Economics 101 with Jack White

What's that, Jack? Price is a function of supply and demand?

Eighteen months ago, Jack White's record company Third Man Records was having problems with "flippers" – people who buy the company's ultra-limited-edition releases (the tri-colour vinyl reissue of the White Stripes' first album, for instance, was an edition of five) purely to sell them on for a profit. His solution? Skip the middleman:

This week, Third Man Records decided to beat the flippers at their own game, listing their own limited-edition White Stripes reissues on eBay. Vault subscribers [a paid members' service] were directed to these auctions, where bids have soared to more than $300 (£193).

The winning bid ended up being $510, but White had to face down angry fans, writing:

make no mistake, we could make twenty thousand split color whatevers for you, and they’ll be worth 20 bucks, and you’ll pay 20 bucks for them, and you’ll never talk about them, desire them, hunt to find them, etc. why should ebay flippers, who are not real fans, dictate the price, make all the profit (taken from the artist and the label) and take the records out of the hands of real fans. there’s a guy who waits in a black suv down the block from third man who hires homeless people to go buy him tri colors when they are on sale. doesn’t even get out of his car. should he be charged ten bucks or two hundred? don’t be spoiled, don’t insult people who are trying to give you what you want.

Writing at the Guardian, , a staff member at Third Man, even brought some economic theory into the discussion:

Third Man customers take these limited-edition releases very seriously. Hardcore fans are incredibly dedicated and vote with their money. The more hard to find an item is, the more they want it. It's something of a Veblen good, and that's not a bad thing. But I understand fans' frustration when there is something they cannot get, and by us selling items on eBay it appears we are dangling something in front of their noses and demanding they pay more. We are not. These items will end up on eBay regardless. On an auction site, the customers set the price.

So, economics 101 with Jack White: price is a function of supply and demand. If supply is low and demand is high, the equilibrium price will be high indeed. If the merchant keeps the price artifically low, then there is an opportunity for arbitrage – or "flipping". Either way, the price will end up at its natural level; so you may as well capture that yourself.

Hat-tip to Modeled Behaviour

Jack White sings with his band the Dead Weather. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.