Tuesday, March 13, 2012

My Child Answers the Difference Between Value and Price


The original feeling I had was that any attempt to explain the distinction between the concepts of Value and Price to any people is a wasteful thing to do, no more than just a regurgitation of what's already obvious, isn't it? Come on. People must not be that utterly ridiculous to ever ask what's the difference between Value and Price. But, I somehow convinced myself that I was wrong on my original impression. Some people, and disgustingly not so few, specially in a land of so much socialists who still idolize Karl Marx and his Labor Theory of Price Value, think Value and Price are just the same.

They are not. So what's the difference? Ask a child.

My 3-year old daughter, as all other children,  don't know anything about prices. But my little girl must have caused  a slight headache to her mom when she's on tantrum when her mom refused to buy her favorite doll. She really like to have the doll no matter what. My question is: What's in the doll that made my daughter cry for it? Certainly, there is something. And also, what's in the doll that made my wife refused to buy it? Certainly, there is something too. What are they?

Definition of Value and Price


Price is the sum of money a sum offered for the capture of a criminal dead or alive. Well, I mean to joke. That is true but it is not the kind of definition to use in front of a hard-core, often irrational socialist. We need a definition in economic context.