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ChuckMcM 654 days ago | link | parent

"One way to improve the situation is to invest in infrastructure to reduce the logistical cost, allowing the grain to compete across a wider range of market prices."

I have seen these sort of 'inversions' as well. As an engineer I've pondered whether or not you could create enough infrastructure to create a non-spoiling product which returned enough capital to move the rest. So in the grain situation you might create a simple distillery which produced grain alcohol, which was sold to cover the cost of moving excess grain to locations where it could be used. Grain alcohol has a number of used and it doesn't spoil, further processing grain into alcohol is a relatively self sufficient process (you can use the alcohol produced to run the distiller and still get net positive output.) It of course presumes free grain.

One of the more curious social effects I've witnessed is that someone will dump grain which is too expensive to move, but they are less willing to simply give it to you for your distillery. They note you're getting an economic benefit from their grain (which is true) but they are unwilling to build their own distillery and capture that value but still won't cede the value to someone who does that original investment.



kamaal 654 days ago | link

>>They note you're getting an economic benefit from their grain (which is true) but they are unwilling to build their own distillery and capture that value but still won't cede the value to someone who does that original investment.

I think this is because, 'If I'm not gaining anything, you shouldn't either' attitude.

Programmers would be pissed if the code written by them gets used by somebody else to make money, while they don't make any money out of it. Isn't this the whole Java debate these days all about. Sun/Oracle aren't getting much money out of Java(While writing/maintaining/advertising it) while the whole world is using it to make money.

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ChuckMcM 654 days ago | link

I think you are correct, that captures the problem.

How do we make recycling and efficiency more important than personal gain?

  Me: "Give me the grain and I'll put it to productive use."
  Them: "What do I get out of it?"
  Me: "Nothing"
  Them: "Then why should I give it to you?"
  Me: "Because the resources you used to create it won't be wasted."
  Them: "Oh, Okay." <- never happens
The challenge comes when the choice is 'put to use, but only if its free' or 'rots away and nobody gets anything.' People choose to have it rot. Its the prisoner's dilemma writ large, and one of the inherent traits in humans, and one that religions seem to try to overcome.

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simonh 654 days ago | link

You are expecting the producer to distinguish between consumers that would have bought grain instead and consumers that would never buy the grain no matter how low the price went. In reality producers just don't have any reliable way to determine that, so they naturally consider freely given away produce to be a potential lost sale, or at least having a tendency to depress prices even if through indirect effects. And in fact they are almost always quite right to do so.

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ChuckMcM 654 days ago | link

Well in this case the market is exhausted at the point of delivery. Which is to say the farmer has all his grain in wagons and he can drop it off in the grain elevators (full) drive somewhere else (always an option but raises his costs) or dump it. So perhaps we disguise the economic transaction by making our hopper look like an excess grain dump station :-).

Now I'm being humorous there but there might be some social engineering needed. And I wonder if one could promise a share of any future profit (if there is any) which comes from the use of the grain.

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shimon_e 654 days ago | link

How about for the last two lines: Me: "Because I may be able to create a market environment where you may be able to profit off this grain in the future. Plus you have nothing to loose." Them: "Sounds great."

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ChuckMcM 654 days ago | link

I would certainly pitch it that way. Not sure if they would go for it though.

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cgoddard 654 days ago | link

That is where government is supposed to step in and provide at least a small incentive, or buy the supply for a more modest sum before distributing it. Protecting the life and health of citizens is pretty much the most fundamental role government is supposed to serve. If it is failing in that duty, it should be toppled.

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ChuckMcM 654 days ago | link

Generally I agree with this sentiment but the place where it falls down is that the grain is rotting. Its one thing to cover some of the economic loss to the farmer, its another to do the 'double lose' of both paying tax payer money for grain that won't be consumed, and then not doing anything with the grain. So perhaps the government builds our distillery so that there is a 'sink' for any amount of excess grain into a useful pre-cursor product.

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kamaal 654 days ago | link

Interesting Analogy.

I always knew 'reward' vs 'punishment' motivations always exist. But only today I had a blinding flash of obviousness that 'no-reward' 'no-punishments' scenarios are equally demotivating.

And understandably so, I would not put in extra hours at office if not rewarded, yet I'm not getting punished either.

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gcb 654 days ago | link

You forgot "and then the share of grain you were going to profit from now is worth half, because some people were buying it to make grain alcohol"

zero sum game

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eru 654 days ago | link

Can you please elaborate?

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gcb 654 days ago | link

I have 10 things every month. I sell them for a living.

One month i only sold 5, but you asked for the other five. If i give you, there will be more things in circulation and now i will be offered less money for my things. Maybe only next month, but i still lose.

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eru 654 days ago | link

Perhaps. But shouldn't getting a helping setting up a new source of _demand_ for your product, grain, in the form of grain alcohol producers help prop up the prices for your supply?

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gcb 652 days ago | link

The demand was already there. say 30% of the people that actually buys your product every month produces grain alcohol.

now, you give your exceeding production for free. That person that got it for free makes grain alcohol, sells it cheaper than your paying customer. next month your paying customer will either also want it free, or at a much lower price to remain competitive, lowering your next month profit.

The whole problem is people trying to make more money with the grain by creating false scarcity. if they sold way cheaper when they had more production, the original paying customer would have bought twice the grain and made twice the grain alcohol to begin with. and none of that would have been a problem.

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