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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: PMG who wrote (115842)8/7/2001 9:34:58 AM
From: Don Lloyd  Read Replies (1) of 436258
 
PMG -

...But, as someone else pointed out: in a competitive market productivity does not affect profits as every company shares the same advantages. The advantage goes directly to consumer welfare through lower prices. ...

But it's worse than that. Profits are affected (negatively)because the companies that cannot afford to compete at the new level of productivity (it's rarely free) destroy the profits for all as they liquidate their inventory at any price they can get, or worse, hang on and produce at a loss. While consumer prices fall, only those consumers who retain their jobs benefit.

Productivity has to be considered a potential negative unless there exist significant profits from at least temporary semi-monopolies to re-invest in new products and services to sop up the displaced workers.

Regards, Don
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