Jeroen said:
> >John.
> >If Americans stop buying expensive
> >domestic products in favor of cheaper imports from developing countries,
> >what should the domestic corporation do?
> They could concentrate on producing a similar product that may be more
> expensive than the imported product, but has a significantly higher
> quality. Or they could accept a somewhat lower profit margin. Or they
could
> accept defeat and focus on producing something else. Or lower their costs
> by increasing efficiency.
Yes. Or raise prices then differentiate their product from the competition
through branding and dishonest advertising, endorsements by someone famous
who is not qualified to judge the product but whose endorsement allows the
simple minded to believe that some of the endorser's mana will be magically
transferred to them if they buy it. (Mega-rich sportsmen and film stars
appear to be just as keen as struggling actors to lie for money.)
Or enter into an illegal price or distribution agreement with the competitor
encouraging the competitor to raise prices.
Or merge with or take over the competition.
Or seek exclusive distribution or wholesale rights (Gates-IBM).
Or your trade representative will lobby or blackmail govt officials to
impose tariffs or otherwise frustrate the competition.
Most corporations put more effort into avoiding competition. The concepts of
"free market" and "free trade" may have some use in theoretical economics
and propaganda but are the exception rather than the rule. (Ceterus paribus,
which they never are).
> And yes, I do realize that the last option might result in a loss of jobs.
> That's why in my country, employers have to come up with a social plan for
> their about-to-be-laid-off employees.
<sarcasm> Why do they *HAVE* to? Corporations are benign and make decisions
on the basis of "social responsibility".
SNIP
> > >> >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 implies 100%. Your statement requires that no company has ever
> >lowered consumer prices due to lower costs.
> The term "only" was used in the meaning of "just" or "merely" (it could
> even be completely omitted). It was not used in the meaning of "in 100% of
> all cases" [1]. I'm not saying that no company ever lowered prices due to
> lower costs. I do however doubt it happens very often, and I doubt that
> prices are lowered at the same rate as the costs.
I can't imagine prices being lowered solely because of lower costs. There
would have to be an additional reason such as maintaining or increasing
market share.
> [1] My English isn't perfect; it is after all not my native language.
You could have fooled me(:>) My English isn't perfect; it is my native
language.
SNIP
> Yet the profite motive is the only motive for moving your production to
the
> third world.
Yes. As well as cheaper labour costs and avoidance of social responsibility,
there is the advantage of totalitarian control over employees which more
than compensates for the additional PR costs. However there is growing
awareness of the lack of ethical behaviour of corporations which might lead
to a backlash
But probably not.
Faced with an insistent child, whose diet of television advertising has been
orchestrated by a child psychologist, a parent seeking peace is unlikely to
be immediately concerned that the "free" toy offered with the MacTasteless
has been made using child labour in a sweat shop.
Bob.
