28 Oct
1998
28 Oct
'98
2:38 a.m.
Chuck McManis wrote:
Ok, I have to draw a line on this one Sam ...
At 05:36 PM 10/27/98 -0800, Sam wrote:
"Fair Market Value" is a price set by bureaucrats and is rarely
related to the real world (except in the case of real estate, since
that will be the baseline for your property tax gouge).
"Free Market" is the way things are supposed to work. Somebody sells
at a price he is willing to accept, somebody buys at a price he is
willing to pay. _Both_ win. If one deals from a position of
knowledge while the other deals from a position of ignorance, the
knowledge was available (so was the ignorance). "Caveat emptor" has
been common for two millenia, the counterpart "Caveat vendor" is also
part of our heritage. The invisible hand is always there. (Me, I
won't pay a dime for an Atari 8-bit or anything else with a 6502 --
this harms nobody -- the price I'd pay at auction for an NCR Tower
Unix system is a secret between me and my cat).
Well, if the guy who bought the Atari 1200XL
thinks he got fair market
value, I'm happy for him. But I don't want to have to pay some schlub
$600 for an Atari 1200XL the next time I see one go up for sale (luckily I
won't have to, I paid less than $5 for mine at a thrift store, and if I
want another I'll probably find it for around the same price). What that
guy thinks is a "fair price" does NOT equate to "fair market". There
is a
huge distinction.
There IS a huge distinction, there is no such thing as a "fair price."
Its a myth, it don't exist, deal with it. If this "schlub" as you so
affectionately refer to them knew about your thrift store (and I can
guarantee you he will) then you won't find Atari's in thrift stores and
you won't find them at swap meets and the _only_ way to get one will
be to pay more than what some other "schlub" is willing to pay. And if
the price is too rich for you then you won't own one. What's a "fair"
price for a Picasso? a Rembrandt? That is exactly what a market IS
and it is actually _incredibly_ fair. Without external intervention it
will settle on a price that people are willing to pay. To use the 1200XL
example.. Word will get around that a 1200XL goes for 600 on Ebay, so
enterprising folks who have been in thrift stores will start scrounging
around for them, and then they will all put them up on eBay and the
large number of them will cause the price to come down, probably way
down but it may not get down to a level you are comfortable paying. For heaven's sake, you think there is a
"fair" price for a house in
Silicon Valley? Of course not, the MARKET supports a median house price
that is well above what any ordinary mortal could pay for, but only
because there are enough people willing to pay that price. When people
said, "This is f__ ridicululous!" in 1991 guess what, houses stayed
on the market until the price came down. When I bought my house I
offered nearly 100K UNDER the asking price, got the house and it STILL
lost 15K in value over the next couple of years! Now its going back up,
great, but that will change when the guys from eBay who got rich on
the IPO have all bought there houses.
Your house has never changed in _value_ unless you've made improvements
or let it decay or be otherwise damaged, the appraised price has varied
according to the market. I realized a long time ago that I would never
own a house in California, the prices driven by the local market were
higher than any value I could perceive. That was _my_ _subjective_
view of the value -- others have different values. (My subjective view
of the value being affected by the property tax rates in Los Angeles).
Economics, not just an idea it's a discipline that
actually predicts
these things pretty accurately...
Ludwig von Mises is always worth reading, as is Milton Friedman.
--
Ward Griffiths <mailto:gram@cnct.com> <http://www.cnct.com/home/gram/>
WARNING: The Attorney General has determined that Alcohol, Tobacco,
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