Is Cream Extra?
$12 Cup Of Coffee Comes To New York.
Another example of why capitalism is great. To people not living in NY city, $12 seems like a lot of money for a cup of coffee. Bear in mind though that the cost to rent a cubbyhole in Manhattan is much higher than anywhere else in the U.S. According to rent.com, an average rent (and this can be a meaningless statistic) is about $1600 per month plus utilities. They go on to claim that:
“…The overall cost of living here is 364% compared to the national average, making it just slightly less than California’s Silicon Valley, the most expensive area in the nation…”
So, 12 bucks for a coffee may not be out of whack in this context. But here’s the salient point: Not ALL cups of coffee are 12 bucks a shot. Assuming you were too lazy or your apartment wasn’t big enough for a coffee maker, you could always find a coffee somewhere at a discount place….like Starbucks. Nobody compels you to pay the top tick for a coffee. It’s entirely at your discretion and the vendor is entirely entitled to charge whatever he thinks the market will bear. It’s not as if everyone is forced to patronize this vendor. If the guy can’t get enough people to buy his brew, he goes out of business. If he gets customers, he prospers. It’s all fair. He can’t run to the government and claim a subsidy.
Recently I had occasion to dine at a restaurant at a resort destination which charged $52 for a bottle of Cabernet available at the grocery stores for $14. While this was annoying, the fact is we paid for elegant surroundings and pleasant ambiance. Like the coffee, we are willing to pay up as a trade off for some tangible or intangible benefit. For New Yorkers, the ultimate option is always available for them to not live there. At some point the cost of living is going to overwhelm whatever benefit may accrue to their continued residence. People may come in to take their place, or they won’t.
We’ ve fallen into the trap of thinking there is a ‘right’ price for something, a notion that is wildly irrelevant. As the crazy theory goes, the right price for things should be a function of supply and demand. In real life, there should not be an arbiter of what price is the right price. At the moment, most of the U.S. is suffering from the ongoing real estate softness that began a few years ago. Government is being asked to help out homeowners who are at risk of default because of ill timed or ill advised purchases. For most people, they were innocently caught up in the tide of rising prices and inaffordability and it must seem unfair that they now suffer for only wanting to acquire a home.
The role of government in this disaster cannot be overstated. Their role of essentially providing a guarantee for everyone who wanted to buy a home has backfired in the cruelest way, bankrupting many and indirectly causing the great bank debacle of 2008/2009. While it may be compelling for state and federal governments to help out with one hand, the fact is, it can only be done by taking with the other hand through taxation. This is especially galling to those who were not leveraged and exposed to the housing markets because now, they too will be exposed through higher taxes and reduced services by governments because of it. It may seem outrageous for someone to pay $12 for a cup of coffee. It’s more outrageous when you find out you are indirectly paying for it and didn’t have a sip.