"N2EY" wrote in message
...
In article , "Dee D.
Flint"
writes:

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.

Exactly, people won't produce things they can't make a profit on. Thus it
results in shortages and job losses leading to reduced buying power leading
to layoffs in other industries and so on.

[snip]
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.


I agree 100% but was just trying to keep it simple. It also illustrates
that it it too complex to try to regulate as we've discussed below.

"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.


Yup it sure did. I certainly remember when it seemed the roadways were
dominated by foreign 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

As people have always done:
1) Some will whine and barely get by.
2) Some will simply make the best of what they have and do a bit better
3) Others will forge ahead and strive for their own personal best
development and productivity and will be reasonably comfortable.
4) Yet others will create an opportunity and become the next Bill Gates.

Dee D. Flint, N8UZE