Hacker News Reader

Comment by mhb | Hacker News Reader

Why doesn't your explanation apply to every commodity? Gold, cocoa, mustard seed, electricity? These are also essential products subject to the influence of markets and market makers.

View on HN

You can substitute cocoa sources globally, but you can't substitute a house in Charlotte with one in Phoenix.

If cocoa prices spike, you buy less chocolate. If housing prices spike in your job market, your options are: pay more, endure a brutal commute, or uproot your life. The demand is far more inelastic.

> Gold, cocoa, mustard seed, electricity

I can easily live a full and meaningful life without owning gold, drinking cocoa or eating mustard. Those aren't essential and have decent substitutes.

Electricity is essential, just like housing and it's very highly regulated.

That's overly reductive. I was hoping that the specific commodities weren't going to be the focus, but I guess that was naive.

If you're going to use "housing" as an umbrella for its substitutes, let me do the same. Instead of wheat, beef, pork, cocoa, sugar, etc, let's call that "food". So now food is as essential as housing. Why doesn't the housing complaint against speculators work for food speculators?

The argument is either intellectually dishonest or you just really haven't thought this through very deep and are just puppeting this neoliberal bullshit.

We could start with I have traded wheat futures and could hedge with future contracts on all those commodities. You can't trade single family home derivatives in the same way because it is not the same.

This is unthinking market religion stupidity and the result is going to be a massive over correction towards socialism. You don't help free markets with this bullshit. You are helping to destroy them in the long run.

So on one side, we have a theory which suggests increasing supply to reduce prices. And on the other, we have playing whack-a-mole with the bogeymen du jour who are manipulating a vast market. One solution makes economic sense and the other appeals to populists who favor state control.

And you're claiming that the reaction to opposing state control and socialism is socialism? Not compelling.

Just curious, where do you live that electricity is sold in an open market? Seems like a very strange setup.

Much of the US works this way, but individual consumers don't buy it that way. It's the level above that.

In other words it doesn’t work that way. The people who actually pay for the end product do not have the opportunity to apply market pressure by choosing a different source.

So you weren't really "just curious". You felt it necessary to cherry pick a particular commodity to debunk the notion that markets are markets? Do harder to steel man it.

Yes, they do apply market pressure. They can change who they buy from and there are different deals - like fixed rate, or different charges for different time periods.

The intermediate players "electricity retailers" then participate in a day ahead and real time market to fulfill their obligations to their customers. This is a good summary (https://chatgpt.com/share/696170d5-5d08-8002-a0ff-e2f45e42c4...) - if you hate ai links, so be it, this is a good description of an esoteric topic.

You'll find most markets actually work this way. When I go to the supermarket to buy sugar, the price isn't jumping around real time with the underlying price of sugar. Same for coffee etc. But it changes with a lag, and consumers respond and the effects flow through even if not in real time. Similar things occur in most markets where there is a wholesale market for something and then several players between that market and the consumer, each player doing some combination of logistics, risk eating, aggregation/disaggregation etc.

Reply on news.ycombinator.com