Airlines are hardly an uncontrolled market in the United States. To make the comparison between the EU (where you even point out that certain market interferences are forbidden) to US as an example of regulated vs unregulated is mind numbing.
Wow I had never seen that rebuttal. I've stopped reading because it's mostly really bad--specifically, when I got to the "PHP error handling is fine" bit. I program all day long in PHP because that's what the shop I work for uses. It is simply not as productive as other languages. The writer of "PHP is a fractal of bad design" gives mostly-accurate, concrete reasons why developing in PHP is more time consuming than in another, sane language (I realize that his point is that its design is bad, which I think is true, but pragmatically speaking, most of us care about time spent than how "perfect" something is). Good luck proving otherwise.. argh, this "rebuttal" is just so bad, drawing on obvious straw mans, etc. Okay,/rant. I'm done. Thank you for linking it, though.:)
My claim was not that during the Great Depression, blacks had low unemployment, but that before the Great Depression (which hadn't really set in by 1930), they had low unemployment. Also, I never claimed that they made the same wages as whites; in fact, my claim assumes the opposite.
I didn't mean to communicate that there isn't systemic violence aimed at minorities, because clearly there is. But look at black unemployment in 1930; things have not always been this bad for minorities. When the market was allowed to work and we didn't have such egregious things as the war on drugs, minorities faired far better.
How is this relevant at all to the conversation? The point is that full service used to be so affordable that most of society were okay with paying for it. Now it's so expensive that only people who are well off or find it very valuable to have "what they grew up with" will pay for it.
So the $600 pre-refund of taxes that Bush2 put in place (which made a negligible increase in per paycheck take-home) and the SS 2% rebate by Obama (which had a similar result) were useless? No, they weren't, they were identified as having an impact on the economy, even though the money wasn't even in consumers hands when it was announced/started.
That's a straw man's argument. Reducing taxes is not even remotely close to having the same sort of economic impacts as setting a minimum wage. The first puts more control of the economy back into the hands of consuming public, while the latter makes it difficult or impossible for those who cannot bring in enough productivity to justify the wage to find a job.
Minimum wage has nothing to do with minimum ability. It sets a price floor for labor. The people who lose out are those just above the minimum wage floor who see their less skilled/experienced/tenured coworkers elevated to a higher wage while theirs remains stagnant. (This happened to me, btw, and it sowed a short period of discord in that company)
I think you've just successfully argued against yourself.
For businesses with very small margins, the costs will be transferred pretty much one for one. As the margin of the business increases, the cost will be passed on in a proportionally smaller magnitude. People are (almost) never hired because they're "cheap" but because work needs to be done to meet demand. Just as nobody hires people if their taxes go down, or fire people if taxes rise. Might it delay hiring? In some instances it makes greater efficiency more valuable, with businesses investing in machines (which are built by people) instead of people. However most of the time it's just a cost of production. If you need to make more silk shirts and the cost of silk goes up, you don't buy less silk - you buy as much as you need to meet demand.
You're making so many assumptions here, I'm not really sure where to start. I guess I'll start with the law of supply and demand. Raise a price, ceteris paribus, the demand decreases. This is visible throughout the economy, although possibly it is easiest to see when looking at the supply side of the equation. For instance, look at doctors and lawyers: these fields have artificial barriers to entry, reducing supply and increasing prices. If you want to look at the demand side, I highly suggest reading upon Thomas Sowell's work, where he very often points out that the young black male worker used to be on par with his white counterpart in terms of percentage employed. With the introduction of the minimum wage, however, young black male unemployment skyrocketed. Why? Because that people group is generally not as educated and brings in less productivity (that's not to say that young black males are inherently worse than their white counterparts, but rather that they're at a societal disadvantage and that laws like the minimum wage make that worse).
Regarding people not being hired because they're "cheap," you're only looking at half of the equation. You're right in that work needs to be done, but how the work gets done is hardly as simple as you make it sound. For example, if labor is very expensive, it becomes more advantageous for the business owner to invest in capital goods to offset the high labor costs; this generally comes at the cost of how many laborers he will hire. For example, consider a fast food business where most of the employees are burger flippers. They cost $7/hour to hire (40 hrs a week for each); 10 of them must be employed to produce 5,000,000 burgers annually, which is the business's target. Let's say that the minimum wage is raised to $12/hour, thus drastically increasing the employer's labor costs. What cost him $145,600 before will now cost him $249,600. As it turns out, an automated burger flipper, which can do all of the basic flipping that the employees did, has been developed that costs $150,000. The employer realizes that he can let 8
I think you missed my point. Or perhaps I didn't make it clear. My solution is not to ban things, but to at the minimum, reduce what is publicly owned, so that society's preferences can be expressed. And of course what is "unreasonable" is subjective, but that does not mean that it has no place in the discussion. I do not mean to promote government censorship: I mean to remove government from the equation. When I said the best thing government can do is to mimic what private society does, I mean that as an imperfect solution, since the more perfect solution is generally very frowned upon. I think you and I are ultimately after the same general things: less (or no) government intervention in how we live our lives. I only mean to point out that the sorts of freedom you're talking about requires government intervention, as in a free society (one free from government intervention), there are limits to freedom, as you often must forego freedom if you want to interact with others.
Unless you own the park, you're out of luck. Sorry. There's plenty of things I don't want to see--including your comment--but I don't think I can just infringe on other people's freedoms just because I don't like something. I don't want to smell cigarette or pot smoke any more than you probably do, but I deal with it.
Unfortunately, publicly-owned land and establishments creates unique problems for private property rights. In the ideal world, where everything is privately owned, society has a real a tangible way to deal with these things. For example, even without laws and regulations about smoking in restaurants, etc (your state may not have them, but mine does), most restaurants wouldn't allow smoking throughout it (except perhaps designated areas) because society has deemed that inhaling second hand smoke is bad. If that weren't true, then a new establishment that completely bans smoking or controls it better, would have a competitive advantage over the business that allows it openly and everywhere. No such mechanism exists for publicly-owned land, so really the best that policy makers can do is to try to use good judgement in mimic'ing what they see in private society of similar markets or context. Unfortunately, the phrases "good judgement" and "policy makers" have proven to be poorly suited for the same sentence, thus making that solution far from ideal (not to mention public policy evolves oh, so, so slowly, relative the world around us).
Furthermore, I think perhaps you don't fully understand what "land of the free" means. It doesn't mean "land of where I get to do whatever I want in a 'public' space." Rather, it means the "land where I am free to pursue life as I see fit, so long as I don't impose my freedom to the detriment of someone else's freedom." It is unreasonable to expect to be able to go to the park in the nude, because most people would find that offensive; so much so, that if a group of people regularly went to the park as such, many families might stop going to that park, abandoning it for alternatives that don't feature naked participants. If we had a society where everyone was "free" to do whatever they want to do, it would be chaotic and highly unpleasant. In a completely private society, which is free from state intervention, rules still exist and, while technically you *can* do whatever you want to do, there are consequences to acting on your every whim, not entirely unlike what we have today. It is perfectly natural to forego freedom in order to cooperate with society, even in an anarchist society.
Apart from that, I agree with everything you've said.
I am quite tired of this discussion, as it's clear that you live in a land of your own delusions. The last thing I will say is this:
I want that the new one exists without destroying the old one. And that they can easy. There is no need to *remove* the old from the economy and it makes no sense anyway.
That right there is the problem and anyone who understands the most basic things about economics will see right through it.
Why do people always bring up 'brick and mortar' when in fact this is not the issue? The issue is dumping prices, covert by a law from 1983 IIRC, and the current government made clear the maximum discount on books may be 25% and that this includes also shipping. So going below 75% in the 'total price' by shipping for free is not allowed.
In France 'brick and mortar' book sellers do just fine, as many people in this story already pointed out. And people like to go there. Your idea they would waste time and energy is simply wrong.
Have you stopped to wonder *why* brick and mortar book stores are doing just fine in France and not anywhere else? It couldn't possibly be that the discount regulations to which you refer have delayed the closure of brick and mortar book stores in France? If the prices are more equal between a physical book store and an online one, more people will be inclined to go to the physical book store. I don't mean to argue that there isn't something "cool" about a physical book store: I like them, too. But when it comes down to it, most of society has demonstrated their preference for cheap books over expensive books + store. It's amazing to me that I have to spell this out to you. *shrug*
And why do you try to lecture on 'economy'? You seem not to get that different countries/cultures have different ideas how an Economy works or should work. We simply don't want that money rules everything... we don't like to end in a state like the states where you have to pay absurd prices for a reasonable meal or simple medical attention.
You are absolutely right. Different governments/groups of people can setup economies in different ways. Generally, though, people want an economy that is more likely to increase the standard of living, rather than decrease it. I point out economics to you because it can pretty readily tell us which sorts of policies are good for increasing the standard of living and which are bad for it. This sort of legislation is *bad* for standard of living. I will explain in detail shortly.
Yes, western countries can live with 10% or higher unemployment rates. Germanys official rate is not the true one either... they fake every one away into other 'social care' groups.
There is simply not enough work for everyone, to much automation, to less demand for unskilled labour and many other factors playing into this. Western Europe does not have the hire and fire mentally, nor laws that would allow it. So we always have a considerable high unemployment rate. But it is not fluctuating in such a bright band as e.g. in the US.
Mankind has an insatiable desire for things. Until that changes, there will always be plenty of demand. When governments get involved with these sorts of "bright ideas," consumers preferences are interfered with, creating the appearance of "insufficient demand." For example, consider good X, which is inherently expensive and good Y, which is a new alternative to good X and is much cheaper, but not quite as "nice". Upon Y's arrival in the market place, the government notices that those involved in creating good X are having a real hard time making ends meet because most of their business has gone to Y. Government makes the obvious connection that it's because Y is cheaper, so it forces Y to raise its prices to be more in line with X. Because prices have not been allowed to fall as they would have if government stayed out of things, Y now has a demand shortage--and in fact, X does too because X is still splitting its demand with Y. If X were allowed to fail, Y would have had all the demand it needed and because it's much cheaper than X (when the market is allowed to determine prices), MORE people consume Y than would have consumed X because Y requires less of a sacrifice to obtain than X.
Bottom line your whole argument makes no sense either. If a book store around the corner has to close, you can as
I think perhaps you have lost sight of the point of a market economy. His post is not ideology, it is rooted in economics; yours is not. To refresh you: a market economy is about fulfilling the wants and desires of consumers. Scarce resources are allocated via prices, which are ultimately established by the preferences of consumers (demonstrated by their actions in the market economy).
The consuming public has demonstrated that they do not want brick and mortar book stores. They would much rather buy books cheaper online than spend the time and energy to go to a physical store, where they generally are charged a premium. You are in fact pushing your own ideology when you say that the consuming public is effectively wrong and France should continue with a completely pointless waste of time and energy. France is deliberately preventing their consuming public from achieving what they want. They are, in fact, lowering the standard of living of their own citizens.
As for France's future: Do you really think these sorts of government interventions have no long-term consequences? This is one example of many of France destroying their market economy. They've hovered at a 10% unemployment rate for a very long time now. The LOWEST it's been has been 7.2% since 1996. Do you really think an economy can maintain itself (let alone grow) if 10% of the individuals in it don't contribute? Or what about all of the other areas where their government disrupts economic progress, like the one we're discussing right now? What France is doing is akin to trying to save the horse and buggy market back at the turn of the 19th century. Sure, intervention can keep some jobs alive now, but at what cost? Economics is about trade offs; you cannot have your cake and eat it to.
Once again, this conversation about cartels is a tangent from the original point. But I will humor you.
1. This is not specific to cartels. This is very typical of market leaders, with or without a formal cartel agreement. It is an excellent example as to why the government should not be involved in markets.
2. This is just silliness. When prices go up, demand goes down (in varying degrees, depending on the elasticity of demand). Furthermore, input prices do not determine output prices. If a cartel wants to increase prices, all it has to do is agree to raise its prices. It's absolutely ridiculous to suggest that they need to increase their input costs to raise their prices. In fact, intentionally increasing input costs to increase prices is about the stupidest thing I've ever heard. You do not make more money by charging people more unless demand is very inelastic. You make more money by charging people LESS (and you charge people less by reducing input prices), so as to increase DEMAND. A far more likely scenario in a hampered market is that a group of businesses (not necessarily even a cartel) will lobby for special privileges and try to keep out competition. The more hampered the market is, the more likely this will happen; clearly then, the solution is to unhamper the markets.
3. That's fraud and hardly unique to cartels. Fraud has its own consequences. Like cartelization, there may be short term gains to be had by committing fraud, but in the long term, it tends to catch up with the perpetrator.
But to reiterate, none of this has *anything* to do my original claim, which is that it makes perfectly good business sense to enter a market with a vastly cheaper product offering than the current alternative. Depending on the specific market in question, there may be regulatory issues, as you've so astutely pointed out. Once again, the clear solution is to remove those regulations and to return to a free market and ideally take the power away from government to interfere with markets. But one step at a time.:)
This talk of cartels has to do with the merits of the free market and is not related to my claim that it makes good business sense to enter such a market. In fact, a cartel in the oil industry only *increases* the business sense of providing a cheap alternative.
Which cartels are you referring to? Keep in mind that I did have a pretty big caveat: that what I'm talking about only applies to cartels of purely voluntary nature, with no government or other coercive interference.
I started typing up an example to illustrate why cartels are unsustainable when I thought "hell, I don't have time to write this out," and looked to Wikipedia. So I will provide you a link instead (which makes the exact point that I was going to make): http://en.wikipedia.org/wiki/C...
The article points out that there was one long term exception, which lasted 134 years. So it appears we may both be right.:)
There is one additional point that the article does not cover that I am aware of, so I will try to do it justice. If there is say, a cartel of three firms, the extent that they fix prices above the market price, will partially determine the likeliness of another firm to enter the market. For example, if prices are fixed at a small percentage above the market price, an entrepreneur will be less likely to enter the market to undercut; but if the cartel has set prices substantially over the market price, it will be more likely that 1) it'll be noticed and 2) new firms will enter the market to undercut the cartelized prices. We cannot predict exactly how the new firm will set prices, but they all analyze pretty similarly. In every scenario other than the firm setting prices *higher* than the cartelized price, the cartel is likely to bring in this new firm as the cartel's newest member. The new firm must make a decision: reap the benefits of potentially greater profit now and not join the cartel or join the cartel and potentially (although I would say this is mostly an illusion) receive greater long term benefits. Even if the latter is chosen, the cartel now must split its earnings with yet another member (4 ways instead of 3), reducing the effectiveness of the cartel. So to sum up, the more firms enter the market, the more unstable the cartel becomes and the higher the cartelized price is set above the market price, the more likely new firms will enter the market, destabilizing the cartel.
Lastly, if the cartelized price is set at or very near the market price, is this really something worth worrying about?
Note: Yes, I am aware that some markets have very high barriers to entry, but as I've stated before, raising capital for even these markets, although more challenging, has proven far from impossible.
Cartels are known to fall apart rather quickly unless perhaps there is a coercive agent to help enforce it, such as the government. I can elaborate on why this is theorized to be if you want, but I doubt you really care.
Such things are not a prerequisite to a free market. Take barriers to entry, for example: empirically we know that even when barriers are very high, capital can be raised for new firms to enter a market and compete. Of the things you listed, only legal barriers are a problem for a free market (thus making it not entirely free). But then, it seems schools have been teaching some pretty fucked up definitions of "free market".
No, it is not. Obviously, to not go bankrupt, one must sell his or her goods above the cost of inputs. But let us not conflate how a single business operates with the study of economics. When I say "price," I don't mean the price set by a single firm, but for a single good throughout the entire market. Let's say Joe Bob owns a convenience store and hires all of friends to run the place, who are a bunch of deadbeats. They constantly screw things up (and likely steal from him), forcing Joe Bob to raise his prices; candy bars are "priced" at $10/bar. Just because Joe Bob is an inept business manager and has high input prices does not mean that the market price for candy bars is $10/bar. It just means that he won't be selling very many (if any) bars.
Perhaps a better example is this: Let's say you have a new idea for a cell phone, which runs CrapOS. To cover your costs and make a moderate profit, you have to charge $400/phone. But no one wants your phone because it runs CrapOS, which is awful. It doesn't matter that the cost of your inputs are just shy of $400 if the phone will only sell at $200. This is society's way of saying you have produced something which they do not want; if you cannot produce and sell your CrapOS phone for $200, society would rather spend their money on something else.
It makes perfectly good business sense. If you were an entrepreneur, wouldn't you be very happy to move to such a technology, drastically undercutting the oil companies? Contrary to popular belief, businesses don't generally make killings because they charge a lot, but rather because they don't charge a lot, relative to other alternatives. If you were one of the first firms to enter such a market (assuming the consuming public moves on this new tech) and make a very handsome profit, charging far more than your input costs. New players will eventually enter the market and big down prices, but since you were [one of the] first players, you got to make a killing. That is how economics works. The market rewards the first entrants to a market via profits above and beyond the going rate of return.
Actually, I think the crux of the problem is that you don't understand price theory. Price is not determined by the cost of the inputs. Rather, society determines the price via their actions in purchasing or not purchasing a good (and of course to nearly infinite extents of purchasing vs not purchasing). The more society wants a good, the higher prices will be driven up (all things the same), inducing more competitors to the market who compete for the lion's share, in turn bidding down the price until equilibrium is reached. (Nevermind that equilibrium almost certainly will change before it is ever reached.)
Actually, minimum wage is a useful tool if you want to drive income to capital instead of labor. If Bob's Diner now must pay everyone $15/hour instead of, say, $10/hour, that means that their employees must bring in greater than $15/hour in net revenue for the business. The most sure way of doing that is to invest in capital goods that enable their minimally-trained staff to produce over $15/hour worth of goods. Trying to make the most of a bad situation (a ridiculous minimum wage), Bob's Diner would likely be forced to purchase more capital goods at the cost of employees.
Your analysis suffers from the same thing that... well, most people's analysis suffers from: the assumption that businesses can simply pay their employees higher real wage rates. Most businesses only run *maybe* 10-15% profit margins, pre-tax. Considering that something like 70% of the input costs for most businesses go to labor, it's rather apparent that a business can't generally just pay their labor force more. While there are certainly cases of individuals working for far less than his or her market value, that is ultimately up to the individual to correct; if in fact, he is working for less than he should, then he can go find another job with a better wage.
Also, the entire notion that demand creates economic prosperity is flawed. But one thing at a time.:)
Slashdot Mirror
Hmm... I've never noticed any slow down. And I've done all sorts of terrible things to my system, package-management wise.
Airlines are hardly an uncontrolled market in the United States. To make the comparison between the EU (where you even point out that certain market interferences are forbidden) to US as an example of regulated vs unregulated is mind numbing.
Wow I had never seen that rebuttal. I've stopped reading because it's mostly really bad--specifically, when I got to the "PHP error handling is fine" bit. I program all day long in PHP because that's what the shop I work for uses. It is simply not as productive as other languages. The writer of "PHP is a fractal of bad design" gives mostly-accurate, concrete reasons why developing in PHP is more time consuming than in another, sane language (I realize that his point is that its design is bad, which I think is true, but pragmatically speaking, most of us care about time spent than how "perfect" something is). Good luck proving otherwise.. argh, this "rebuttal" is just so bad, drawing on obvious straw mans, etc. Okay, /rant. I'm done. Thank you for linking it, though. :)
Far too few people know what "liberal" actually means.
+1. wish I had mod points.
Cycling money through the economy faster does not stimulate economic growth.
My claim was not that during the Great Depression, blacks had low unemployment, but that before the Great Depression (which hadn't really set in by 1930), they had low unemployment. Also, I never claimed that they made the same wages as whites; in fact, my claim assumes the opposite.
I didn't mean to communicate that there isn't systemic violence aimed at minorities, because clearly there is. But look at black unemployment in 1930; things have not always been this bad for minorities. When the market was allowed to work and we didn't have such egregious things as the war on drugs, minorities faired far better.
How is this relevant at all to the conversation? The point is that full service used to be so affordable that most of society were okay with paying for it. Now it's so expensive that only people who are well off or find it very valuable to have "what they grew up with" will pay for it.
So the $600 pre-refund of taxes that Bush2 put in place (which made a negligible increase in per paycheck take-home) and the SS 2% rebate by Obama (which had a similar result) were useless? No, they weren't, they were identified as having an impact on the economy, even though the money wasn't even in consumers hands when it was announced/started.
That's a straw man's argument. Reducing taxes is not even remotely close to having the same sort of economic impacts as setting a minimum wage. The first puts more control of the economy back into the hands of consuming public, while the latter makes it difficult or impossible for those who cannot bring in enough productivity to justify the wage to find a job.
Minimum wage has nothing to do with minimum ability. It sets a price floor for labor. The people who lose out are those just above the minimum wage floor who see their less skilled/experienced/tenured coworkers elevated to a higher wage while theirs remains stagnant. (This happened to me, btw, and it sowed a short period of discord in that company)
I think you've just successfully argued against yourself.
For businesses with very small margins, the costs will be transferred pretty much one for one. As the margin of the business increases, the cost will be passed on in a proportionally smaller magnitude. People are (almost) never hired because they're "cheap" but because work needs to be done to meet demand. Just as nobody hires people if their taxes go down, or fire people if taxes rise. Might it delay hiring? In some instances it makes greater efficiency more valuable, with businesses investing in machines (which are built by people) instead of people. However most of the time it's just a cost of production. If you need to make more silk shirts and the cost of silk goes up, you don't buy less silk - you buy as much as you need to meet demand.
You're making so many assumptions here, I'm not really sure where to start. I guess I'll start with the law of supply and demand. Raise a price, ceteris paribus, the demand decreases. This is visible throughout the economy, although possibly it is easiest to see when looking at the supply side of the equation. For instance, look at doctors and lawyers: these fields have artificial barriers to entry, reducing supply and increasing prices. If you want to look at the demand side, I highly suggest reading upon Thomas Sowell's work, where he very often points out that the young black male worker used to be on par with his white counterpart in terms of percentage employed. With the introduction of the minimum wage, however, young black male unemployment skyrocketed. Why? Because that people group is generally not as educated and brings in less productivity (that's not to say that young black males are inherently worse than their white counterparts, but rather that they're at a societal disadvantage and that laws like the minimum wage make that worse).
Regarding people not being hired because they're "cheap," you're only looking at half of the equation. You're right in that work needs to be done, but how the work gets done is hardly as simple as you make it sound. For example, if labor is very expensive, it becomes more advantageous for the business owner to invest in capital goods to offset the high labor costs; this generally comes at the cost of how many laborers he will hire. For example, consider a fast food business where most of the employees are burger flippers. They cost $7/hour to hire (40 hrs a week for each); 10 of them must be employed to produce 5,000,000 burgers annually, which is the business's target. Let's say that the minimum wage is raised to $12/hour, thus drastically increasing the employer's labor costs. What cost him $145,600 before will now cost him $249,600. As it turns out, an automated burger flipper, which can do all of the basic flipping that the employees did, has been developed that costs $150,000. The employer realizes that he can let 8
I think you missed my point. Or perhaps I didn't make it clear. My solution is not to ban things, but to at the minimum, reduce what is publicly owned, so that society's preferences can be expressed. And of course what is "unreasonable" is subjective, but that does not mean that it has no place in the discussion. I do not mean to promote government censorship: I mean to remove government from the equation. When I said the best thing government can do is to mimic what private society does, I mean that as an imperfect solution, since the more perfect solution is generally very frowned upon. I think you and I are ultimately after the same general things: less (or no) government intervention in how we live our lives. I only mean to point out that the sorts of freedom you're talking about requires government intervention, as in a free society (one free from government intervention), there are limits to freedom, as you often must forego freedom if you want to interact with others.
Unless you own the park, you're out of luck. Sorry. There's plenty of things I don't want to see--including your comment--but I don't think I can just infringe on other people's freedoms just because I don't like something. I don't want to smell cigarette or pot smoke any more than you probably do, but I deal with it.
Unfortunately, publicly-owned land and establishments creates unique problems for private property rights. In the ideal world, where everything is privately owned, society has a real a tangible way to deal with these things. For example, even without laws and regulations about smoking in restaurants, etc (your state may not have them, but mine does), most restaurants wouldn't allow smoking throughout it (except perhaps designated areas) because society has deemed that inhaling second hand smoke is bad. If that weren't true, then a new establishment that completely bans smoking or controls it better, would have a competitive advantage over the business that allows it openly and everywhere. No such mechanism exists for publicly-owned land, so really the best that policy makers can do is to try to use good judgement in mimic'ing what they see in private society of similar markets or context. Unfortunately, the phrases "good judgement" and "policy makers" have proven to be poorly suited for the same sentence, thus making that solution far from ideal (not to mention public policy evolves oh, so, so slowly, relative the world around us).
Furthermore, I think perhaps you don't fully understand what "land of the free" means. It doesn't mean "land of where I get to do whatever I want in a 'public' space." Rather, it means the "land where I am free to pursue life as I see fit, so long as I don't impose my freedom to the detriment of someone else's freedom." It is unreasonable to expect to be able to go to the park in the nude, because most people would find that offensive; so much so, that if a group of people regularly went to the park as such, many families might stop going to that park, abandoning it for alternatives that don't feature naked participants. If we had a society where everyone was "free" to do whatever they want to do, it would be chaotic and highly unpleasant. In a completely private society, which is free from state intervention, rules still exist and, while technically you *can* do whatever you want to do, there are consequences to acting on your every whim, not entirely unlike what we have today. It is perfectly natural to forego freedom in order to cooperate with society, even in an anarchist society.
Apart from that, I agree with everything you've said.
I want that the new one exists without destroying the old one. And that they can easy. There is no need to *remove* the old from the economy and it makes no sense anyway.
That right there is the problem and anyone who understands the most basic things about economics will see right through it.
Why do people always bring up 'brick and mortar' when in fact this is not the issue? The issue is dumping prices, covert by a law from 1983 IIRC, and the current government made clear the maximum discount on books may be 25% and that this includes also shipping. So going below 75% in the 'total price' by shipping for free is not allowed. In France 'brick and mortar' book sellers do just fine, as many people in this story already pointed out. And people like to go there. Your idea they would waste time and energy is simply wrong.
Have you stopped to wonder *why* brick and mortar book stores are doing just fine in France and not anywhere else? It couldn't possibly be that the discount regulations to which you refer have delayed the closure of brick and mortar book stores in France? If the prices are more equal between a physical book store and an online one, more people will be inclined to go to the physical book store. I don't mean to argue that there isn't something "cool" about a physical book store: I like them, too. But when it comes down to it, most of society has demonstrated their preference for cheap books over expensive books + store. It's amazing to me that I have to spell this out to you. *shrug*
And why do you try to lecture on 'economy'? You seem not to get that different countries/cultures have different ideas how an Economy works or should work. We simply don't want that money rules everything ... we don't like to end in a state like the states where you have to pay absurd prices for a reasonable meal or simple medical attention.
You are absolutely right. Different governments/groups of people can setup economies in different ways. Generally, though, people want an economy that is more likely to increase the standard of living, rather than decrease it. I point out economics to you because it can pretty readily tell us which sorts of policies are good for increasing the standard of living and which are bad for it. This sort of legislation is *bad* for standard of living. I will explain in detail shortly.
Yes, western countries can live with 10% or higher unemployment rates. Germanys official rate is not the true one either ... they fake every one away into other 'social care' groups.
There is simply not enough work for everyone, to much automation, to less demand for unskilled labour and many other factors playing into this. Western Europe does not have the hire and fire mentally, nor laws that would allow it. So we always have a considerable high unemployment rate. But it is not fluctuating in such a bright band as e.g. in the US.
Mankind has an insatiable desire for things. Until that changes, there will always be plenty of demand. When governments get involved with these sorts of "bright ideas," consumers preferences are interfered with, creating the appearance of "insufficient demand." For example, consider good X, which is inherently expensive and good Y, which is a new alternative to good X and is much cheaper, but not quite as "nice". Upon Y's arrival in the market place, the government notices that those involved in creating good X are having a real hard time making ends meet because most of their business has gone to Y. Government makes the obvious connection that it's because Y is cheaper, so it forces Y to raise its prices to be more in line with X. Because prices have not been allowed to fall as they would have if government stayed out of things, Y now has a demand shortage--and in fact, X does too because X is still splitting its demand with Y. If X were allowed to fail, Y would have had all the demand it needed and because it's much cheaper than X (when the market is allowed to determine prices), MORE people consume Y than would have consumed X because Y requires less of a sacrifice to obtain than X.
Bottom line your whole argument makes no sense either. If a book store around the corner has to close, you can as
I think perhaps you have lost sight of the point of a market economy. His post is not ideology, it is rooted in economics; yours is not. To refresh you: a market economy is about fulfilling the wants and desires of consumers. Scarce resources are allocated via prices, which are ultimately established by the preferences of consumers (demonstrated by their actions in the market economy).
The consuming public has demonstrated that they do not want brick and mortar book stores. They would much rather buy books cheaper online than spend the time and energy to go to a physical store, where they generally are charged a premium. You are in fact pushing your own ideology when you say that the consuming public is effectively wrong and France should continue with a completely pointless waste of time and energy. France is deliberately preventing their consuming public from achieving what they want. They are, in fact, lowering the standard of living of their own citizens.
As for France's future: Do you really think these sorts of government interventions have no long-term consequences? This is one example of many of France destroying their market economy. They've hovered at a 10% unemployment rate for a very long time now. The LOWEST it's been has been 7.2% since 1996. Do you really think an economy can maintain itself (let alone grow) if 10% of the individuals in it don't contribute? Or what about all of the other areas where their government disrupts economic progress, like the one we're discussing right now? What France is doing is akin to trying to save the horse and buggy market back at the turn of the 19th century. Sure, intervention can keep some jobs alive now, but at what cost? Economics is about trade offs; you cannot have your cake and eat it to.
Instead of eat shit, drink shit?
I'm sorry, you are right. I misread. I'll try to get back to you later. No time right now.
Once again, this conversation about cartels is a tangent from the original point. But I will humor you.
1. This is not specific to cartels. This is very typical of market leaders, with or without a formal cartel agreement. It is an excellent example as to why the government should not be involved in markets.
2. This is just silliness. When prices go up, demand goes down (in varying degrees, depending on the elasticity of demand). Furthermore, input prices do not determine output prices. If a cartel wants to increase prices, all it has to do is agree to raise its prices. It's absolutely ridiculous to suggest that they need to increase their input costs to raise their prices. In fact, intentionally increasing input costs to increase prices is about the stupidest thing I've ever heard. You do not make more money by charging people more unless demand is very inelastic. You make more money by charging people LESS (and you charge people less by reducing input prices), so as to increase DEMAND. A far more likely scenario in a hampered market is that a group of businesses (not necessarily even a cartel) will lobby for special privileges and try to keep out competition. The more hampered the market is, the more likely this will happen; clearly then, the solution is to unhamper the markets.
3. That's fraud and hardly unique to cartels. Fraud has its own consequences. Like cartelization, there may be short term gains to be had by committing fraud, but in the long term, it tends to catch up with the perpetrator.
But to reiterate, none of this has *anything* to do my original claim, which is that it makes perfectly good business sense to enter a market with a vastly cheaper product offering than the current alternative. Depending on the specific market in question, there may be regulatory issues, as you've so astutely pointed out. Once again, the clear solution is to remove those regulations and to return to a free market and ideally take the power away from government to interfere with markets. But one step at a time. :)
This talk of cartels has to do with the merits of the free market and is not related to my claim that it makes good business sense to enter such a market. In fact, a cartel in the oil industry only *increases* the business sense of providing a cheap alternative.
Which cartels are you referring to? Keep in mind that I did have a pretty big caveat: that what I'm talking about only applies to cartels of purely voluntary nature, with no government or other coercive interference.
I started typing up an example to illustrate why cartels are unsustainable when I thought "hell, I don't have time to write this out," and looked to Wikipedia. So I will provide you a link instead (which makes the exact point that I was going to make): http://en.wikipedia.org/wiki/C...
The article points out that there was one long term exception, which lasted 134 years. So it appears we may both be right. :)
There is one additional point that the article does not cover that I am aware of, so I will try to do it justice. If there is say, a cartel of three firms, the extent that they fix prices above the market price, will partially determine the likeliness of another firm to enter the market. For example, if prices are fixed at a small percentage above the market price, an entrepreneur will be less likely to enter the market to undercut; but if the cartel has set prices substantially over the market price, it will be more likely that 1) it'll be noticed and 2) new firms will enter the market to undercut the cartelized prices. We cannot predict exactly how the new firm will set prices, but they all analyze pretty similarly. In every scenario other than the firm setting prices *higher* than the cartelized price, the cartel is likely to bring in this new firm as the cartel's newest member. The new firm must make a decision: reap the benefits of potentially greater profit now and not join the cartel or join the cartel and potentially (although I would say this is mostly an illusion) receive greater long term benefits. Even if the latter is chosen, the cartel now must split its earnings with yet another member (4 ways instead of 3), reducing the effectiveness of the cartel. So to sum up, the more firms enter the market, the more unstable the cartel becomes and the higher the cartelized price is set above the market price, the more likely new firms will enter the market, destabilizing the cartel.
Lastly, if the cartelized price is set at or very near the market price, is this really something worth worrying about?
Note: Yes, I am aware that some markets have very high barriers to entry, but as I've stated before, raising capital for even these markets, although more challenging, has proven far from impossible.
Cartels are known to fall apart rather quickly unless perhaps there is a coercive agent to help enforce it, such as the government. I can elaborate on why this is theorized to be if you want, but I doubt you really care.
Such things are not a prerequisite to a free market. Take barriers to entry, for example: empirically we know that even when barriers are very high, capital can be raised for new firms to enter a market and compete. Of the things you listed, only legal barriers are a problem for a free market (thus making it not entirely free). But then, it seems schools have been teaching some pretty fucked up definitions of "free market".
No, it is not. Obviously, to not go bankrupt, one must sell his or her goods above the cost of inputs. But let us not conflate how a single business operates with the study of economics. When I say "price," I don't mean the price set by a single firm, but for a single good throughout the entire market. Let's say Joe Bob owns a convenience store and hires all of friends to run the place, who are a bunch of deadbeats. They constantly screw things up (and likely steal from him), forcing Joe Bob to raise his prices; candy bars are "priced" at $10/bar. Just because Joe Bob is an inept business manager and has high input prices does not mean that the market price for candy bars is $10/bar. It just means that he won't be selling very many (if any) bars.
Perhaps a better example is this: Let's say you have a new idea for a cell phone, which runs CrapOS. To cover your costs and make a moderate profit, you have to charge $400/phone. But no one wants your phone because it runs CrapOS, which is awful. It doesn't matter that the cost of your inputs are just shy of $400 if the phone will only sell at $200. This is society's way of saying you have produced something which they do not want; if you cannot produce and sell your CrapOS phone for $200, society would rather spend their money on something else.
It makes perfectly good business sense. If you were an entrepreneur, wouldn't you be very happy to move to such a technology, drastically undercutting the oil companies? Contrary to popular belief, businesses don't generally make killings because they charge a lot, but rather because they don't charge a lot, relative to other alternatives. If you were one of the first firms to enter such a market (assuming the consuming public moves on this new tech) and make a very handsome profit, charging far more than your input costs. New players will eventually enter the market and big down prices, but since you were [one of the] first players, you got to make a killing. That is how economics works. The market rewards the first entrants to a market via profits above and beyond the going rate of return.
Actually, I think the crux of the problem is that you don't understand price theory. Price is not determined by the cost of the inputs. Rather, society determines the price via their actions in purchasing or not purchasing a good (and of course to nearly infinite extents of purchasing vs not purchasing). The more society wants a good, the higher prices will be driven up (all things the same), inducing more competitors to the market who compete for the lion's share, in turn bidding down the price until equilibrium is reached. (Nevermind that equilibrium almost certainly will change before it is ever reached.)
Actually, minimum wage is a useful tool if you want to drive income to capital instead of labor. If Bob's Diner now must pay everyone $15/hour instead of, say, $10/hour, that means that their employees must bring in greater than $15/hour in net revenue for the business. The most sure way of doing that is to invest in capital goods that enable their minimally-trained staff to produce over $15/hour worth of goods. Trying to make the most of a bad situation (a ridiculous minimum wage), Bob's Diner would likely be forced to purchase more capital goods at the cost of employees.
Your analysis suffers from the same thing that... well, most people's analysis suffers from: the assumption that businesses can simply pay their employees higher real wage rates. Most businesses only run *maybe* 10-15% profit margins, pre-tax. Considering that something like 70% of the input costs for most businesses go to labor, it's rather apparent that a business can't generally just pay their labor force more. While there are certainly cases of individuals working for far less than his or her market value, that is ultimately up to the individual to correct; if in fact, he is working for less than he should, then he can go find another job with a better wage.
Also, the entire notion that demand creates economic prosperity is flawed. But one thing at a time. :)