A fool-proof plan for economic recovery: [modified]

[Lost User]

Oakman wrote:

throw-away goods

If you are private individual, you are going to want that item to last as long as it can unless you are the type which demands the latest greatest thing the moment it is released. Quality is important but quality is expensive to design and manufacture. Take a television, made with quality parts and quality manufacturing principles will last an awfully lot longer than a television assembled with cheaper parts and production techniques where quality assurance is an afterthought. Thus the later TV will attract a lower price at the retailer but its life will be short in comparison to the expensive higher quality make/model. And to the time when it fails, often it is cheaper to replace rather than repair. And landfill sites fill with such stuff and the problems continue. Regarding corporations and businesses in general, any object is an asset, they use a depreciated value of an object so that after a period of time the depreciated value of the asset becomes £nil or very close to £nil and is tax efficient to replace. So 5 years for a piece of office equipment and 3 years for a motor vehicle is the norm in this accounting practice. And more so if the objects are subjected to some leasehold agreement as the decision to replace is taken out of your hands.

[Stan Shannon]

Yes, and they will grow until we can no longer afford our own manufactured goods. ANd the end result will be exactly the same thing.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Stan Shannon]

Synaptrik wrote:

That an economy is driven by demand, which equates to labor, which needs a manufacturing base to really thrive.

No, it equates to free market capitalism. If those who actually own and are invested in the production, the risk takers, have full control over all business related decisions - including the price of labor - than that labor is far more likely to produce a profit which grows the national wealth. That is the only way to grow national wealth (aside from conquering other countries, that is). Anything the state does to try to artificially manage that process (aside from simple infrastructure maintenance and law enforcement) is counter-productive to the goal of growing a national economy.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Stan Shannon]

Oakman wrote:

For one that would last twice as long? No problemo.

What makes you assume that quality would be better?

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Lost User]

Stan Shannon wrote:

price of labor

Depends if the cost is a fixed cost or a variable cost as shown on the accounting documents.

[Lost User]

Quality is subjective. This you might find an interesting definition ... Mean Time Between Failures (MTBF) MTBF is a basic measure of reliability for repairable items. It can be described as the number of hours that pass before a component, assembly, or system fails. It is a commonly-used variable in reliability and maintainability analysis. And can be calculated as the inverse of the failure rate for constant failure rate systems. For example: If a component has a failure rate of 2 failures per million hours, the MTBF would be the inverse of that failure rate. MTBF = (1,000,000 hours) / (2 failures) = 500,000 hours Mean Time To Failure (MTTF) MTTF is a basic measure of reliability for non-repairable systems. It is the mean time expected until the first failure of a piece of equipment. MTTF is a statistical value and is meant to be the mean over a long period of time and large number of units. For constant failure rate systems, MTTF is the inverse of the failure rate. If failure rate is in failures/million hours, MTTF = 1,000,000 / Failure Rate for components with exponential distributions. Technically MTBF should be used only in reference to repairable items, while MTTF should be used for non-repairable items. However, MTBF is commonly used for both repairable and non-repairable items.

[Stan Shannon]

Richard A. Abbott wrote:

Depends if the cost is a fixed cost or a variable cost as shown on the accounting documents.

No it doesnt. It only matters that it is set by those who understand what it is actually worth.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Stan Shannon]

Which has nothing to do with my question. In a world where jobs are protected from foreign labor and internal competitive pressure, which is precisely what we would have unless we eliminated the labor unions, price will increase without limit, and quality will decrease.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Lost User]

Then take a look at "Profit & Loss Forecasts". Labour costs fall into essentially two categories. Fixed AND variable. Variable labour costings that appear in said P&L is in the cost of Manufacture. Piecework is a kind of variable labour cost. Fixed labour costs by the definition of the word "fixed" don't often change these you can equate to office staff.

[73Zeppelin]

I have to agree with you, Stan. Companies are operated for profit - in a society with high import tariffs, there is absolutely no reason for domestic companies to produce quality goods - in fact, there is every incentive for them to produce lower quality goods and charge a higher price for them. They know that there are high import barriers so they can get high prices for lower quality goods and pocket the difference in profit.

[73Zeppelin]

Richard - if a domestic company knows that a foreign company has a high barrier for import, why would the domestic company produce higher quality products? That costs more, so the domestic company would have every incentive to produce lower quality goods and receive a higher price for them. Companies are profit-maximizing and have every incentive to lower quality for increased price knowing the foreign competition does not have equal access to the domestic market.

[Lost User]

Companies do indeed operate for profit. But if the MTBF is too low, this is tantamount to defrauding the buying public. And the buying public have long memories. Yet if you attempt some degree of protectionism, you could be substituting higher quality imports for lower quality "home grown" and subsequently your distant profit (x years down road) could suffer because of the view by your buying public that the product is a lemon. So MTBF is important if you are striving for quality and happy customers.

[Lost User]

John, if the quality of the home grown product is lower than the imported object in the short term they may indeed sell huge quantities. Yet, if the quality is poorer, the reputation becomes tarnished. So an immediate saving of £x may in the long term prove to be a false saving. Earlier failures, poor quality service will no doubt accompany lower quality items. Like I said to Stan, above, customers have long memories. If a home grown object is of lower value and lower quality the perception of value dropped to the point where the customer may think they have bought a lemon and the taste of that lemon is remembered. Companies who sole aim is to maximize profit without considering their long term future, and that includes the perceived happiness of their customer base, are doing themselves a dis-service and are likely to be a failed future company. It would be interesting to see how these home grown companies manage risk in such scenarios.

[Rob Graham]

Exactly. The U.S. automobile manufacturers are a case in point. Until they were faced with competition from higher quality product (mostly from Japan) they cared not a whit about quality. This was compounded by their labor unions, who were only interested in job protection and compensation, and not in either the compamy nor the product. Although the companies began to turn the quality issues around in the last decade or so, they are now reaping the rewards of that legacy, particularly the non-market cost of labor. It is likely that GM will not survive, no matter how many times the government bails it out.

[Stan Shannon]

Rob Graham wrote:

This was compounded by their labor unions, who were only interested in job protection and compensation, and not in either the compamy nor the product.

ANd that is precisely what I meant by 'internal competition' that I mentioned above. THe competition between manufacturers is one thing, the competition between laborers themselves is something else entirely. If the laborers have no incentive to produce quality, they won't. If the companies cannot fire them, cannot cut their salaries for poor performance, etc, there is no reason for one worker to try to do a better job than another will. In fact, he will get in big trouble with the entire union if he does.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Lost User]

You have given the perfect reason for trade union reform. This was a problem in Britain before Thatcher. But no longer is it a problem. Thatcher's policies essentially forced trade unions to modernize their practices and disputes are no longer the problematic issue they once was. And by and large, there is now a happier workforce as the result of these policies.

[Stan Shannon]

The problem I have with all this is that it minimizes the real problems we are faced with. There simply is no easy fix. The notion that tariffs are some kind of economical magic wand that was taken away from us by evil corporations and politicians is ludicrous.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[73Zeppelin]

Richard A. Abbott wrote:

John, if the quality of the home grown product is lower than the imported object in the short term they may indeed sell huge quantities. Yet, if the quality is poorer, the reputation becomes tarnished. So an immediate saving of £x may in the long term prove to be a false saving. Earlier failures, poor quality service will no doubt accompany lower quality items. Like I said to Stan, above, customers have long memories. If a home grown object is of lower value and lower quality the perception of value dropped to the point where the customer may think they have bought a lemon and the taste of that lemon is remembered. Companies who sole aim is to maximize profit without considering their long term future, and that includes the perceived happiness of their customer base, are doing themselves a dis-service and are likely to be a failed future company. It would be interesting to see how these home grown companies manage risk in such scenarios.

I understand your argument, but with high import barriers, foreign companies will export their products to countries with less protectionist policies. So while customers may demand quality, if the domestic market offers low quality products at high prices, it's not like the customer can go elsewhere. With foreign imports discouraged from high trade tariffs, domestic companies have every incentive to offer low quality products (i.e. low manufacturing cost) at high prices. To who does the dissatisfied customer turn?

[73Zeppelin]

Yep.

[Oakman]

Richard A. Abbott wrote:

And to the time when it fails, often it is cheaper to replace rather than repair.

In both TV and shoe repair, there are very few shops left - because no-one bothers to repair those products any more.

Richard A. Abbott wrote:

any object is an asset, they use a depreciated value of an object so that after a period of time the depreciated value of the asset becomes £nil or very close to £nil and is tax efficient to replace.

That's easy - change the accounting rules. Make it a generally accepted best practice to hold onto your stuff for twice as long as its present life.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.