Price Fixing: Jason Unruhe Debunked

For those of you who don’t know who Jason Unruhe is, you’re missing out. He is a Communist who proclaims to be number 1 Marxist on YouTube for the past 6 years, however it does not surprise me that he can proclaim to be number 1 Marxist, because no one that serious would dare to show their face and claim suchJason Unruhe clip with a city Capitalism built behind him. an outrageously ignorant thing as that given what history has already proven to us. Jason Unruhe for me should not be in the political sphere of YouTube but rather if categories mattered, he really should be in the comedy section! One of his best comedic value videos is his video on “How Socialism can make things cheaper” this for me is arguably the funniest political and economical video on YouTube simply because he was serious about what he was talking about. Here is a video response I did debunking Jason Unruhe on price fixing, although I do advise you run to the toilet first and then grab some popcorn:

As I explained in previous blogs about prices and Supply and Demand things like this are things you simply cannot ignore, it’s a bit like someone trying to ignore the laws of physics that if you walk off a cliff you’ll go down the way, you’re not going to float or go up the way, nor can you argue the fact the moon exists or that the earth is round, not flat (although there is such a thing out there on the internet known as the flat earth society, not kidding). People like Jason Unruhe simply do not understand fundamental basic economics, they have no understanding of basic economics like I explained in the previous blog post on Venezuela Food Shortage problems, economics is about our place on this earth, it’s not all about finances, but rather a study of our life on this planet and how we can better improve our living standards whilst using as few resources as possible.

After all resources are scarce, they’re not infinite and there simply isn’t enough to go around everyone, so we must find the right economic system that we can allocate scarce resources efficiently to provide for the market whilst using the fewest resources as possible. Prices are important for this very reason, because without prices you do NOT have the information at hand to allocate scarce resources. If you destroy that valuable information using price fixing which destroys the information of profits and losses, you no longer hold the information at hand to know what to stop producing; what to produce more of; where to stop allocating resources in the market; where to allocate scarce resources; what to invest in and what not to invest in.

Jason UnruheThe theory of Communism is deeply flawed for the very reason that it’s based on a moneyless system, therefore there are no prices. Add to this it falls outside the basis of human nature and reality for the simple reason being, we as human beings are all born as individualist, we all have our own individual self-interest and our personalities even from the day we are born are completely different, this is just part of human nature. Communism seeks to destroy all means of self-interest, it’s predicated on this utopia where all human beings are apparently the same, Karl Marx and Friedrich Engels were strongly influenced by Charles Darwin, thus Marx and Engels believed that from this theory since we all started out the same as apes, they could transform society to this level of equality.

The problem with this theoretical nonsense is that we’re not born the same, we are born with our own self-interest and I know from experience that even though my parents had some influence on myself, it was largely my own self-interest that led me on the path to what I personally like, even the things I like. It’s a bit like a father trying to influence his son or daughter into football and the son or daughter for whatever reason just doesn’t have the heart for it but when he or she goes off and does her own thing, perhaps reading, writing, playing my little pony, this is perfectly natural, it is part of who we are.

Karl Marx Portrait
Karl Marx Portrait

So in order for Communism theoretically to be achieved you require the use of coercion to force everyone into a collective group and to force this egalitarian utopia onto people. Let’s cut to the point, if you haven’t read my blog on theory and practice it is useful for understanding this. Look around you, everyone is demanding higher paid wages, so from a logical stand point of view, how is a moneyless society ever going to work? People don’t want to work for free and it is from this point of view that these ‘IDEALIST’ Socialists fail to grasp, they don’t understand the difference between theory (what people say) to that of reality (what is put into practice).

His video on “How Socialism can make things cheaper” for this reason alone is a complete contradiction, however that is not what destroys his argument, it is his failure to understand prices in the market.

From his example he starts off the example of a Socialist run store with a left column showing how much is required in order to meet the operational costs of the company, on the right he illustrates the ‘essentials’ and ‘luxuries’ that he requires to sell in order to meet his operational costs. What he illustrates is that if you reduce the costs artificially of the essentials by setting a price ceiling on essentials, and raise the costs of luxuries then apparently this will meet his operational costs and this apparently makes things cheaper. So let’s look at this argument and explain why this is ridiculous.

First of all he shows a clear sign of ignorance when it comes to Supply and Demand because prices are determined by Supply and Demand, in other words if you see high prices in the market this tells you there is a lack of supply (shortage) and if you see lower prices in the market it signifies an abundance therefore lack of demand. Although the intentions of such policy makers are good, good intentions does not necessarily equate

Prices going up
Prices going up

to good consequences. From what I explained about price ceilings in my blog on the Venezuela Food Shortage problem if you artificially lower the cost of produce below market value and say your production costs cost more than the price you’re selling the product at, you’re going to end up with a shortage. In other words the ‘good intentions’ of policy makers who artificially lower the costs of essentials in his circumstance would end up causing a shortage of essentials thus the costs of the essentials due to lack of supply would inflate, they’d go through the roof.

The other part of the problem is that when you increase the costs of luxuries consumer demand falls, as I explained before on Supply and Demand, when price goes up, demand goes down, price goes down, demand goes up. So when he raises the cost of luxuries consumer demand falls therefore he has no way of telling how much produce from luxuries he’s going to sell, especially if the luxuries are raised above market value and what is market value? Market value is what the consumers are willing to pay for it, that’s the price the consumers voted on, what they agreed upon. So if you’re going to raise the costs and consumer demand falls and you’re seeking to meet the operational costs, how do you know how much you’re going to sell of all your essentials and luxuries a month from now, or two months from now, maybe even 6 months or a year from now?

The fact of the matter is, you don’t! No business could tell you how much they would earn, they could estimate from an average monthly income, but if you’re going to artificially drive down the costs of essentials by setting a price ceiling, destroy the incentive for

Supply and Demand curve example
Supply and Demand curve

producing more causing a shortage, in turn shooting costs through the roof as well as raising cost of luxuries, in hindsight you’re actually going to make everything more expensive and you’re without shadow of a doubt going to be running at a loss.

The beauty of the free market is the fact that we can lower the costs of luxuries and essentials simply by producing more. Also because there are no price controls and it’s left to consumer demand and supply to dictate prices, we have the valuable information to allocate resources efficiently without causing waste or shortages. After all, you produce more of something, the cheaper it gets. That’s why when consumers walk into a store in a free market and they buy a lot of a particular product, this tells the business owner what to produce more of, what to invest more in and where to put scarce resources efficiently. Their losses also tell them what to stop producing more of, where to stop putting resources and what to stop investing in. This not only saves time and money on the business, it gives the consumers more of what they want and less of what they don’t want.

Without the information of prices, you simply cannot allocate scarce resources efficiently, therefore the only economic system that can look after the environment and our resources on this planet is Capitalism.

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  1. Half-ass true. Keep cart and horse in right order. If price is the independent variable then increasing price increases supply and decreases demand (most economic texts use this model). Price fixing limits supply from increasing but does not limit demand from increasing. Hence, sets up a discordance between what people want (demand) from what people get (supply). The pressure on both curves to equilibrate drives prices upward. The interim discordance will collapse the economy if input into the system is not allowed. At this point the input comes from the consumer through higher prices, lack of availability of essentials, closure of production, etc., all bad. Keynes economists also recognize this and have the government through monetary policy inject wealth (which incurs a debt) in hopes to in general stimulate the economy enough to produce a surplus of wealth which allows for a payback of the debt. If this is not done, the whole system will collapse as there is a limit of resources in the world. Free market (supply side) economists say that with the above described discordance that it must be sucked up by the bottom feeders who will get nothing (and starve). Both methods work and the supply side always works but at quite a cost.
    The article does correctly point out the irrationality of Marx-Engels in that their Utopian ideal was to have people exist as an ant colony “to each his needs from each his abilities.” What a boring lifeless existence that would be.
    But, socialism sets up a system where there is insufficient supply to meet basic demands for all.
    Unchecked Capitalism likewise sets up an equilibrium point of insufficient supply to meet basic demands for all.

    • First of all, the word equilibrium in economics means explainable and predictable, and I would like to ask your refer to the methodology books published by Milton Friedman, which he has a very detail analysis on the economics methodology.

      The reason that it is the price is called equilibrium is because according to price theory, the when the level of the MUV of the consumer equals to the level of price, they will stop buying. Also, because people are maximising, so the level of the MUV of the consumer to stop buying a good will be zero, and at this point we can explain, in order words achieve the equilibrium, on how why the consumer stop buying. That’s why all the text book are saying the equilibrium are MUV=P=0.

      When the price is too high, that means there will be no consumer buying, so this mean the seller needs to drop their price, and also we should never forget the power of private charity, and that’s why the situation of the bottom feeders who will get nothing will not happen, and the best example is the western germeny after WW2.

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