From: jmarttila@abo.fi (Fast-Eddie Felson)
Subject: Re: Business (was Re: Immigrants and employment)
Organization: Turku School of Economics
Date: Thu, 20 Aug 1992 20:01:57 GMT

jafitv@termo.unit.no (Jan Arne Fagertun) writes:
>jmarttila@finabo.abo.fi (Jouni Marttila) writes:
>> Now the market economy this chain goes from
>> top to bottom. The original demand defines the
>> product. The product defines the production. The
>> production defines the amount of capital, the 
>> raw-materials, and finally the labor. This works
>> fine because the demand always defines the supply
>> and if the supply doesn't match the demand it must
>> adjust to it or it stops existing.
 
>Are you joking ?
>Does it work fine "because the demand always defines the supply" ?
 
Yes, if the demand is about a carrot, the production must work to supply a 
carrot. To supply a carrot the production needs capital to invest to a hoe, 
a carrot seed (raw-material) and someone to use the hoe, to sow the seed 
and to give water to it. Finally we have a carrot which fulfils the need.
 
In a command-controlled economy the central government tells the production 
what the need is. The next five years we need this amount of carrots and 
that amount of tomatoes. However, the consumers might need that amount of 
potatoes instead of tomatoes and the supply doesn't meet the demand. The 
central government simply can't know what the millions and yet again 
millions of people actually need.
 
>What about the millions of people in Africa starving to death nowadays
>- don't they have any demands or needs for food and water ?
>Or aren't they people ?
 
I think I quite clearly explained this in my last previk}rus posting, but 
obviously reading thru these long messages is difficult O:)
 
No capital, no raw-materials and not enough labor to do it.
I don't have any doubts about the supply meeting the demand, but the supply 
is just too little for the demand. In my argumentation I don't remember 
saying anything about supply and demand matching in volume - where did you 
find that?
 
>(Some quite sensitive remarks about the Soviet system deleted -
>sensitive, but not very interesting.)                      
 
Of couse you might tell us as well what so sensitive did you find in it?
I like seeing people commenting my postings and I don't mind at all to see 
people disagreeing with me, but I would also like to see some reasoning 
instead of some meaningless flames O:)
 
>> In a pure market economy the supply always meets the demand so there will
>> be no wasted efforts on any ring of this chain. 
 
>I repeat - are you joking ?
 
>> Now here we get to my original statement, that there must be a need
>> for the labor, before the labor can be employed - not so that the
>> society has to create production to fulfil the labor's need to work. 
>> Which was to be proved O:)
 
>Poor mathematics - you still avoid defining the need!
 
Now in those quite sensitive but not very interesting remarks it was quite 
clearly stated that the need cannot be defined by anyone in particular. 
One's need is defined by oneself. The government doesn't know your needs 
and it can't say "Jan, today you need 5 potatoes, 4 sausages and a six-pack",
you can tell your needs only by yourself. You can get what you need by 
demanding it, you say "I'll give 20 kronor to get 30 carrots" and if 
someone thinks 20 kronor is worth giving you the carrots, you'll get them.
In the command-control economy the central government tries to define your 
need.
 
>>>Don't people starve in large areas of the world ?
 
>> Yes, to keep in the terms of my previous argumentation, the demand
>> of food can't reach the supply because there are not enough
>> resources to make enough supply. This is mainly caused the natural
>> conditions that are not suitable for agriculture, the source of
>> food. This is, however, another important question, but has nothing
>> to do with employment.
 
>According to your argumentation the people of all cities/towns all over
>the world should starve ! "This is mainly caused (by?) the natural
>conditions that are not suitable for agriculture, the source of food."
 
Of course in the cities the conditions are suitable for transportation O:)
Probably you yourself understand this without saying, but still you have 
the *need* to disagree O;)
 
>> The businesses problem is how to make profit. That's the only real
>> problem. If employing the workers doesn't increase profit, but
>> rather decreases it, it's not worth employing the workers. Shall
 
>I agree, the only reason for making jobs in a capitalistic/liberalistic
>system is to make profit.
>I agree, the businesses have to try to maximize the profit, to survive
>in a capitalistic/liberalistic system.
>But someone have to pay for the living for the unemployed, and,
>unfortunately for the capitalistic/liberalistic businesses, they have
>to supply the money......
>Or rather, the profit of their workers labor has to !
 
You seem frequently to forget some of the basic facts concerning the 
society. The businesses *are* the people, the society *is* the people, so 
if the businesses make profit, it's good for the people. If the society has 
to pay someone for something it means that all the people pay that and all 
the businesses pay that since they are just formed by people. 
 
The society is no warm, loving and caring god who takes care of the people 
and the businesses are no devils who want to torture people for their own 
good.      
        
>> The concept of people being paid equally for the equal jobs belongs
>> to the same category than the concept that the society has to make
>> jobs for the unemployed. You say the Pakistani workers should be
>> paid as much as the Norwegians. As it's not the businesses' problem
>> to keep up the standard of living of the workers, but making profit
>> there's no reason why the businesses would pay more than the workers
>> are worth. If the Norwegians are paid more, it simply indicates that
>> the businesses give more value to the Norwegians' work than to the
>> Pakistanis' work. 
 
>I think you have misunderstood - the businesses don't pay what a worker
>is worth - all the products are made by the workers (and former
>workers, who paid for the machinery and so on) - that means that the
>workers are worth (economically speaking :-) exactly the amount of
>products thay make !
 
If the worker is worth more, another business will pay a bit more to employ 
the worker because the cost is lower than the benefit for the business. 
 
>No, the businesses don't pay what a worker is worth - they just try to
>minimize the payment.
 
Is it a sin to try not to pay more than needed? Why don't you pay double 
price of everything you buy? O:)
Workers also try to maximize their wages and that's as natural as what 
the businesses do.
 
>>> Joking is too serious to make jokes about .-)
  
>> Oh, but I was not joking O;) 
 
>Neither did I :-)
 
Oh I was kind of hoping you were just joking, because it's hard to believe 
you could seriouly want to argue about things that are clearly explained
without reasoning your own statements. Most of your statements could be 
regarded as plain flames. Maybe you want to destroy the capitalistic world
by blocking the networks with these postings? O;) (That was a joke - now I 
was joking O:P)
 
       Greetings,
  
       Jouni 
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