From: Dickey, Michael F (michael_f_dickey@groton.pfizer.com)
Date: Wed Aug 29 2001 - 15:29:53 MDT
"You claim tire installers are making 50K? how about some proof, and
by the way if it wasn't worth it the company wouldn't pay it...."
They dont, instead they close up shop and move south, where the same job can
be performed just as well in a cheaper environment. Then, of course,
everyone complains that these greedy corporations are stealing jobs from the
US and giving them to mexico, of course these same people turn around and
buy cheap imported clothed, electronics goods, and cars. Very few of them
are willing to pay the extra money for a product required to pay the average
american worker.
"Like given that without government intervention companies can form
monopoly/monopsonies and completely distort the prices in a market."
"Either a monopoly or a monopsony can control the price of either
goods or labor."
only to a limited extent, see my previous objections to monopolies and price
fixing.
But those things never last. Even when price fixing, say four companies get
together and agree to charge $5 for thier product, which cost $1 to
manufacture and distribute, they now share the market equally. It will
always be in one of the companies best interest to undercutt the others. If
those four companies each shared 25% of the market then it would be in one
of the companies best interest to now charge $4 for thier product since they
may take a far greater percentage of the market. If the market is not
equally shared by all companies, then it is not in the companies that are
not recieving an equal share's best interest to continue with that
agreement. Also, other companies who might not be making a competing
product would then decide to since they could undercutt all the price fixing
competitors and take the whole market. In this way price fixing never
lasts, and it can never go past a certain point in price anway. If all the
companies who sell milk decided to charge $4 a gallon, would you still drink
it? $8? $32? There is always a limit that anyone will pay for a product,
even in a monopoly the price is kept in check.
and
Again, people will only pay a certain price for certain items, and no more.
This is why ketchup does not cost $100 per bottle. Nobody would pay it,
even if all the ketchup companies decided to price fix at that, people would
switch to a different condoment. If that was price fixed as well, they
would switch to nothing. In the end, no amount of artifical impositiong of
demand, which is a valid part of capitalism, will convince the average
consumer to work 40 man-hours to pay for a bottle of ketchup.
"Lets try a modern day example. Suppose Microsoft was the only
software company in the world. Do you think anyone would be getting
stock options and bonuses or relocation allowances, or would
programmers be working for minimum wage."
Do you think those people would continue working for microsoft? Or would
they quit and start thier own software company? Do you think that other
companies wouldnt then decide to enter the software market given the
potential profit margins? Pointing out why free markets wont work by
imagining a world where only one producer is allowed isnt valid, as no such
world would exist.
Regards
Michael D
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