the pub has only 10 glasses (I know...), and there are 11 thirsty customers that come every afternoon at 5. Each day, only 10 people get to have a drink, and it's always the same 10 people. Why? Because the barman tells them: the guy who pays the most gets the first glass. The next guy who pays the most gets the second glass, and so on. Every day, the poorest customer gets no drink, and that customer is always the same.
Now you might say that isn't fair. Maybe one of the other customers won't drink one day to give the last guy a chance. But they're all thirsty, every day, and it never happens. Well, the 11th guy never gets a drink unless something happens. Maybe the barman takes out some matches and everybody has to pick one. The guy with the short one goes without a drink on that day. Maybe some other method gets used. Anything's possible.
How much they have in their bank accounts is irrelevant, it's how much they're willing to spend on getting a unit of wheat.
And of the farmers are the producers of the wheat so if crazy guy really does want to spend $39.50 on a unit of wheat a farmer can profitably pay even more (and covering the interest if he needs to borrow to do so) - since he'll take the unit and turn it into multiple units one of which he can sell to the craxy guy...
But yes, your point is correct - market economics to assign resources really only works once you reach a big enough scale. At small sizes the communist/feudalist method of the guy in charge telling everyone what they will do works better (especially for the guy in charge) - at least until you get a cray buy at the top...
For the record. Paris Hilton is dumb as a rock, but she is smart enough not to own a 747. Only John Travolta is dumb enough to 'own' a personal 747. (IIRC it's a semi-retired Quantas 747 they let him use as long as he keeps it airworthy and available for them to use in an emergency, still cost _far_ more then occasionally renting a jet. And he can't turn the interior into a disco.) The Saudi royal family likely has one or two, unless they've already upgraded to A-380s, but not personal ones.
You have hit on a another good thing about market economies (in addition to them being 'unfair'). They allow stupid rich people to turn themselves back into normal people by spending way too much on stupid ego driven things.
The problem people like you never see is the basic flaw in your economic model. All command economies (look it up) require unhealthy concentration of power. Power corrupts etc (see history).
Finally 'there as some experiences in life that you can only have if your balls are sufficiently large.' (Google wingsuit, better yet Google wingsuit death) Is that also inherently unfair?
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
I wish I had mod points. I was practically screaming at my monitor about parent being modded +4 insightful. I'm holding back on making a political statement regarding economics at this point.
He could've been modded "Interesting" anyway...
You'd have "rich" processes that hog all the CPU time, and you'd have "poor" processes that couldn't get any CPU time at all. It would be a crazy fun Linux kernel patch, though :)
Simply with process priorities (the "nice" command, for example) you could set up a scenario like this.
A small fraction only will decide to defer their projects, and sell their drive on a secondary market.
You mean, everyone who values their drive more than the secondary market price will use it on their project. But what happens when people who don't want or need a hard drive join the queue because they know the secondary market price is higher than the round-robin price?
You're right that I started mixing up price and cost as terms there near the end. I meant "price" throughout.
Paris Hilton has managed, by virtue of having a famous family and being slutty, to make a name for herself and earn quite a bit of money. She's entertained a lot of people along the way. It has nothing to do with her intelligence (although her success at this suggests someone intelligent is behind it all), or her morality, or anything else. She is doing something that people value more highly than what nearly all of us on here do. Don't like it? Don't buy her stuff. Better still, if you think she's such a moron, and that all of her friends are, too, why don't you set up your own heiress trap, convincing them to blow their fortunes on stupid stuff you sell. Bad heirs are often the end of family money - you're just helping them along!
So 140-145million hard drives will end up buried in landfill in Q1-2012! Yay!!!!
https://www.accountkiller.com/removal-requested
1) Food is a necessity; hard drives aren't.
2) Not all food was rationed. Mainly it applied to luxuries. Sure, the unrationed stuff was dull, but it'd keep you alive.
3) You can't make a hard drive at home, nor find one in the woods. You can, however make your own food. People used to keep chickens in the back yard, grow veg in the garden (ever hear of Dig For Victory?) Country people are adept at finding fruit and mushrooms. Police turned a blind eye to small-scale poaching.
So apart from it being totally different it's exactly the same.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Yes, the scheduling algorithm computes the priorities. This would implement a scheduler using some form of currency and a supply and demand based pricing mechanism.
They're *all* willing to pay what it takes to get a unit. They might even be willing to pay for more than one unit, but I've simplified it.
No. The crazy guy doesn't spend all his money on a single unit. He is *willing* to spend all his money, but he spends at most the amount that his nearest rival is willing to spend.
With the numbers I gave, the top artist with $200.95 competes with the top farmer who has $50.65. The price rises until it reaches more than $50.65, and the farmer drops out. Now there's no competition, so the artist purchases his unit for $50.70, the lowest price he can.
Next, the artist has $150.25 left and he's still the richest individual, so he could beat the farmer for a second unit at $50.70 again, but I'm pretending that the artist is happy with a single unit. So now the farmer is the richest individual, and he's competing with the next one down, which is a baker with $45.85. They compete until the baker drops out, and the farmer pays $45.90 for his unit. Now his bank acount has $4.80 and he's out of the race. The baker has $45.85 and competes with the crazy guy who has $39.50. So the baker wins a unit for the price of $39.55$, and drops out. Then the crazy guy competes with the storer who has $34.95, and the crazy guy pays $35.00 and drops out. Etc.
Your second idea about taking a loan doesn't help. Suppose the farmer with $15 wants to compete with the crazy guy with $39.50. If the farmer can take out a loan, then the crazy guy can too. And the crazy guy has more collateral, so his interest rate on repayments will be lower than the farmer's. If they compete on loans, the total amount (bank account + borrowed amount) for the crazy guy beats the total amount for the farmer.
But in fact, the farmer with $15 will never compete with the crazy guy. If that was the case, the cost for this particular unit of wheat would be at least $39.50 and probably more. There's a much better way, which is that the crazy guy competes with the storer and the crazy guy wins. Then the storer competes with the next guy and so on, all the way down to the farmer with $15 who competes for one of the last few units. In this case, the farmer will only pay $14.95 or so to beat the next guy in line, which is much more efficient than taking a loan and paying $39.50 or more.
Just to be clear, I'm not trying to argue in favour of communism or a dictatorship, I'm merely pointing out that the invisible hand of the market doesn't provide goods at the lower edge of the wealth scale. This shortcoming is fixed in modern society by welfare, government grants and tax breaks, social networking and preferential treatment, etc. This is so the poor can eat, the poor scientists can send rockets to Mars, the nephew can get a job as a journalist, etc. But those mechanisms aren't formally taken into account in pricing, so we don't really understand theoretically what makes the economy work or not, and whether the results are optimal or not.
Well, I'm happy to pay $2 million for a car, but the snag is I don't have $2 million. But it's sufficiently important to me, so do you think I can get the car?
Yes, that's another alternative system. The first thing you'll need to do is prevent inheritance and gifts. Once you die, all your money and assets get taken away. Your kids get an allowance, the same allowance everybody gets, and we all spend that allowance however we wish. Periodically, say once a year, the amounts in everybody's bank accounts are reset, and we all spend the same initial allowance again.
I never claimed she is dumb. I claimed she is more worthy than Hognoxious. I admit it was a bit snarky, but you are saying exactly the same thing in a more sober way. She is more worthy than you or I. Well, certainly more worthy than I, maybe your bank account is bigger than hers.
I'm sorry, I'm having a second discussion in parallel which interferes with this one. The calculation of prices in the other comment depends on some assumptions which aren't met in this example. The allocation of units is unaffected, but the common price paid by all the individuals who receive a unit of wheat, assuming they each only buy one unit, is of course the lowest amount payable here, $14.95. (Imagine that the seller of wheat reduces prices repeatedly until there are exactly 15 buyers).
Decisions should be made by a committee of people like martin-boundary (547041).
I'm sure they could be trusted to do it fairly, objectively and competently. History bears out that there is no chance of people with such power exhibiting corruption, nepotism or plain old stupidity.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
What is and isn't worthy (and how you quantify it - what's the unit?) is purely subjective, and totally irrelevant to the question at hand, namely that when desires outstrip possibility somebody's going to be disappointed.
Ignoratio elenchi is what it was. That's a red herring to you.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
You can't distribute what isn't there.
You say that the price in your lottery is irrelevant, but then go on to state as an absolute law that it's lower than the black market price. These are contradictory as is obvious if you consider what would happen if the "fair" price you and your bureaucrats set was too high.
What do I mean by too high? Start with the price in a nearby country and add a premium for the effort and risk in bringing them in from there, then add some more.
No, you just claimed that the market price was always higher. Not the same thing at all.
You can't distribute what doesn't exist.
He could get a job. Making glasses, perhaps...
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I'm not. There's nothing artificial about a factory getting splatted by a natural disaster.
Or are you among those who think they've got massive floating backup factories anchored off Atlantis that they aren't using, even though they could corner the market if they did?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
That's kind of a circular argument anyway, but when 16TB drives come out and 8TB are the norm you'll barely be able to give 1TB ones away.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
In Soviet Russia, people used to join queues even if if they didn't know what they were for. If it's not something you want, it's still better than nothing, right?
You might be able to swap it for something. Ooops, that's a secondary market which according to you can't exist.
Clearly you're as knowledgeable about computers as you are economics. In Windows XP it can be done from within the task manager. In Linux it's the command nice. On OSX ... well it came with a manual, why don't you read it?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
That's because "fairness" is a philosophical, moral & political issue.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Thanks for your posting.
Yes it's simple "Economics 101", but too many nerds here on Slashdot don't understand it. Unfortunately they probably still won't understand it even after reading your post. Because their minds are closed, and they're just saying to themselves "that's not fair" without thinking it through.
Except that as I tried to say, the farmers take one unit of wheat and produce more units of wheat. Hence if the price of wheat is high they are willing to pay more for the seed to plant, since they'll be able to sell it for more and cover those costs (and the interest on what they needed to borrow).
And a market economy is never going to be optimal - it's essentially a voting system on what we will wo with our capital. With the people who have a better history of choosing well getting more votes. This obviously breaks down - just because one of my parents was good at doing that doesn't mean I'm good at it when I inherit their votes. Just because my parents weren't good at it doesn't mean I'm not but I don't get the votes to begin with.
Those things can be reduced by allowing people to move up and down the wealth scalre easily. People who make bad choices lose their money (votes), people who make good choices get more money (votes). Currently the US does very poorly at both of those things, but that's a whole other story :)