Globalization

POSTED BY: deepgirl187
UPDATED: Tuesday, August 26, 2025 22:20
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FLETCH2

Friday, October 12, 2007 8:04 PM

Quote:
Originally posted by SignyM:

So looking only at "investment"...

A business expands production when it sees an expanding market. But if the money supply stays the same the market will be stagnant, so a business will invest either to increase market share (improved product, acqusition/ consolidation) or to create higher profits through greater automation or lower pay rates. Neither one of those activites actually expands the market, and reduced pay rates and/or automation -while improving the bottom line in the short run- reduces the total amount of money that will be used to "buy stuff" with and shrinks the market.

I know you'll prolly dispute my view of "what happens to profits" so if you'd like we can go thru a specific example of your choice.

---------------------------------
Always look upstream.

No. For one thing the economy expands because of increased economic activity. You have set up a situation where the economy can not expand -- kind of like a soviet style command economy, then you show activity dwindling, those are unrealistic start conditions. If the money supply can never expand to reflect the value in the economy you could not even pay people to mine raw materials, you would be almost unable to buy anything.

In reality the money would just increase in value as the amount of worth in the economy expanded. So even in your world the total number of notes traded would be the same but their exchange value would increase. Money, gold any unit of exchange only has the value that people are willing to trade it for. "The money supply" is just a very rough estimate of an agreed intrinsic value.

Let's look at a more realistic point of view.

Apple has a success with Ipod.

Competitors seeing success with Ipod engineer their own version. They are not trying to "grow" the economy, they want to steal part of Apple's market share.

All of these companies want return on their investment but the market at the price Apple sets is finite. So to get market share they cut prices -- accept smaller profit to get return on investment.

Prices fall. Some competitors fail however the money they invested in their attempt to grab market share has bought buildings and equipment, paid staff who have bought goods/food/rent all of which is economic activity that has put coin in people's pockets.

Because prices fall the survivors products are now in a different price point to where they started, consequently folks that couldn't have afforded Ipod at the original price now can do so. As it happens there are people that now have money because of the successfull or unsuccessfull investments. The market for MP3 players (generic name) is seen to have expanded. There are now more people making more money than there was when apple was the only game in town.

FLETCH2

Friday, October 12, 2007 8:09 PM

Quote:
Originally posted by rue:
BTW Fletch, I highly recommend this book, available at Amazon.com, which I have and have read.
."

As I said above I did read his testimony to congress and I agree completely with that (though he's more pessimistic than I am.) In his testimony he doesnt say that Free trade is good or bad, he says it is mixed (which it is.) If you read what I wrote at the begining of todays thread, there are problems with the reality of what Free Trade guru's push. Doesn't mean it's all bad, just means expectations are unrealistic.

CHRISISALL

Friday, October 12, 2007 8:10 PM

Quote:
Originally posted by Fletch2:

Let's look at a more realistic point of view.

Okay, let's. Can the average first week's paycheck of a McDonald cashier buy more 'stuff' back in 1980, or can today's first week's paycheck buy more right now?

Tough one Chrisisall

FLETCH2

Friday, October 12, 2007 8:23 PM

Quote:
Originally posted by rue:
"All money going back into the economy."

It's not true that ALL the money goes back into the economy. The vast majority never does.

I think you'll find it all does one way or another. Unless like Saddam they have some wrapped in plastic in an outhouse.

Quote:

For example, a person buying a private jet creates enough demand for one jet. A bunch of people flying on commercial jets create enough demand for a fleet - plus fleet maintenance, airports, regulations, airline companies, cabs and shuttles, travel agencies, on-line services ...)

But this is a different question. That's like saying that because you own a house and don't use it as a hotel you are not making as good use of the money and depriving maids/porters/checkin staff of a living. It may be true but it's beside the point.

If a private jet costs $9M then in buying it you have still put $9M back into the economy irrespective of how you use it. Now had you invested $9M in an airline could you have produced more economic activity? If that is your argument then the answer is yes. However in that case you are being an A*hole to not use your house as a hotel. In the end the nature of private property is that it's principle purpose is private.

Quote:

And that isn't their interest anyway. Their interest is in making MORE money. So they spend the vast majority of their money in acquiring more money making opportunities or in buying up the competition.

And that further concentrates wealth.
."

That's called "investment" amongst other things it pays to start and expand businesses and thus hire working Joes that use their pay to buy food/housing/ consumer goods etc. If the money was never invested and wrapped in plastic you would have a point but it isn't it goes ultimately to pay guys to do stuff.

FLETCH2

Friday, October 12, 2007 8:30 PM

Quote:
Originally posted by chrisisall:

Okay, let's. Can the average first week's paycheck of a McDonald cashier buy more 'stuff' back in 1980, or can today's first week's paycheck buy more right now?

How much are you willing to pay for a burger? If it's less than $5 then chances are the "value" added by the cashier isn't enough to pay them more. That applies to a lot of people.

You can't afford to pay someone more than the value they add to the product. If you Chris would pay more for a burger then the cashier would be paid more. As it is if the local McD raises prices you will just go to Wendy's and the McD goes out of business. Ultimately YOU decide what that gal gets paid by waht YOU will pay for her product.

CHRISISALL

Friday, October 12, 2007 8:35 PM

Quote:
Originally posted by Fletch2:

How much are you willing to pay for a burger? If it's less than $5 then chances are the "value" added by the cashier isn't enough to pay them more. That applies to a lot of people.

You can't afford to pay someone more than the value they add to the product. If you Chris would pay more for a burger then the cashier would be paid more. As it is if the local McD raises prices you will just go to Wendy's and the McD goes out of business. Ultimately YOU decide what that gal gets paid by waht YOU will pay for her product.

Ummm, the answer is, the first week's paycheck in 1980 could buy more stuff. Just makin' the point that our economy is catchin' up (or down, if you wanna get technical) with the rest of the world- we will have a true global share soon enough.

Chrisisall

Edit to add: I don't eat burgers you omnivore!

SIGNYM

Friday, October 12, 2007 8:36 PM

Quote:
That's called "investment" amongst other things it pays to start and expand businesses and thus hire working Joes that use their pay to buy food/housing/ consumer goods etc. If the money was never invested and wrapped in plastic you would have a point but it isn't it goes ultimately to pay guys to do stuff.

Did you even read my post? A company will not invest in increasing production unless they see an expanding market. Why would I, as a business, invest in producing more widgets if I don't think anybody will buy them? Now, considering that I'm already holding onto 10% of the last amount of money which cycled through the economy, that's 10% NOT available to buy my widgets.

I didn't set the parameters towards a stagnant economy. The shrinking supply of dollars that can be used to "buy stuff" did.

---------------------------------
Always look upstream.

FLETCH2

Friday, October 12, 2007 8:48 PM

Quote:
Originally posted by SignyM:
Quote:
That's called "investment" amongst other things it pays to start and expand businesses and thus hire working Joes that use their pay to buy food/housing/ consumer goods etc. If the money was never invested and wrapped in plastic you would have a point but it isn't it goes ultimately to pay guys to do stuff.
Did you even read my post? A company will not invest in increasing production unless they see an expanding market. Why would I, as a business, invest in producing more widgets if I don't think anybody will buy them? Now, considering that I'm already holding onto 10% of the last amount of money which cycled through the economy, that's 10% NOT available to buy my widgets.

.

If your idea is to isolate one economic element your argumant is baseless. In your simplification you have postulated a world where one manufacturer has a monopoly making something nobody would buy. In that case they go to the wall like buggy whip makers.

If there is a market for your wiget, then other people will make them at lower prices to steal the market share of your odd little monopoly. This will make jobs for folks put money in the economy that will be used to buy widgets at a lower price. If there is a cap on the number of notes in the economy the value of the ones being traded will rise. Expansion in the money supply ultimately reflects increase in wealth in the economy, if it doesnt the value of the notes falls and you get hyperinflation. If by "money supply" you mean the number of notes then if that doesnt expand the value of each one goes up. If by money supply you mean wealth in the economy then you are right, you are in a bad way but then in effect you are saying "in a world where the economy is failing economic activity declines."

To which I say "Doh Sherlock"

CHRISISALL

Friday, October 12, 2007 8:53 PM

Quote:
Originally posted by Fletch2:

If your idea is to isolate one economic element your argumant is baseless. In your simplification you have postulated a world where one manufacturer has a monopoly making something nobody would buy.
If there is a cap on the number of notes in the economy the value of the ones being traded will rise. Expansion in the money supply ultimately reflects increase in wealth in the economy, if it doesnt the value of the notes falls and you get hyperinflation.

Ummm... but how does this explain quantum singularities?

Not good with hard words Chrisisall

SIGNYM

Friday, October 12, 2007 9:00 PM

Quote:
If your idea is to isolate one economic element your argumant is baseless. In your simplification you have postulated a world where one manufacturer has a monopoly making something nobody would buy. In that case they go to the wall like buggy whip makers.

Apparently the idea of "aggregate" is foreign to you. If you can't handle the idea of aggregate, don't try discussing economics. My manufacturer is a stand-in for ALL manufacturers, as my nominal 10% profit is a stand-in for ALL profits.

So, let me try this again: Why would ANY manufacturing invest in expanding production if the market wasn't there?

---------------------------------
Always look upstream.

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