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Pastimes : Austrian Economics, a lens on everyday reality -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (93)	12/19/2001 7:03:12 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 445

Tim - ...If foreign competition increases efficiency and total production why wouldn't more domestic competition? ... I'm not saying it wouldn't. There are two incentives to innovation and productivity improvement. Profits are the carrot, and competition is the stick. Both are needed. In the normal course of events, most productivity improvements are available to all and are competed away. This is why when people justify high stock market valuations by productivity improvements, they are wrong. Any progressing economy is continually improving productivity and improving the standard of living by reducing consumer prices. It could still be such an economy even if GDP and other measures of the economy were falling by 10% per year. This apparent paradox is just a demonstration that an economy cannot be completely characterized by financial measurements and statistics. However, the lack of visibility of improvement in the economic statistics is correlated with a difficulty of achieving financial profits, although the economy is improving the standard of living of consumers. Think of it this way -- ultimately all economic products are the result of different individuals cooperating and competing to engage in the mutually beneficial exchange of economic goods and services. This can perfectly well happen even if money does not exist. However, without money, financial profits and all the advantages of explicit money capital cannot exist. Not necessarily. He could sell the patent to someone else. Also if the inventor is going to produce, and sell the invention himself then he needs to be good at those other things (or hire people who are good at them) patent or no patent. But this still limits the use of the patent to the buyer and prohibits the incorporation of related ideas from an infinite variety of other potential contributors. Regards, Don