"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

In article , "Dee D. Flint"
writes:

Exactly, people won't produce things they can't make a profit on.

More likely they simply can't produce those things.

Thus it
results in shortages and job losses leading to reduced buying power leading
to layoffs in other industries and so on.

Exactly.

Even more recently, look at the mess that the electric power industry got into
in parts of California some time back because of botched "deregulation".

[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.

There *is* a need for regulation of industry - we just have to be very careful
as to how that regulation is done. For example, I don't think US companies
should have to compete head-to-head with foreign companies whose managements
don't have to worry about environmental rules, safety rules, child labor laws,
etc.

"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 some ways they still are. Much of what we consider "American" cars are not
100% "Made in USA". In fact, many "foreign" cars have higher domestic
content...

In the past quarter century, my immediate family motor pool has included 2
Fords, 1 Saturn, 3 VWs, and 2 Hondas. All "Made in the USA".

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.

I meant as a society.

73 de Jim, N2EY

"N2EY" wrote in message
...
There *is* a need for regulation of industry - we just have to be very
careful
as to how that regulation is done. For example, I don't think US companies
should have to compete head-to-head with foreign companies whose
managements
don't have to worry about environmental rules, safety rules, child labor
laws,
etc.

And of course we need basic regulations such as preventing one company from
selling temporarily at a loss to drive another company out of business and
so on. However what I meant was that we do not know enough to manipulate
the economy to create prosperity. I.e. The most productive approach is going
to be the free market economy that has mechanisms in place to prevent
unethical business practices (as described in my first sentence) and to
prevent the drifting towards monopolies so that there are competing
companies.

The items in the last sentence of your paragraph will change as these
foreign countries become more prosperous. The US and European countries did
not enact such laws themselves until we were our economies were strong
enough to allow us to do so. This is part of what I was talking about when
I said problem of foreign competition will eventally be solved when the
foreign companies reach our level of prosperity. Of course in the meantime
it does make it difficult for us. But who ever promised life would be easy?

[snip] 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.

I meant as a society.

Well it's not going to work to try to manipulate the economy and market
place. So as a society, we have patience and help these other countries to
become as prosperous as we are. And we deal individually with the hardships
as we have always done in the ups and downs of life.

Dee D. Flint, N8UZE

"N2EY" wrote:

In some ways they still are. Much of what we
consider "American" cars are not 100% "Made
in USA". In fact, many "foreign" cars have higher
domestic content...

In the past quarter century, my immediate family
motor pool has included 2 Fords, 1 Saturn, 3 VWs,
and 2 Hondas. All "Made in the USA".


When shopping for a car, how can you tell which are made in the USA? My
wife's Plymouth was made in Mexico and my Ford was made in Canada. I didn't
find that out until the vehicles were actually delivered. The purchase of
these "American" cars certainly didn't help US automobile workers much.


Dwight Stewart (W5NET)

http://www.qsl.net/w5net/