Board 8 > Hypothetical: if Ron Paul DID become president...

(+) Yeah! (+)

red sox 777 posted...
how are the peasants doing

About the same, but there are far fewer peasants in the country now. The trend continues to be for more and more peasants to leave their farms.

Never knew they had that freedom; thanks for educating me!

Smuffin: True enough.

--
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Look guys, this is really simple. Free markets always tend towards equilibrium. Barring some sort of natural superiority of the American worker, the fact that Chinese laborers are paid much less than American laborers is a direct reflection of governmental tampering in the labor markets.

At equilibrium, obviously the wages of the Chinese and Indians and Africans would rise, and the wages of Americans, Canadians, and Swedes would fall. Same thing with standard of living. To argue that China should treat their workers better is to implicitly argue that America should treat its workers worse. That's just the way it goes.

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SmartMuffin - Because anything less would be uncivilized - http://img.imgcake.com/smartmuffin/barkleyjpgde.jpg
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I imagine that would happen in an idealized system, bt the world is not.

I ean how long is it supposed to take?

we've had hundreds of thousands of years and we don't seem even remotely equalized

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America and Europe have a lot of historical reasons for being ahead of China. I'd say those historical reasons are much bigger than government policy over the past few decades. For example, Russia still has much higher per capita GDP than China, even though they were both Communist for decades. Russia was a European country that took advantage of the phenomenal advances in technology in Europe and America from the Renaissance on. But it was on the outskirts of Europe, not at the heart of that advance in technology, which took place in Western Europe and America.

The US also has the advantage of an extremely successful history in wars. Before Vietnam the US never lost a war. The US went through WWI and WWII with small losses compared to what other countries lost, and a lot of economic profit from being the manufacturing workshop and source of money for the Allies in both. China, on the other hand, was a punching bag for Western powers through the 19th century.

You're right that China doesn't look like it will approach US standards of living anytime in the near future. It would need to multiply its standard of living more than 12-fold while the US stays constant.

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Steady state isn't equal unless the institutions are equal. If all of the corruption in African governments doesn't end, for example, they will never have the same standard of living as America.

--
No I'm not a damn furry. Looney Tunes are different. - Guiga
I wanted Sonic/Shadow romance at that time, not sex. - MWE

How does that happen without the cost of everything rising dramatically?

Would it though? You have to question if people are so used to certain prices being the way they are, that would people not be interested in buying an ipad if they all of a sudden were 100 more to make up for chinas theoretical better working conditions.

I mean look at a product like steam. People are so used to paying $60 for a video game that they buy skyrim off steam for the same price as going to target, which gives you a physical copy potential trinkets (like a paper map), and won't be region locked.

Entertainment is different from say, gas prices (which people will always buy). Look at movies these days. Aside from the big summer releases and whatever wins major nominations, people are turning away from movies because they dont want to shell out $13 for a ticket to be in an aging theatre, when back in 2003 it was maybe $6 and the location was 10 years less worn down.

I don't get it. Do you want workers in China to be better off or worse off? China has a third of the production we have and over four times the population. There is absolutely no way China could give its workers US standards. The wealth just isn't there. If they could, the CCP would have done it long long ago.

I'm assuming you mean GDP when you say production, because there is no way in hell that china only has 1/3 of our manufacturing (what i think of when somebody says production).

I think my major beef with the economic state of the usa has more to do with the fact that we are slowly (or quickly) turning everything into a service. I really see it with gaming, and it makes me fearful of its future. I prefer having a mix of goods and services as a country's economic structure.

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Pride. Passion. Excellence. Metal_DK
Currently playing: Sengoku Rance, Starcraft II

I mean GDP, yeah. I don't like how the US economy is becoming more and more service based either, but we can take some solace that the goods we do have are good ones to have, I think. The US has 3 main exports for goods: Food, natural resources, and technology. All 3 of these will be even more important in the future, and are hard to replicate. Any poor country in Africa can undercut China's prices for manufacturing, but it's much harder to do with new technology creation, and impossible to do with natural resources.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
your 7 time champion, Link.

To argue that China should treat their workers better is to implicitly argue that America should treat its workers worse.

Explain this. Why can't we imply that both China and America should treat their workers better?

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we've had hundreds of thousands of years and we don't seem even remotely equalized

Because various governments keep interfering with the free market. Interference in the market is what keeps equilibrium from being reached. Do note that I'm talking about economic equilibrium, which is almost certainly not the same as "equality" in whatever way you're thinking of.

Explain this. Why can't we imply that both China and America should treat their workers better?

Well, the phrase we should be using is "standard of living." Right now, the labor market is not at equilibrium. Our wages are artificially high and the wages of the Chinese are artificially low. If you were to raise the minimum wage in China, it would have to be paid for somehow. In the immediate term, this would mean massive unemployment for the marginal Chinese workers. In the longer term, it would most certainly have to mean falling wages in the developed world.

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SmartMuffin - Because anything less would be uncivilized - http://img.imgcake.com/smartmuffin/barkleyjpgde.jpg
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if ron paul becomes president, he will be assassinated within a month. problem with being incorruptible is you tend to make enemies with a lot of incredibly shady people...between the fed, the military industrial complex, the pharmaceutical companies, and all the other rats running washington, someone will take him out

I mean GDP, yeah. I don't like how the US economy is becoming more and more service based either, but we can take some solace that the goods we do have are good ones to have, I think. The US has 3 main exports for goods: Food, natural resources, and technology. All 3 of these will be even more important in the future, and are hard to replicate. Any poor country in Africa can undercut China's prices for manufacturing, but it's much harder to do with new technology creation, and impossible to do with natural resources.


Agreed wit the first two, but do we even export that much technology? I know we export a lot of military technology (cargo planes and the like....although it wouldnt surprise me if we started exporting even some of our major fighter planes liike the f-22 since we are dumping tons of money into the f-35 development)

But for "regular, small business" guy? What technology to we really export? I guess software for businesses like SAS, Office, etc? We sure as hell dont export technology hardware.

Also the reason why i cant see any poor country taking over chinas manufacturing is the fact that china has a billion people that aren't fighting religious and tribal wars. That is kinda a natural resource in itself.

--
Pride. Passion. Excellence. Metal_DK
Currently playing: Sengoku Rance, Starcraft II

But for "regular, small business" guy? What technology to we really export? I guess software for businesses like SAS, Office, etc? We sure as hell dont export technology hardware.

We certainly do. Companies like IBM, Apple, Dell, etc. all make hardware. We create the design for the hardware here, and it may get manufactured in China or elsewhere. The design is 95% of the product though.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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^
Not sure where this 95% comes from, but ya. This is somewhat of a "theory vs applied: which is more important" debate. Obviously you need the "theory'' (in this case, hardware design). But as somebody who has taken theoretical and applied statistics graduate courses, I will say don't sell the applied people short. I feel you are somewhat doing that with this "design is 95% of the product".

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Pride. Passion. Excellence. Metal_DK
Currently playing: Sengoku Rance, Starcraft II

Well, the thing is anyone can do the manufacturing, while only we can produce the design. I would not be surprised if Americans get 95% of the profit on each ipad sold.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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If you were to raise the minimum wage in China, it would have to be paid for somehow. In the immediate term, this would mean massive unemployment for the marginal Chinese workers.

It'll be paid for by unemployment in China and higher prices for goods here. Not lower wages here, in the short or long run.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
your 7 time champion, Link.

It'll be paid for by unemployment in China and higher prices for goods here. Not lower wages here, in the short or long run.

Higher prices of goods has the same net effect on a person as lower wages does though. That's why I said "standard of living" would probably be a better measurement.

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SmartMuffin - Because anything less would be uncivilized - http://img.imgcake.com/smartmuffin/barkleyjpgde.jpg
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imho if governments didn't become involved, certain monopolies would eventually "win" and become the de facto governments

edit: except they would have even less accountability

monopolies cannot exist without government involvement

government protects you from monopolies in the same way that the sun protects you from getting sunburned

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SmartMuffin - Because anything less would be uncivilized - http://img.imgcake.com/smartmuffin/barkleyjpgde.jpg
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Of course monopolies can exist without governments creating them.

And while we're at it, what do you think a government is but a monopoly?

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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Of course monopolies can exist without governments creating them.

No they can't, it's actually part of the original definition of the word monopoly, which was "a grant of exclusive privilege by the state" (at that time specifically the king).

How could a monopoly exist in a free market? What would prevent competitors from entering the market?

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SmartMuffin - Because anything less would be uncivilized - http://img.imgcake.com/smartmuffin/barkleyjpgde.jpg
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monopolies cannot exist without government involvement

government protects you from monopolies in the same way that the sun protects you from getting sunburned

eh, kinda disagree here. Monopolies can be stronger with the gov't, but to say monopolies would not exist without government involvement is pretty....foolish.

--
Pride. Passion. Excellence. Metal_DK
Currently playing: Sengoku Rance, Starcraft II

No they can't, it's actually part of the original definition of the word monopoly, which was "a grant of exclusive privilege by the state" (at that time specifically the king).

How could a monopoly exist in a free market? What would prevent competitors from entering the market?

I'm not talking about the original definition, just the current one.

And in a free market, the monopoly cannot stop anybody from entering the market by force, but they can make it impossible for anyone else to profit, thereby ensuring that no one else will enter.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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SmartMuffin posted...
How could a monopoly exist in a free market? What would prevent competitors from entering the market?

What if you're the only person that knows how to make a particular product?

--
No I'm not a damn furry. Looney Tunes are different. - Guiga
I wanted Sonic/Shadow romance at that time, not sex. - MWE

but they can make it impossible for anyone else to profit

How?

What if you're the only person that knows how to make a particular product?

Well, nothing short of complete and total socialism will ever prevent that particular form of monopoly. In any case though, I'd argue that such a thing isn't that sustainable. Especially these days.

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How?

Cut prices so that the other side has to cut prices to below profitability levels to compete.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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And then when the other side goes bankrupt or quits, you raise the prices again. Everyone knows that this will happen as soon as they enter, so everyone will stay away in the future after one such demonstration.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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Cut prices so that the other side has to cut prices to below profitability levels to compete.

This has nothing to do with business though, and everything to do with wealth. This sort of logic would boil down to "the richest man on Earth has a monopoly on everything" which is obviously not possible.

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SmartMuffin - Because anything less would be uncivilized - http://img.imgcake.com/smartmuffin/barkleyjpgde.jpg
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Wealth is definitely a big part of what a monopoly is. It has to do with the means of production too.

Example: The Most Serene Republic of Venice has a monopoly on trade between the Trebizond (end point of the Silk Road) and Italy. They carry out this trade with an extensive fleet of hundreds of ships. The Bishop of Rome would like to join in on this lucrative trade, but lacks ships, because his predecessors have placed their focus on building large cathedrals, promoting great artists, and launching inquisitions.

Now, the Pope can spend a fortune building up the necessary navy and merchant marine to conduct Eastern trade. Through the sale of indulgences across Europe, he does have a massive fortune, perhaps more than the Venetians.' But it is nonetheless much more expensive for him to enter this trade than for the Venetians to continue doing it, so he probably won't.

If the Pope is vastly more rich than the Venetians, he might try it anyway and dare Venice to try to cut prices. But that's not surprising, because concentration of wealth in the hands of one person is closely related to that person having a monopoly. A monopoly is power. Wealth can give you power. So it's not strange that all that wealth can buy you a monopoly.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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But it is nonetheless much more expensive for him to enter this trade than for the Venetians to continue doing it, so he probably won't.

True, but remember, the reason we fear monopoly is because we fear that it will lead to exorbitantly high prices. At some point, the Venetians, if they choose to price-gouge, will make it worthwhile for the Pope to enter into this trade as a competitor, because he knows he can charge much lower prices than the Venetians to still recoup his initial investment.

The Most Serene Republic of Venice stole the secret of Greek Fire when the sacked Constantinople in the 4th Crusade. This enables their navy to fight off Ottoman ships that would otherwise stop trade. The Papal navy does not have this technology, and is unable to defeat the Ottoman navy. As a result, the Pope is unable to protect his merchant fleet from attack and cannot conduct the trade between Trebizond and Italy.

Well, in this case, the monopoly is really on the greek fire, and not any particular trade route. If the Pope was rich enough, he could employ scientists to study and attempt to either replicate the greek fire, or invent a suitable substitute. Or even invest in finding a profitable land route for trade. Remember, the good demanded here is "trade with the east" not "control of the seas"

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SmartMuffin - Because anything less would be uncivilized - http://img.imgcake.com/smartmuffin/barkleyjpgde.jpg
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True, but remember, the reason we fear monopoly is because we fear that it will lead to exorbitantly high prices. At some point, the Venetians, if they choose to price-gouge, will make it worthwhile for the Pope to enter into this trade as a competitor, because he knows he can charge much lower prices than the Venetians to still recoup his initial investment.

Monopolies don't price gouge per se. The optimal price for a monopolist is higher than in a competitive market, but it's not always astronomical. The reason is that fewer people will buy the product as the price goes up, monopoly or no, and the monopolist wants to set his price to maximize profit.

But in this example, the Pope's problem is that he can look at the Venetians' prices all he wants and think about how he can charge lower prices profitably. But he knows that if he tries, Venice will just cut prices to force him out. So he never does anything, and the Venetians keep on charging their monopolist prices.

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Congratulations to SuperNiceDog, Guru Winner, who was smart enough to pick
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From: red sox 777 | #080
Monopolies don't price gouge per se. The optimal price for a monopolist is higher than in a competitive market, but it's not always astronomical. The reason is that fewer people will buy the product as the price goes up, monopoly or no, and the monopolist wants to set his price to maximize profit.

Well it depends on how much demand there is for the item. The point is that a monopoly's price increases far more rapidly with demand than an good that has competition in the market.

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_foolmo_
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From: foolm0ron | #081
Well it depends on how much demand there is for the item. The point is that a monopoly's price increases far more rapidly with demand than an good that has competition in the market.

And the follow-up point is that the further the monopoly price departs from the market price, the more likely it is that competitors will see an opportunity to make a profit and enter the market.

As far as undercutting goes, that's where the total wealth comes into play. If the Pope is just as wealthy as the Venetians, undercutting won't drive him out of the market, because he can afford to take the loss just as much as they can.

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