Big Oil Under Fire

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  1. Quote Originally Posted by Nullifidian
    I can't really argue too much against you because you are arguing the point of a theoretical economic condition. I can only pick out close examples of unrestricted capitalism which you of course go on to claim are restricted.
    Unrestricted capitalism has never existed except sporadically here and there. All through history we and most other people have been subject to varying degrees of government mixed with business, robber barons that use the legal force of the government to get what people would not willingly give them. I believe in regulation to stop two things, the use of force against other people and defrauding them, period.

    Let me ask you, how exactly were coal mining companies restricted at the turn of the century? Did the government restrict them? NO.
    Very good, now you're learning. they weren't that I know of. If you'll recall I had no problem with the coal miners. You said their choice was coal mining or death. I don't suppose everyone in those towns were miners, but let's except that as fact: mine or die. Now, IF the government had restricted the mining companies and forced them to adopt standards for safety, licensing, etc, that the accumulated capital of time did not justify, the cost of doing business would not have been worth the profit to the companies. They wouldn't have been there, and deprived of what you say was their only alternative, those would-be miners would havehad one choice: to die. I'm sure they preferred the mines.

    Going from poverty to prosperity is not a short step, it doesn't just happen at ths snap of beauracrat's fingers. And just because some of the conditions people have endured over time to get here might horrify you or me, the bottom lines is they wouldn't have done it had the alternatives been better. Because of the path they took we've been given more choices. Those choices don't just pop out of no where.

    Like it or not, aesthetically displeasing as it may be, the productivity of some people does not justify the capital investment necessary to make their working conditions as good as most of us would prefer. However it's a dumb comparisson to compare what I want in my situation and my options with what someone else wants in their situation with their options. People think Nike is exploiting kids in the third world to sew shoes together, frequently ignoring that the only alternatives for those kids are prostitution, crime or death.

    Economies have to evolve towards better conditions, it doesn't happen out of no where. That conditions early on the development are deplorable to those later on is completely off the point, because that is the point: improvement over time. Take your reasoning to it's extreme and we have to wonder how much 'better off' we would have been had the first dregs of government that formed among the cavemen voted themselves a twentieth century standard of living and working conditions. After all, it's that easy...

    Quote Originally Posted by William Art Carden
    But let’s lay all this aside for the moment. Many will reject the argument predicated on "voluntary exchange" precisely because a lot of people have to make decisions between two undesirable (by western standards) occupations. Also, contentions of "market power" and "monopsonistic exploitation of labor" have traditionally been levied as explanations for low wages and shoddy working conditions. In this light, let’s look at what happens if we pursue different policy alternatives.


    For clarity’s sake, we’ll use an example (the conclusions will be general enough). Let’s consider a shoe company, say Nike, which is trying to decide whether or not to expand a factory in China. They expect to sell their shoes for $50 a pair.


    Suppose now that a group of reformers, motivated by the heart-rending images of the "unbearable heaviness of industry," descend on the Chinese embassy and convince the Chinese government to adopt western-style labor regulations. Starting tomorrow, Chinese factories have to adopt western-style working conditions and a minimum wage of $5.15 an hour. How will entrepreneurs and business owners respond?

    According to conventional wisdom (and Marxian theory), the firm will respond by improving working conditions, producing the same quantity of shoes, and continuing to employ the same number of people at higher wages. The additional costs of doing so will merely reduce Nike’s profits, which are a product of Nike’s capitalist exploitation.


    It is important to remember, however, that firms don’t produce in isolation. They respond to incentives, which are determined by the institutional framework. In this case, formal constraints on wages and working conditions will lead to different outcomes.


    These institutional changes haven’t affected the prices that entrepreneurs expect to receive. It is possible that some people may be willing to pay higher prices for goods that are produced under better working conditions—see, for example, the popularity of "fair- trade" coffee—but it is unlikely that these changes in wages and working conditions will affect the price that Nike expects to receive for their output. However, these changes will affect the costs that the firm expects to incur.


    When firms decide to produce, they estimate a price that they expect to receive for their goods (in this case, $50 for a pair of shoes). They then bid for factors of production—skilled labor, tools, unskilled labor, machines, land, etc.—by offering wages and prices. Profit-seeking firms try to produce a quantity of goods at which the revenue received from the last good produced is only slightly greater than the cost of producing that last good—in other words, where marginal revenue is only slightly higher than marginal cost (neoclassical economics claims that firms maximize profits when marginal revenue is equal to marginal cost; however, Murray Rothbard has demonstrated that the two can never be precisely equal). The firm’s costs will skyrocket when the state intervenes, and the profit-maximizing level of output will be much lower, all other things equal.


    The firm responds by doing one of two things: (1) They restrict production, because production of higher levels of output will no longer be profitable, or (2) They move to a different country with less-stringent labor laws (this merely moves the example, so we’ll go ahead and assume that the firm doesn’t do this).

    A firm’s decision to restrict production may manifest itself in one of two ways. Either the firm will close a plant that is already in operation, or it will not invest in a new plant. In either case there may be apparent winners. Some workers will have higher wages and better working conditions, at least in the short run. This is what we will see. However, we have to take a page from the great French economist Frédéric Bastiat and take account of that which is not seen.

    Lower output requires that firms invest fewer resources in labor and capital. In our example, Nike produces fewer shoes. This means fewer jobs, lower wages, and fewer "perks" like improved working conditions. These comprise the unseen costs of intervention—we don’t see the shoes that aren’t produced, the capital that isn’t invested, the workers who aren’t employed, or the wages that aren’t paid.

    This even hurts the apparent "winners" in the long run. It may well be the case that wages and working conditions improve; however, it is also true that the tendency in an unfettered market is for wages to increase and for working conditions to improve anyway. The short-term improvements will be obvious and apparent, but they will come at the expense of the future improvements that don’t occur when production isn’t as profitable as it would be on an unfettered market. In sum, everyone is made worse off. Firms are less profitable. Fewer shoes are produced. Workers are involuntarily unemployed. Capital isn’t invested. Future improvements in wages and working conditions are retarded.
    The government didn't do jack ****. The government couldn't care less. In fact, the government didn't step in until the mining company's employees started fighting back against the company with force and forming unions. Those companies weren't taxed in any way, and they didn't have to abide by any laws whatsoever. They in fact made their own laws in the mining towns they owned.
    Grant this is true, you prove my point. Without the force of LAW, with government IGNORING abuses and violence or AIDING those abuses those coal companies wouldn't have been able to do jack ****. Why you can't see that it is the marriage of government and industry that produces these bad conditions, and that the government is the true evil in that situation because they, not the corporations, have the legal monopoly on the use of violence, that I can't understand.

    I of course noted that you ignored it when I point out the massive government involvement and restrictions in those markets you said had monopolies. I also noted that you ignored the apparently wide availability of those ultrasonic washing machines that were, according to you, crushed by the evil laundry detergent cartel. It's one of the things that got me into Libertarianism and Austrian economics specifically, the fact that they actually brought evidence to bear to prove their points. Most people are taught the two disciplines economics and history in school. And sadly, most historians don't know jack **** about economics and most economists don't know jack **** about history. It's a bad state of affairs, but it makes me laugh.


  2. Quote Originally Posted by jmh80
    Null - it was 85 cents per gallon in the late '90's when the price of oil plummeted to below $10 a barrell due to the Asian economy collapse.

    Try again.
    You shoulkd give up, as I should have. Evidence doesn't matter.
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  3. I'm fat dumb and happy
    Last edited by jmh80; 05-28-2006 at 04:53 AM.

  4. Quote Originally Posted by Nullifidian
    I'm all for capitalism, but this just doesn't seem right. I mean, taking advantage of people's misfortunates and then your taking advantage of them causing more people to die; that just doesn't seem right.
    Isn't this the basis for civilization?

    We all take advantage of people's misfortunes to advance our own. Anyone who says they don't is a liar. We've all done it.

  5. Windfall profits? They are taking steps at the right direction but not solving the problem. The problem is how the oil companies have us by the balls. Not to forget the hostile countries we use oil from. Like Saudi Arabia, which frequently funds al Qaeda. How about Hugo Chavez and Venezuela, who owns Citgo?

    The sooner America moves to better sources, hell more American sources, the better.

    Ethanol from corn. Its renewable and can provide lots of money and jobs in America instead of funding Osama's next attack or stroking Hugo Chavez's ego along with making deals with his butt buddy, Fidel Castro.

    Another source is Biodiesel. A 1:1 conversion of raw products to energy that is formed from animal fats. The large cattle and hog industry will benefit greatly from this.
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  6. Windfall profits? They are taking steps at the right direction but not solving the problem. The problem is how the oil companies have us by the balls. Not to forget the hostile countries we use oil from. Like Saudi Arabia, which frequently funds al Qaeda. How about Hugo Chavez and Venezuela, who owns Citgo?

    The sooner America moves to better sources, hell more American sources, the better.

    Ethanol from corn. Its renewable and can provide lots of money and jobs in America instead of funding Osama's next attack or stroking Hugo Chavez's ego along with making deals with his butt buddy, Fidel Castro.

    Another source is Biodiesel. A 1:1 conversion of raw products to energy that is formed from animal fats. The large cattle and hog industry will benefit greatly from this.
    That's my question as well...WHY isnt there a big push toward alternate forms of energy? I know replacing the current petroleum based infrastructure would be a huge undertaking, and that's why it should be something akin to America's mission to go the moon back in the 60's - the whole country should be focusing on it.

    You want to shut down the terrorists? Take away one of their primary sources of income. Create an America that can depend on itself instead of relying on other countries that would like to see us dead for our vital resources.

    I commend companies like Toyota, who are obviously making great strides toward getting away from gasoline to power their automobiles. Or, at least moving toward using far LESS gasoline.

    Instead of focusing on a long term strategy to free America from the shackles of petroleum, we're spending 6 billion a month to rebuild a country in order to protect a valuable source of oil, among other things. I digress though, that's not the topic of this thread and I dont want to go off on a tangent.

    BV

  7. The problem with ethanol is that we'd have to use over 85% of the land of the US to grow enough corn to supply our vehicles.

    Isn't quite reasonable is it? Unless you like living in a corn field.

  8. Last edited by jmh80; 05-28-2006 at 04:54 AM.

  9. The problem with ethanol is that we'd have to use over 85% of the land of the US to grow enough corn to supply our vehicles.

    Isn't quite reasonable is it? Unless you like living in a corn field.
    Corn might not be the best solution, Brazil is making a big move toward ethanol and I believe they're using sugar cane. I know that we really dont have the climate for mass sugar cane fields, but whatabout genetic engineering? The technology exists today to modify a plant genetically to exhibit the qualities we want/need in it. I dont see why, with enough ingenuity and effort, the perfect plant for ethanol production could not be designed.

    Of course, i wouldnt want to eat it

    BV - what I'd like to see is the opening of oil and gas deposits in the US.

    I'm so ****ing tired of people talkign about reducing foreign dependence when we can actually do something about it!

    I'm making the "leap" that a hydrogen economy ain't gonna happen in my lifetime.

    The strategy is probably to use up everybody else's oil first before we tap into our own. That makes sense, but how many billions of dollars are going to get funneled to the MidEast before that happens? If the world had put its efforts into an alternative fuel source decades ago, I bet you AlQueda wouldnt have enough money to get off the sand dunes today.

    BV

    BV

  10. Last edited by jmh80; 05-28-2006 at 04:55 AM.

  11. I differ with you on Al Queda. I think they'd be getting their money somehow irregardless if the world is operated on a hydrocarbon economy.
    Be it drugs or whatever, they'll find a way.
    Yeah, you've got a point there...

  12. In their opening remarks, Exxon Mobil CEO Lee Raymond and Chevron CEO David O'Reilly said their companies and others in the industry invest billions in developing new sources of energy no matter the market price of oil or the level of the industry's profits.

    "Since 2002...we invested what we earned," O'Reilly said.

    Several executives said that the industry faces costs of between $18 billion to $30 billion to repair damages from hurricanes Katrina and Rita.

    Raymond argued that industry profits as a percent of revenue were in line with other industries, adding that companies had to use earnings to invest in new sources of oil.
    Considering all oil prices are developed based on projected costs, I personally believe this argument is a valid reason to increase prices. I don't see that as price gouging--and trust me, I hate these oil prices as much as anybody because I'm more broke than most

    If you owned a hamburger shop, maybe your burgers would be a buck or two more expensive while you repaired the place. Makes sense to me.

    Now, if they can't prove that they are using profits to repair damaged properties as a result of the hurricanes, then I'd say price gouging is evident and they should be held accountable.

    I personally believe people think big business are much more shady than they really are. When you have a lot, you have a lot to lose. Enron showed that

  13. "I bomb atomically. Socrates. Philiosiphies. Hypothesis. Can't be definin' why I be dropping these mockeries. Lyrically performed armed robbery. Flee with da lottery. Possibly they spotted me."
    Last edited by jmh80; 05-28-2006 at 04:56 AM.

  14. I will admit CDB DID make a good point regarding oil and inelastic vs. elastic goods.

    My girlfriend's father works for an oil shipping business, and he was saying one of the reasons the price of oil is this high is because of our EPA regulations. The EPA requires many different kinds of fuel types. Additionally, certain types of fuels are taxed while others are not. In some cases, the fuel is identical or near identical. For example, home heating fuel is nearly identical to diesel. However, home heating fuel is not taxed the same as diesel is. To differentiate, home heating fuel has a red dye added to it. Because of the dye, home heating fuel has to be refined seperately from diesel even though the same equipment is used. This causes a doubling of equipment costs and operating costs. Furthermore, because of a shortage in refining capabilities in California, and the fact that California has something like 28 different fuel types (due to their preposterous EPA regs), many other refineries in the US must retool to be able to make certain fuels for Cali.


    To top things off, we have different gasoline regs during the summer than we do in the winter. In the summer, the only refineries capable of making gasoline that passes inspection are ones in the US, which as you know we have a shortage of. In the winter however we can use foreign refineries for much cheaper. As we speak, there are several oil tankers waiting off the coast to deliver winter fuels. My gf's father said this is the reason the gas prices are dropping so much now; because we are soon going to be getting foreign refined gas at a cheaper price. Domestic refined gas costs so much more right now because of all the refineries that were blasted during katrina et al.

  15. Quote Originally Posted by jmh80
    The problem with ethanol is that we'd have to use over 85% of the land of the US to grow enough corn to supply our vehicles.

    Isn't quite reasonable is it? Unless you like living in a corn field.
    I'm not suggesting we go 100% ethanol. With this, geothermal heat (that is readily available but untapped in the Rocky Mountains), biodiesel, etc., there's no real reason why we should be using petroleum within 20-25 years. Obviously it would be almost impossible to convert to alternative energies right away.

    We will have to go alternative sometime. Oil efficiency is improving but there might be maybe 100-150 years worth of petroleum tops. No need to completely drain it out before moving on.

    We might as well start going alternative sooner than later.

    Sugar cane is in fact better at ethanol. I agree but I think moving from oil, we should try to make sure America itself is a major contributor of alternative energy, instead of being at the mercy of ultra-corrupt dictators. Since corn grows better, thats why I think its a good idea to use it, instead of using corn for High Fructose Corn Syrup.

    I differ with you on Al Queda. I think they'd be getting their money somehow irregardless if the world is operated on a hydrocarbon economy.
    Be it drugs or whatever, they'll find a way.
    Yeah but the Saudi family makes no apology or attempt to cover up that they pay Osama. They get money mainly from oil, which US is the largest consumer of. If we pull out entirely, it will cripple them. Since the Saudi family probably cares about themselves more than al Qaeda, they will get less money.

    Anyway, I'm sorry to get off on a tangent with alternative energies and what oil funds go towards.

  16. Sugar cane is in fact better at ethanol. I agree but I think moving from oil, we should try to make sure America itself is a major contributor of alternative energy, instead of being at the mercy of ultra-corrupt dictators. Since corn grows better, thats why I think its a good idea to use it, instead of using corn for High Fructose Corn Syrup.
    Amen to that brother!! Imagine the paradigm shift...what would the petroleum and pharmaceutical industries do with cheap fuel and healthier Americans?


    Yeah but the Saudi family makes no apology or attempt to cover up that they pay Osama. They get money mainly from oil, which US is the largest consumer of. If we pull out entirely, it will cripple them. Since the Saudi family probably cares about themselves more than al Qaeda, they will get less money.
    I agree with JMH80 that there'd be an AlQueda no matter what, but Id be willing to bet they'd be far less of a threat if their funds werent virtually limitless like they are currently. They can sell all the dope they want, it wont even scrape what those countries have made from their oil. Hell, we could end this absurd 'drug war' while we're at it...where would their money come from then? Its a simple solution, but far too complicated to implement any time soon.

    BV

  17. Quote Originally Posted by BigVrunga
    Amen to that brother!! Imagine the paradigm shift...what would the petroleum and pharmaceutical industries do with cheap fuel and healthier Americans?
    What you said right there is probably the reason why alternative fuels aren't being researched.

    I agree with JMH80 that there'd be an AlQueda no matter what, but Id be willing to bet they'd be far less of a threat if their funds werent virtually limitless like they are currently. They can sell all the dope they want, it wont even scrape what those countries have made from their oil. Hell, we could end this absurd 'drug war' while we're at it...where would their money come from then? Its a simple solution, but far too complicated to implement any time soon.

    BV
    I agree once again. I think America needs a complete and total retooling of the government. It seems grim but to me, the only real solution seems to be revolution.

  18. What you said right there is probably the reason why alternative fuels aren't being researched.
    Well they are being researched, but not with close to the vehemence they should be. I would imagine with something so serious the government would be making a national effort to make a change. And not by getting involved in trying to regulate an industry - like CDB mentioned above that just adds to the mess. By funding research, motivating the public through the media, etc. If you think about, many of the great 'failures' of our government (drug policy, health care, the list goes on) create tons of jobs, and make a lot of people a great deal of money. Where would the drug companies be without all these sick people? Think of all the advertising agencies that wouldnt have those great contracts with the pharmaceutical if their adds werent plastered all over radio and television. Think of all the people who work with or are affiliated with the DEA, if the 'drug war' just up and ended, what would they do?

    I agree once again. I think America needs a complete and total retooling of the government. It seems grim but to me, the only real solution seems to be revolution.
    The crazy thing is the people who started this country tried to set it up so the people could peacefully change the government if things got out of hand. Our system of checks and balances does work pretty well, but it definitely has its flaws. The republicans and democrats have a monopoly on power in this country, and it seems like no matter who has control things keep on sliding into the sheetpile.

    The problem is, the people who really want change arent voting. Or, not enough people really want change, or are to busy with their day-to-day lives to give it any real thought. It takes a lot of money and inflluence to be a politician, and most of the people the government craps on have neither.

    BV

  19. Quote Originally Posted by Nullifidian
    To top things off, we have different gasoline regs during the summer than we do in the winter.
    Were it not for the lunatic level of regulation out there, I would have moved to CA a long time ago. This deep freeze **** in NY sucks.

    Please understand, I am not against laws in general, nor am I a fan of corporations. Most of them are sickly disgusting organizations, set up to limit the responsibility and liability of those at the top and to screw those at the bottom, and they are begging for government protection at every turn. I'd wager most of our corporations couldn't survive in a truly free market.

    However, the laws I would favor are only those that stop aggression against others or their property. Do I think it's unethical if oil companies raise prices in the face of a crisis when they know they generally know they don't have to? Yes. Be that as it may, if there were doubt about whether or not to raise prices to stop shortages, were there more competition there would likely be one or more companies who in such situations would not raise prices. These companies, if proven right, would rightfully end up with more customers after the crisis had abated.

    I'm sure you can guess my opinion of who is to blame for lack of competition in this and other markets.

  20. Yep. It has been pretty warm this year though, you've got to admit.

  21. Last edited by jmh80; 05-28-2006 at 04:58 AM.

  22. Re: Al Queda. They planned an executed the WTC bombing in '93 when oil prices were no where near today's prices.
    I'm sure they weren't broke when oil was $10 a barel in the late '90's.
    True, but how many billions of barrels of oil had been sold in the past 100 years? If petroleum had never been our primary fuel source, they wouldnt have a pot to piss in.

    Still though, that's not the case and I do agree with you - they'd be what they are regardless.
  23. Lightbulb


    CDB is correct when stating that excessive regulation is responsible for many economic disasters, but I refuse to believe that with no regulation that companies would self-govern and provide not only lower prices but better working conditions, investment in new markets (ex. alternative fuels in the petro industry) and ethically delivered final product.

    It's already been shown that given the chance most companies will take their business to other countries where regulations are less strict, especially in regard to wages and working conditions. This is good for the end consumer as prices are lower. However, it negatively affects the economy because workers in the U.S. are put out of jobs. So government regulation is only half the enemy here. The government specifies regulations for safety and livable wages, which causes companies to balk at trying to compete in a generally free market (ex: automobiles). This causes a loss of jobs here as plants are moved overseas. So what is the solution then? Pay the U.S. workers much less and disregard good working practices? Or force companies to keep their companies U.S.-based or face levies and tax penalties? It seems that the U.S. has done the opposite, giving free rein for companies to leave this country and even keep their money elsewhere, with tax breaks and windfalls galore. At what point do we stop the bleeding?

    When you speak of generally free markets and monopolies, take the personal computer industry as an example. Profits are low and prices are low, because of heavy competition, yet companies like Microsoft still attempt to control the market and stifle genuine new development from smaller companies. This is where government is supposed to step in, because companies which are heavily invested in one type of product have an interest in smothering competitors. Now if the only company to release software is Microsoft are we really better off? Those guys aren't exactly known for their interest in quality control.

    In the case of the oil industry, you have a cartel, OPEC, and you have almost systematic cooperation, even what could be considered collusion among companies in the end market to keep prices as high as possible. No major competitor exists that bucks the system and attempts to provide gasoline at a lower price. You tell me which of these competing companies dares to signifigantly lower a price without the others following suit? It's not like bread or ketchup. The oil industry is unique. Bread, somebody can grow grain and bake it at a lower price. Ketchup, someone can grow tomatoes somewhere for less and bottle them. Oil, you can't just dig up in your backyard, unless you live in Kuwait. And even if you did, you'd better have tankers, refineries, and someone viable willing to pick up your product and sell it to the end user en masse. You can open a restaurant serving quality food and given the right conditions have a decent chance that it will survive and give you a chance to expand. You can't just open a gas station and hope to change an industry. This is why oversight is necessary. Oversight which is not paid off by the oil companies.

  24. Quote Originally Posted by Brooklyn
    CDB is correct when stating that excessive regulation is responsible for many economic disasters, but I refuse to believe that with no regulation that companies would self-govern and provide not only lower prices but better working conditions, investment in new markets (ex. alternative fuels in the petro industry) and ethically delivered final product.
    Why?

    It's already been shown that given the chance most companies will take their business to other countries where regulations are less strict, especially in regard to wages and working conditions. This is good for the end consumer as prices are lower. However, it negatively affects the economy because workers in the U.S. are put out of jobs.
    Good. Maybe the government will get the hint and stop regulating our labor markets into inefficiency. However this is also a common fallacy stemming from the idea that this one job that was shipped overseas is the only one that one worker here could have had.

    Take Michael Jordan. He's a great ball player, but what if he would rather lay brick for a living? He may or may not be good at that, but it's what he wants to do. However, there's a person in his town who is just as good at laying brick, but has little or no work. And, very importantly, no one is going to pay Mike several million a year to lay brick. He's making about 50,000 a year laying brick, the brick layer isn't making much if any money at all.

    Then Mike gets his sense back and starts playing ball again. He starts making millions again, and he and everyone else in his neighborhood hire that unemployed brick worker at 50,000 a year to work. Everyone is better off.

    The point is whether or not a job is overseas or here, one person having a job instead of another person doesn't imply a disadvantage, either to the economy or to the individuals. Perhaps someone in America would have rather had a job that was shipped overseas than the job they have now. But the market through prices will generally allocate resources to their most productive use. Jordan might prefer laying brick, his time is more productively used playing ball, and the price assigned to his labor for that purpose gets that point across to him and motivates him to that end.

    Now the varying efficiencies of labor forces are affected by government regulations, either ones that promote inefficiency or ones that 'promote' efficiency by allowing employers to violate the rights of the workers. The basic point is the driving force in ****ing up a naturally regulating system of implicit cooperation is the government, not business.

    When you speak of generally free markets and monopolies, take the personal computer industry as an example. Profits are low and prices are low, because of heavy competition, yet companies like Microsoft still attempt to control the market and stifle genuine new development from smaller companies. This is where government is supposed to step in, because companies which are heavily invested in one type of product have an interest in smothering competitors.
    Yeah, that's called competition. Not to mention the fact that it's those losing competitors who more often than not try to use the government to stifle their more successful competitors. I'd suggest books by Dominick Armentano, articles and lectures by Thomas DiLorenzo and almost anything written about antitrust by the Chicago School economists for a different perspective on what goes on in monopoly cases, specifically Armentano's work for the Microsoft monopoly case.

    In the case of the oil industry, you have a cartel, OPEC, and you have almost systematic cooperation, even what could be considered collusion among companies in the end market to keep prices as high as possible. No major competitor exists that bucks the system and attempts to provide gasoline at a lower price. You tell me which of these competing companies dares to signifigantly lower a price without the others following suit? It's not like bread or ketchup. The oil industry is unique. Bread, somebody can grow grain and bake it at a lower price. Ketchup, someone can grow tomatoes somewhere for less and bottle them. Oil, you can't just dig up in your backyard, unless you live in Kuwait. And even if you did, you'd better have tankers, refineries, and someone viable willing to pick up your product and sell it to the end user en masse.
    While such costs are a consideration in startup companies, it's not correct to point to them as obstacles. The fact that other companies can do it proves it can be done, which makes loans for such things much easier, relatively speaking of course, to get. The fact that most of those costs can be outsourced to other companies that have already invested the required money and now have the fixed capital necessary to make such operations easier makes starting up again, relatively easy.

    Someone also brought up the point that government funding for alternative fuels is necessary. This would be a big mistake. It would compromise the price system and waste resources on technologies that would not pan out, and if incorporated into our economy would require continual subsidization. The interest rates attached to loans for R&D and the premiums at which these technologies are available relative to oil and gas are the only reliable indicators as to which ones are the most practical and economical to pursue.

    With the government funding research you'd get a seriously screwed up result, with the technologies we persue being determined by political constituents influencing their representatives rather than genuine decisions about what is most practical. Technologies that are aesthetically pleasing, that make campain donors smile and that satisfy interest groups, like corn farmers, would get undue attention and funding for the wrong reasons.

  25. Good. Maybe the government will get the hint and stop regulating our labor markets into inefficiency. However this is also a common fallacy stemming from the idea that this one job that was shipped overseas is the only one that one worker here could have had.

    Take Michael Jordan. He's a great ball player, but what if he would rather lay brick for a living? He may or may not be good at that, but it's what he wants to do. However, there's a person in his town who is just as good at laying brick, but has little or no work. And, very importantly, no one is going to pay Mike several million a year to lay brick. He's making about 50,000 a year laying brick, the brick layer isn't making much if any money at all.

    Then Mike gets his sense back and starts playing ball again. He starts making millions again, and he and everyone else in his neighborhood hire that unemployed brick worker at 50,000 a year to work. Everyone is better off.

    The point is whether or not a job is overseas or here, one person having a job instead of another person doesn't imply a disadvantage, either to the economy or to the individuals. Perhaps someone in America would have rather had a job that was shipped overseas than the job they have now. But the market through prices will generally allocate resources to their most productive use. Jordan might prefer laying brick, his time is more productively used playing ball, and the price assigned to his labor for that purpose gets that point across to him and motivates him to that end.

    Now the varying efficiencies of labor forces are affected by government regulations, either ones that promote inefficiency or ones that 'promote' efficiency by allowing employers to violate the rights of the workers. The basic point is the driving force in ****ing up a naturally regulating system of implicit cooperation is the government, not business.
    No offense, CDB, but that analogy is completely bogus. When a job goes overseas, no job opens up here to replace it.

    Currently there are more unemployed people in the US than there are jobs for them. That's changing, thankfully, but if more jobs get shipped overseas, eventually there WON'T be anywhere near enough jobs here at home.

    When unemployment rates go that high, people turn to crime. The people that don't wind up on the street. Fewer people can afford luxuries and in many cases basic ammenities. Companies that sell that stuff hit try to lower prices but eventually go bankrupt. Eventually even the rich start losing their money and the whole entire economy collapses.


    Sound farfetched? So are your utopian concepts of a free market. A completely unfettered market doesn't work anymore than communism does.

  26. Quote Originally Posted by Nullifidian
    No offense, CDB, but that analogy is completely bogus. When a job goes overseas, no job opens up here to replace it.
    No, that's completely bogus. People are perfectly free to engage in those same businesses here as they are overseas. The difference is if it's done here for various reasons the price of the finished good would be too much and people wouldn't buy it. These jobs 'going' overseas are going there because right now those places are economically more efficient at performing those basic manufacturing jobs. Were they kept here the fixed and circulating capital invested would be wasted, as would the originary resources poured into the process, if any.

    Currently there are more unemployed people in the US than there are jobs for them. That's changing, thankfully, but if more jobs get shipped overseas, eventually there WON'T be anywhere near enough jobs here at home.
    For one, this statement shows you really don't know what you're talking about. Jobs can't be shipped overseas by definition. They aren't goods, they are opportunities. They aren't sent anywhere, they are artificially closed off by making them less tempting than other opportunities. Plus this is the standard lump of jobs fallacy that's been around for decades despite the fact that it's been disproven a few billion times. Finding a more efficient use of scarce resources in terms of land and labor frees up capital to be used for other pursuits which creates the possibility of more and new opportunities for everyone. That's how economies grow and prosper.

    There is never a shortage of jobs, there's always something to do simply because of the nature of the world and scarcity. There is also an extremely complex labor differentiation in today's world which means even in a high tech oriented nation there will be a place for workers whose skills aren't so inclined. No matter how high tech a company is, there is always a need for shippers, truckers, builders, packagers, retailers, etc.

    Sound farfetched? So are your utopian concepts of a free market. A completely unfettered market doesn't work anymore than communism does.
    So you say, you've never provided an example or a true explanation of why that makes any kind of sense. These jobs aren't being 'shipped' overseas because of cheap labor. If that were the case you'd have to explain why cheap labor is most decidedly not the decisive factor in where companies choose to invest. There are countries that are less advanced and pay a hell of a lot lower salaries than Asian countries do (where a lot of these jobs 'go'), and businesses simpy do not invest there. You also have to explain why companies are willing to take on the additional costs of investing overseas, like dealing with language barriers, differing local regulations, being located a long distance from their primary market, etc.

    Basically the deciding difference is these countries to which jobs are being 'shipped' usually don't have an alphabet soup of government agencies harrassing the **** out of companies and investors to keep justifying their ever expanding budgets. The idea that if businesses aren't 'allowed' to invest overseas that they will magically invest the same amount of money and create the same jobs here is ridiculous and false. It's based on the idea that value flows upward towards the finished product and not downward from the finished product which is what actually happens. That's completely bogus, production has no intrinsic value in and of itself. That's why those jobs, if companies were forbidden from investing overseas, wouldn't simpy turn up here. Closing off those economic opportunities overseas would make things worse for Americans. At least right now we get cheaper goods out of it. Close off the trade and you'll see a lot more Americans without jobs and fewer goods and services available because the root problem of a government with no respect for private property and a lust for sucking as much money as possible out of the private sector would still exist. Things would get worse, not better.

    Once again it's a basic economic principle, comparitive advantage, with which you apparently aren't familiar. And, once again, it's the government that's to blame for choking off opportunities here. If someone is getting strangled the air they don't breath will be taken by someone else. Stop others from taking that free air and you still have the problem of stangulation which, if not dealt with, will lead to death in the end.

  27. So you say, you've never provided an example or a true explanation of why that makes any kind of sense
    WRONG. I showed a perfectly good example with the coal mining companies. You tried to claim that government regulation would make the coal mining companies leave. WRONG AGAIN. How do I know? For one, because government regulation doesn't change the fact that the coal was in the ground THERE. Plus regulation would mean regulation anywhere in the country. Additionally, regulation isn't going to change the fact that coal mining would still be quite ridiculously profitable. All depends on how much regulation.

    Once again how do I know? Because the government DID regulate the coal mining companies, and the coal mining companies DIDN'T leave those areas and they STILL made a bundle of money, only instead of their employees dieing of starvation on a regular basis, they live moderately comfortably.

    It's a perfect example of a totally unfettered free market causing pain, suffering, and in fact death. It's also a perfect example of how MODERATE government regulation saved many lives all while not hindering the exonomy. In fact it helped it quite a bit because those employees became decent consumers.



    Your type of reasoning is what allows things like discriminatory pay based on race. Afterall that's a restriction on free market isn't it? I mean, shouldn't corporations be allowed to pay black people less? If they take the job why not? Heck, pay them half what white people make. That's fair right? Free market right? Same goes for women too right? Oh, how about old people, I bet you think it's totally cool to fire someone because they are getting old and retirement benefits are too expensive to pay. Or how about not hiring young women because of the risk they might get pregnant? Good idea right?

  28. [quote=Nullifidian]WRONG. I showed a perfectly good example with the coal mining companies. You tried to claim that government regulation would make the coal mining companies leave.[.QUOTE]

    You I believe were the one who said the coal companies were working with the government to make laws to make the miners' lives hell. But I digress. Point being I didn't give a hoot about the coal miner point because it wasn't a point. If someone was forcing them to work in the mines then they were doing that in collusion with the government or with the government ignoring abuses of the miners' rights. If so, the government was the operative evil doer in that situation, because without their help the coal mining companies couldn't have forced anyone to do anything. As far as the working conditions being unpleasant, that they were. I assume one of the reasons the miners went to work there was because they considered it better than the other alternatives available.

    Put even more simply, safety comes at a cost. If it is costless it is enacted because the costs of not doing so are higher. If there is a cost it has to be justified and that justification isn't always there. Not to mention the fact that different people evaluate safety in different ways, and no amount of regulation can encompass any and every situation, nor can regulators foresee unintended consequences of regulations supposedly to make people safer but ends up hurting them in other ways. Ask steel workers in cold climates how much they like the OSHA requirement for steel toed boots. Some do, some don't. The ones who do get saved a broken toe. The ones who don't prefer to feel the steel with their toes so when conditions get icy they are more secure in their footing. Who is right? Neither is the answer.

    As I said before, through your reasoning cavemen should have just been able to vote themselves better working conditions. They couldn't because that's not how the world works. Economies evolve. As capital is accumulated and invested to increase the productivity of labor that labor becomes more valuable and in turn can demand higher safety standards. OSHA and unions take credit for a lot of advances in workplace safety we have today. What they have a harder time explaining is why safety conditions were trending upwards before they ever existed.

    WRONG AGAIN. How do I know? For one, because government regulation doesn't change the fact that the coal was in the ground THERE. Plus regulation would mean regulation anywhere in the country. Additionally, regulation isn't going to change the fact that coal mining would still be quite ridiculously profitable. All depends on how much regulation.
    Alright. What's the right amount then? Please feel free, share with me how you are aware of everybody's marginal limits in the whole market and can thus determine the proper amount and type of regulation that wouldn't eat to much into profits to make the initial investment not worth it. Grant you're right about the regulations, can you tell me the jobs that were lost because of the increased cost of higher safety standards? The unseen cost is the reduced alternatives, even if the economy still moves forward you don't know how much further it would have gone without restraint. But, because the cost is unseen people like simply claim it doesn't exist.

    Incidentally you've proven yourself wrong, again. People who can put together TVs exist here in the US, but there isn't as much of that going on here as there once was. Gee, you think it might be because the government regulated the labor force into inefficiency in this area? Nah, it's evil corporations. Forget I mentioned it, it's fairly obvious every resource will be exploited no matter what the cost.

    And they say Keyensian economics is dead...

    Your type of reasoning is what allows things like discriminatory pay based on race. Afterall that's a restriction on free market isn't it? I mean, shouldn't corporations be allowed to pay black people less? If they take the job why not? Heck, pay them half what white people make. That's fair right? Free market right? Same goes for women too right? Oh, how about old people, I bet you think it's totally cool to fire someone because they are getting old and retirement benefits are too expensive to pay. Or how about not hiring young women because of the risk they might get pregnant? Good idea right?
    Yes, it is. It's called freedom, and I don't have to agree with someone to acknowledge that they should be allowed to use their property and money as they see fit regardless of my opinion. If they're not harming me or others, or my propety or others, I don't see the problem. It's not my business. I have to wonder what a horrible world it is you live in, where people can't provide for their own retirement without the government, where a women would have to face the choice (shudder) that she may have to sacrifice having a child for a while because she has no right to demand others pay for her choices. A world where a black man can't prove his own worth and get the pay he deserves without the government. A world where apparently no one can make a single decision for themselves without the government holding their hand to make sure they don't hurt themselves, or more to the point where the evil people who in the act of seeking profits created jobs and higher standards of living might hurt them. I have to admit if I lived among such incompetents I'd demand government regulation too. However, the people I live with tend to be able to take care of themselves.

    I think it would easier to agree to disagree. Good luck with your government though, I'm sure if they don't throw you in prison for using roids, or breaking any of the other myriad laws they've enacted to make you safe, they'll make you taller, better looking, better in bed, eliminate all danger, get you a better car and get your lawn looking nice too. After all, all good things flow from the government and the only source of evil is people engaging in mutually beneficial exchanges.

  29. "Hey...you like to drive?" "Don't F*** with us." - John Stewart imitating a goonish looking oil exec.

  30. The only thing that is ever regulated is human weakness. Laws exist to protect the the weak from the corrupted.Fear of loss is the fuel that powers the manipulation of human nature. Choice is an illusion that those with power employ upon those without power. That illusion of choice is the carrot which we all must chase. The chase itself, is what powers the great machines of capitalism.When the illusion is removed( i.e. natural disasters, terrorism) the naked cause and effect reality is revealed.This is the point where people take notice of the inequities of rich and poor. People will become either angry and depressed which is debillitating to the workforce because we stop chasing the carrot, at least momentarily.So the powers that be must reaffirm their value to society(flucuating prices,terroristic threats)once the illusion is back in place,the chase can resume and it is buisness as usual.Now we can go back to our Christmas shopping.
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