Australians believe in spooks!

[T_Bone]

My sister in law is kind of a freak. She started screaming at me once last summer because I touched a rock she had on a bookshelf. I supposedly contaminated the crystal and brought her bad luck. :roll:

[T_Bone]

FluffyMcDeath wrote:

mikeymike wrote:
Imagine how many people would be employed in the police force using these skills for starters...

Casinos would go broke.
Everything you buy would suddenly get way cheaper because the free market would operate efficiently since you would know what the other guys costs were and he wouldn't be able to make 200% margin.

After a time, that lack in profit would correct itself as businesses started making less money, paying less dividends, etc  :-)

[T_Bone]

FluffyMcDeath wrote:

T_Bone wrote:

After a time, that lack in profit would correct itself as businesses started making less money, paying less dividends, etc  :-)

Exactly. In a perfectly efficient, no-one makes any profit. Profit only comes from inefficiency, which comes from disrupting information. If I'm trying to sell you something, it is important that I never tell you what I paid for it.

Once you get rid of profit, what ensures efficiency? It's the prospect of profit that forces efficiency. If there's no chance of a profit, why strive for efficiency?

[T_Bone]

FluffyMcDeath wrote:

T_Bone wrote:

Once you get rid of profit, what ensures efficiency? It's the prospect of profit that forces efficiency. If there's no chance of a profit, why strive for efficiency?

All else being equal, you increase profit by increasing efficiency within your organization. However, once the consumers find out that you can now produce for less, they improve their efficiency by making you forgo your profit.

Let's say company A produces raw materials.
Company B produces parts from As materials.
Company C produces product from Bs parts.

Assume that right now no-one makes profit. It's all break even.

Company A finds a way to produce for less. Efficiency of A goes up but the efficiency of the system remains the same. The same amount of end product at C still costs the same.

B finds out that A now has margin and asks for a better deal. Since their costs are now lower B has profit (but A looses margin). C finds out about Bs lowered costs and pushes them to pass it on.

Finally, at the end of the chain, efficiency is increased when C are forced by the consumer to lower their prices.

So long as there is competition and good information flow margins will be razor thin and transient. Overall efficiency will improve.

To prevent this a certain degree of information witholding and even misrepresentation must be entered into. Ther is also collusion between competitors (not necessarilly overt, but competitors keep an eye on each other to get a feel for what they should be bidding.

Other ways of introducing inefficiencies are government regulations and futures trading. One huge inefficiency enforced by government regulation, for example, is patent protection.

All that might be plausable except for:
"Company A finds a way to produce for less"

Company A has no R&D, because Company A makes no profit.
Company A, even if it had any money for R&D, knows the return on investment into R&D would be zero, and everyone else knows it too, so they can't even get investors to invest in the company so that it may fund R&D.
Plus, Company A has no reason for R&D, there's no Patent protection, so let "someone else" do the R&D
Company A can only find ways to produce for less... by accident.

Meanwhile, in a parallel universe, where there are no psychic powers...

Company A channels a portion of profits into R&D.
Company A also gets investors to fund R&D
Company A benefits from this R&D to find ways to produce for less... AND benefits from accidental discoveries as well.
Company A is moving and shaking!