Re:Berkshire Hathaway Code of Business Conduct and Ethics [pdf]
by rvern on Monday May 08, 2017 @06:34PM
(#14296260)
Efficient companies require less resources to produce the same amount of goods and services. The resources that are not used to produce goods and services can be used to do other things. This is true even if the company uses the savings to realize higher margins instead of lowering prices.
More efficiency increases purchasing power (or reduces working hours or resource usage, at least) even if there is no competition. Competition just gives an incentive to become more efficient.
Re:Berkshire Hathaway Code of Business Conduct and Ethics [pdf]
by ska on Monday May 08, 2017 @09:19PM
(#14297027)
That's the toy model presented in introductory courses, but we have good of evidence that it isn't that simple. Or at least that we don't understand the dynamics very well. The resources used for other things do not necessarily help that much globally, they can just accumulate in less useful ways (i.e. trickle down economics is mostly wishful thinking)
The compelling impact of growth pointed out earlier (over centuries) was largely driven by the breaking of monopolies and increase in market access, as well as social change allowing more efficient allocation of resources.
Re:Berkshire Hathaway Code of Business Conduct and Ethics [pdf]
by valuearb on Tuesday May 09, 2017 @11:29AM
(#14300836)
Trickle down economics is a political slur, not an economic principle.
Re:Berkshire Hathaway Code of Business Conduct and Ethics [pdf]
by valuearb on Tuesday May 09, 2017 @11:28AM
(#14300829)
History shows that efficient production always ultimately benefits consumers, even if a producer briefly captures excess profits.
Re:Berkshire Hathaway Code of Business Conduct and Ethics [pdf]
by ska on Tuesday May 09, 2017 @04:53PM
(#14303711)
Not really, history shows us lots of complicated things that give lie to most statements as simple as yours. However, even if it were that simple, the mechanism by which the consumer benefits is the one that I describe, not the production of the efficiencies. Which is why it is important. "Briefly", after all, can be most of your lifetime.
Re:Berkshire Hathaway Code of Business Conduct and Ethics [pdf]
by TheSpiceIsLife on Monday May 08, 2017 @10:59PM
(#14297427)
> produce goods and services for lower prices
Produce goods and services for lower prices, not necessarily sell them for lower prices.
Re:Berkshire Hathaway Code of Business Conduct and Ethics [pdf]
by ska on Monday May 08, 2017 @11:41PM
(#14297578)
The point was that if they don't sell them for lower prices, the benefit is quite limited. You need competition and market access to spreads the benefits around.
However, this:
Is not correct. Efficient companies are capable or producing goods and services for lower prices than inefficient ones, but they will typically only do so in the presence of true competition. Otherwise, companies are always quite happy to realize the fruits of higher efficiency as higher margins.That may be an nit to pick, but it's an important one.