At 22:45 25-1-01 -0500, John Giorgis wrote:
>Here's a quesiton for you - why don't *all* companies (or at least all
>manufacturing companies) move to developing countries?
Er, because it would be too expensive for some of them? Not every
manufacturing company is so big it can afford such a move. And who knows,
perhaps there are some US factory owners who don't want to move abroad
because they actually have a sense of social responsibility (but I'll
believe that when I see one).
> >Further, moving your production lines to
> >the Third World is anything but helping the non-share-holding working class
> >Americans who loose their job because of that move.
>
>Oh, but it does. Let's say that a company sells X units of product at
>price Y in the US. After moving to another country, the sell the same
>product at lower price Z. Suddenly, all Americans have (Y-Z) * X more
>dollars to spend on other products.
Would you like to tell Bolder's employees that it's good for them and for
the economy that they loose their jobs? I'm sure we can arrange for such a
meeting. Can't guarantee your safety then, though...
Your statement is only true if the result of (Y-Z) * X is extremely large
and all laid off personnel find a new job at the same pay. In the case of
Bolder Tech's rechargable batteries, (Y-Z) * X might be a substantial
amount, but when divided over "all Americans", each American will probably
have only a few dimes more to spend on other products. That hardly
justifies throwing all their American workers out. All the people that are
laid off and can't find an other job will even have a lot less spending power!
But if that really works, the US government should force all manufacturing
companies to move abroad! After all, if spending power already goes up when
*one* company moves abroad, each American should have thousands of dollars
more to spend if all those companies move abroad! I'll show below why that
won't work.
> >Wrong again. Even while you're still producing in the US, your prices
> >already have to be competitive if you want to survive at all.
>
>Actually, if the company is moving to the developing world, it is probably
>*because* their prices are not competitive.
If their prices aren't competitive, then the company would have gone out of
business long ago.
> >Further, you
> >can't lower your prices too far because that might actually cost you your
> >market share. Reasoning: many customers will not buy your batteries if they
> >are much cheaper than the competition's batteries, for the simple reason
> >that a much lower price is usually an indication of inferior quality.
>
>Perhaps you should go warn Dell and Gateway before they lower their prices
>any further.
Dell and Gateway are bad examples, John. Thanks to all the good reviews
their products get, Dell and Gateway already have a reputation for selling
quality products. Their lower prices aren't caused by inferior quality, but
by the fact that they cut out the middle man and sell directly to the end user.
> >I suppose they didn't teach you this in college, John, but contrary to what
> >capitalist theory says, substantially lower costs do *not* lead to
> >substantially lower consumer prices -- they only lead to higher profit
> >margins, which benefit only the factory owners and the share holders.
>
>*ONLY*???????
>
>I am not sure if I should even dignify that with a response. Suffice to
>say, your conclusion is patently false.
Why is it "patently false"? If you make such a statement, you'll have to
provide an explanation.
BTW, it is my experience that companies are very quick to raise prices due
to increase costs, but rarely lower their prices when the costs go down.
> ><sarcasm>
> >Yeah, sure. After all, we all know that owning rechargable batteries is of
> >vital importance to poor Americans in order to survive... Who cares about
> >getting food on the table -- it's those rechargable batteries they need!
> ></sarcasm>
>
>This might surprise you, Jeroen, but some 95%+ of Americans receiving
>welfare payments from our government own televisions.
But when did they buy them? I doubt welfare payments are so generous that a
person on welfare can buy a new television. I assume (a) they bought them
when they still had a job, or (b) bought a cheap second-hand tv. I'll
ignore option (c) they stole it.
>Let's say a company is facing competition from an indigenous firm based in
>a developing country. Sticking with our current example, let's say that
>an entrepreneur has opened by a batter factory in Mumbai, producing
>batteries with cheap labor under Indian labor laws.
>
>1) Continue to employ an American during a time of strong economy who has
>probability X of finding a new job in America if laid off, where said
>worker will still earn his or her current Y wages per hour
>
>2) Move to a develping country and pay a native worker some wages Z per
>hour, such that Z is somewhat less than Y, but substantially higher than
>the prevailing wages in said conutry. Additionall, said worker would
>have probability W, such that W is substantially lower than X, of finding
>any job (probably with much lower wages) in an economy with a 25%
>unemployment rate.
>
>I am asking you, for a moment to neglect the profit motive. I am simply
>asking what you - as a compassionate thinker of the intellectual Left would
>do if placed in the above position.
In that case, option #2 would be preferable. It is however impossible to
ignore the profit motive, for the simple reason that in reality, profit is
the *only* motive to move production to low-wage countries. This is why
option #2 is nonsense; no entrepeneur would pay said worker $3 per hour if
he can get away with paying him $1 per hour.
>Of course, I should not that option #1 also entails continuing to pay high
>wages to the American worker for as long as possible, while forced to cut
>prices due to foreign competition. Eventually you declare bankruptcy in
>the face of competition and lay off all of your workers anyways.
IOW: all US-based companies should move their lay off their staff and move
their production abroad now, because otherwise they'll go bankrupt? How are
you going to deal with the enormous increase in unemployment? Many of those
American workers won't find an other job, we can't give all of them a job
at MacDonald's, and keeping all those millions of people on welfare is
going to be horribly expensive. Where is all that money going to come from?
Not from those business, because they are not US-based anymore. Which
leaves you with a Republican's nightmare: raising taxes...
Jeroen
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