Re: [tlug] Economics lessons

["Stephen J. Turnbull" <stephen@example.com>]

>>>>> "Lyle" == Lyle Saxon <Lyle> writes:

    Lyle> By "overcharge" I meant that they take in considerably more
    Lyle> money than they need to provide a decent profit for the
    Lyle> employees of the company.

[NB Employees see _nothing_ of the profit, by definition.  Profit has
nothing to do with feeding employees or their kids; employee
compensation is a _cost_.]

The profit is the difference between the price in the market and the
sum of such costs.  You are saying that should be capped at some
"decent" level.  Why?  It's quite possible that the net value
extracted by buyers per unit is much higher.  Why shouldn't we cap the
buyers' value and let the sellers take the rest as profit?

The only reason I can see is that people are selfish.  The typical
person says "I don't want to overcharged by big companies that I buy
from, or underpaid by the big company I work for."  Howcum when Joe
Blow is buying, prices are unfairly high, but when he's selling,
they're unfairly low?

In your case, maybe there's a principled reason I haven't thought of.
But I'm quite sure that the typical person's logic is purely
self-interested.

    Lyle> Excuse me for saying so - but comparing a mega-production of
    Lyle> identical items that are quite cheap per unit

Talking about "mega-production of identical items that are quite cheap
per unit" shows that you do not understand what the issues are here at
all.  You might as well assume there is a single original which costs
hundreds of millions of $$$ to produce, which then allows an infinite
supply of perfect copies available at zero cost.  This does little
violence to the economics, and none at all the the ethical issues.

The whole question is how to allocate the "first copy" cost.  The cost
of the copies is irrelevant.

    Lyle> And... how do you know I didn't overcharge anyone?  I
    Lyle> personally remember each of the used cars I sold and don't
    Lyle> think I sold any for an unreasonable price, but it troubles
    Lyle> me that you grant me automatic immunity

No, I granted you the usual human dose of hypocrisy.  I'm glad to see
that I overestimated it, and apologize for that.

-- 
Institute of Policy and Planning Sciences     http://turnbull.sk.tsukuba.ac.jp
University of Tsukuba                    Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
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