In article , "Dee D. Flint"
writes:

You know Nixon tried wage and price controls and we started developing
shortages. Other countries in the world have tried it too and also failed.
Every where that has been tried, the standard of living dropped, goods and
services became hard to get and unemployment rose. So why try what has
already been proven to fail.

As I recall it, wage and price controls caused some shortages because certain
costs could not be controlled. For example, the wellhead price of natural gas
was regulated but the cost of drilling wasn't, so a lot of folks either stopped
drilling altogether, or, when they were drilling for oil but hit only gas,
they'd cap the well and take the loss in one lump rather than put the well into
production and lose money on every cubic foot of gas produced.

Please show that profits are obscene. Don't quote dollars, quote percentage
of operating expenses. If expenses are say 100 trillion, then a profit of 1
trillion (1%) is so dangerously low that the company is on the verge of
going bankrupt. Any company only making a 1% profit has difficulty getting
investors, difficulty in getting expansion capital, and has no safety margin
to ride out an economic downturn. On the other hand, let's take another
case. If a small business has operating expenses of $100 and makes a profit
of $1000 then that is an obscene profit since it is 10 times the operating
expense. So you see just quoting a dollar figure doesn't tell the whole
story.

It's actually even more complex than that. Operating expenses are only one
metric - there's also return on investment, market volatility, stock prices,
regulatory controls, and a bunch of other factors.

For example, suppose a business with a total investment of $1 million has $10
million in operating expenses and $100,000 in profits. Profit is 1% of
operating expenses but 10% of investment - is this company on rocky ground or
not? If the operating expenses are fairly fixed, even a small drop in sales
will put the company in the red. But if the operating expenses rise and fall in
sync with sales, the company may be in a very solid position, profit wise.

There are all sorts of other examples. Some industries are so cyclic that they
*need* high profits in good times to carry them through losses in bad times.

[snip] However, it is clear that even minor regulatory
modifications, not massive government programs, can have a dramatic
impact.
The idea offered in the first paragraph also has the advantage of keeping
product prices down for consumers. The idea in the second paragraph
requires
more effort, but offers greater returns over a longer period of time. The
idea in the third paragraph offers the most benefits, but will have the
most
negative impact on consumers in the short term. For a truly robust
economy,
perhaps parts of all three should be considered.

However, history has proven that it is not possible to predict the results
of these "minor" regulatory actions. At this point in time no one is
knowledgeable enough to do so and it's better to let the system react to the
free market principles.

"Law of Unexpected Consequences"

Look at the auto industry. Fuel prices were kept artificially low until the
1973 embargo, when they became artificially high, and the fuel itself became
scarce.

Because the market had become used to a semingly inexhaustible supply of cheap
fuel, the US auto industry did not develop fuel-efficient cars, and
transportation alternatives like transit died off (or were actively killed to
get rid of the competition to the private auto). This shortsightedness set the
stage for massive inroads in the US market by foreign carmakers who *had*
developed fuel-efficient cars.

In addition, you have left out the most workable option. That is to work
toward a world economy that enjoys a comparable standard to ours. Once that
occurs, industry will find it more economical to produce more locally to
trim shipping costs. Once it becomes equally costly to make a car in Japan
as in the US for example, then the lower shipping cost means it's better to
serve the US market with cars made in the US.

In the case of cars, this has already happened in some cases. Many Japanese
companies (Honda, Subaru, Toyota, to name just a few) make cars in the USA
because it's cheaper!

VW started that trend way back in the '70s by buying the Westmoreland, PA
facility from Chrysler, and building Rabbits, Golfs and Jettas here instead of
Germany. VW later sold that plant to Sony, who uses it to make CRTs (because
it's cheaper to make them here!)

The main drawback is the fact
that it will take a very long time before the world standard of living
matches ours.

So what do we do until then?

73 de Jim, N2EY