On Fri, 10 Jun 2005 13:44:01 -0400, Dave Hall
wrote in :

On Thu, 09 Jun 2005 20:56:30 -0700, Frank Gilliland
wrote:

If you have a hammer made in China and a hammer made in the USA, the
price is going to be the same because the market dictates the price.

Right, and when a hammer can be made cheaper in China, it forces the
American company to lower its price (Often resulting in sharp
reductions in overhead to keep a reasonable profit margin). At some
point the American company will no longer be able to compete.


Hence the success of Wally World.

Thank you for conceding my point. And with a perfect example.


And to expand further on your point, you left out the part about the
reduction of average income of American workers as a result of lost
jobs, thereby reducing overall spending in the economy (-including-
the sales of cheap imported products), shifting more people into the
no-tax bracket and -increasing- the tax burden on everyone else.

Lessening of consumers' purchasing power causes a reduction of demand,
and therefore the prices will drop further, which then leads to
deflation, which was a very real fear a few years back. Which is one
reason why the fed chopped interest rates so much.


Greenspan chopped the prime rate after Bush's tax "rebates" because
the expected revenue wasn't coming back -- instead of spending that
money people were paying down their credit cards. So the Fed dropped
the prime rate to encourage people to borrow and spend -more- money.
IOW, the Fed was bailing out the economy after Bush ****ed it up.


snip
The
price is set by the lowest price that someone is will to sell it for.


Wrong. It's set, as I stated before, by the laws of supply and demand.

That's too overly simplistic.


Not according to Friedman, Lindahl, Svennilsson, Myrdal, Ohlin,
Lundberg, etc, etc. But if -you- say so then it must be true.

I'm sure that none of them put it as simply as you did. They know, as
you should, that there are many mitigating factors that also influence
where a price is set. Think about things like monopolies and economic
collusion.


Think about taking a couple semesters of economics.


snip
Wrong again, Dave. The recommended fuel for the Model T was alcohol,

No Frank, the Model "T" had the capability to run on alcohol "as an
alternative" to gasoline. Henry Ford felt that allowing the car to run
on alcohol would sit well with local farmers who produced it. It was a
"bell and whistle" not a mandatory requirement.


Wrong, Dave. The preferred fuel for the Model T was ethanol, and any
Model T fanatic or Ford historian will tell you the same thing. In
fact, Henry Ford called alcohol "the fuel of the future. There are
more stills in this country than filling stations."


and that's what automobiles were built to use back in the early years
of their history. And it was great because there were a whole bunch of
backyard stills that were pumping out gallon after gallon of good ol'
moonshine. But along came a big foreign oil company that decided to
take a risk by dumping cheap gasoline on the market (at a net loss), a
move which shut down the stills and convinced auto manufacturers to
build their engines to run only on gasoline.

Titusville Pa. (Not all that far from me) is a foreign oil company?
We were producing "cheap" oil since 1859.


Except that it wasn't refined for gasoline until much later. Otto
invented the IC engine to run on alcohol, not oil or gas.


We didn't start importing oil on a large scale until 1970.


The world's first oil tanker was built in 1877. Henry Ford continued
to push for alcohol fuel until the 40's, even though big-time oil was
discovered in the middle east a decade earlier. The rest is history
(that you never learned).


Try entering "US first imported oil" into google and see what you
find.

You really should stop with the conspiracy theories Frank.....


Go back to school.


snip
If, back in the early 1900's, the alcohol producers were able to stay
in business (in a fair and competitive market, protected by import
tariffs) they most likely would have developed the technology to
produce much cheaper alcohol, technology that is only -now- being
developed. We now know that fuel-grade ethanol can be produced cheaply
on a large scale using specially developed yeasts & enzymes and vacuum
distillation, but there are no 'refineries' large enough to make it
profitably.

You also discount the potential environmental impact that large scale
raw material farms, as well as the effect of production emissions and
byproducts of the process might have on pollution.


The environmental impact of farming? That's a -real- stretch, Dave.
FYI, gasoline was originally just a worthless byproduct of refining
kerosene from crude oil. Regardless, part of the 'byproducts' left
over from the fermentation process of alcohol are left in the vats to
ferment the next batch of mash, while the rest is almost a perfect
fertilizer (and sometimes used as hog chow). Ethanol burns cooler so
there are no NO emissions (thereby reducing ozone pollution), there
are almost no hydrocarbon emissions, no need for lead or other
additives, no cyclic carcinogens, and the fuel burns more efficiently
than gasoline. Ethanol is clean at both ends. Get educated, Dave.


snip
Hindsight is always 20/20. We didn't know about such things as global
warming, ozone depletion, the finite availability of fossil fuel, and
the need for truly renewable fuel sources back in the early 1900's.
Oil was cheap, easy to extract, and plentiful. It was a no-brainer
back then.


Wrong again, Dave. Read up on the Free Alcohol Bill of 1906.


snip
I'm not nearsighted. No, in fact, I am a realist. Like you once told
me, change is inevitable. We can't go back to what we once were, so
our best chance is to adapt to what we will become.


Wrong -again-, Dave. Our best chance is to make decisions that will
provide the most benefit for us -as- those changes occur.


snip
Wrong again. Oil is inelastic because the -demand- remains constant
-regardless- of the price.

Demand is never constant. Demand changes with the season, economic and
social conditions around the world, and emerging technology in
developing nations. Overall, demand has been steadily increasing for
the last several years.


geez U R dum:

http://www.netmba.com/econ/micro/dem...sticity/price/


I'm tired of educating you, Dave. I think I'll let Twisty or someone
else do it for a while.





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