Tim -
...If the lower prices are a result of greater efficiency then the overall production is higher ...
I agree. In at least a couple of places in prior posts, I tried to distinguish between lower prices that result from improved productivity and/or efficiency, as opposed to lower prices that are purely the result of artificial competition and destroy profits and investment income and wages.
...I know Austrian economics says you can't add marginal utility of different consumers, but I'm not sure I agree 100%. I don't think you can actually measure them the sum in the real world, and I think that any planed economy targeted at maximizing total utility is doomed to failure, but I think in simplified models like what we are talking about total marginal utility has some usefulness. In any case you seem to be using the concept a bit yourself. ...
This is correct, except that I don't believe that I used marginal utility beyond the individual, at least intentionally. My post that crashed this afternoon was largely concerned with connecting individual subjective marginal utility to overall market demand. I'll try that again later in a separate post.
...Even if efficiency does not increase but merely stays the same I don't see why the price for other products would have to increase. If more resources are going to produce wigits the supply might be down, but if more money is going to buy wigits the demand will be down. The price for other products could be higher, lower, or the same....
The explanation is that the economy is closed. The prices of individual goods and services only serve to adjust the production mix. All money is earned and all money is spent, at least over time. A reduction in price of one good either will result in the prices of some or all other goods going up, OR the adjustment will come from a change in the purchasing power of money.
Change of topic -
I'm completely in favor of competition. One way to look at my objection to mandated actual competition is to note that competition requires competitors. Almost anything that limits potential rewards to innovation discourages risk taking to one degree or another.
...Im not arguing that the government mandate and enforce competition for all products. For example I am not arguing against patent protection. ...
Austrians, at least Rothbard, DO argue against patents. He makes a distinction between copyrights, which he supports, and patents, which he does not. The copyright is simply a protection against theft, while a patent is a government enforced monopoly with finite duration. While his arguments are mainly involved with compatibility with the free market, he also makes a utilitarian case that patents often prevent the easy after-invention application development that usually makes all the difference in actually bringing products to market. A successful patented product requires the inventor to not only be a successful inventor, but often a talented application and production engineer as well, as well as a business promoter. A patent may just as easily prevent a whole range of related products from ever reaching market, as it serves its intended purpose of making inventions public that would otherwise be kept secret.
Regards, Don |
