It is the nature of the buyer to want to pay the lowest price
possible.
It is the nature of the seller to want to charge the highest
price possible.
When there is only one seller, and many buyers who need the
product, the seller can raise his prices to a very high level
resulting in an excessively abundant standard of living for himself
and an excessively destitute standard of living for his buyers.
In these circumstances, another person, who used to be a buyer
and who is suffering from the destitution, might get the idea to
compete with the present seller. To him any life style would be
better than the one he is presently suffering, so he is willing to
settle for a level of abundance somewhat less than the one seller who
is living so well.
This allows the competitor to charge less for the same product,
to produce a better product, to offer better guarantees and better
after market support, all of which cost him more and thus detract from
his own profits and thus his standard of living.
But because his prices are lower and his
product and quality is better, he begins to steal market share from
the first seller, and so his own standard of living begins to go up,
from the destitution of not being a seller himself.
His standard of living never gets as high as the original seller,
because he is now splitting the market share with the original seller,
and charging less for a more expensive and higher quality product.
Then another person decides to do the same thing, and again he is
willing to suffer a standard of living slightly less than the previous
two sellers, so he makes an even better more expensive product and
sells it for even less than his two competitors, thus again stealing
market share, raising his own standard of living, and lowering that of
his competitors.
As more and more competitors come on line with better and cheaper
products, eventually all of the competitors are forced to work at the
edge of non survival. At this point if another comepetitor comes in
and tries to sell a better product for less, he finds he can't no
matter how many people he steals from the others, and he dies off.
In this way the market has reached an equilibrium where everyone,
both buyer and seller alike, are enjoying the maximum *FAIR* benefit
of their work. Markets that reach equilibrium through intense and
extensive competition produce an evenness of wealth that even the
socialists would envy.
As prices come down, the sellers make less, and the buyers have
more to spend on other things, so the wealth naturally redestributes
to each according to their ability to compete.
Of course as the sellers make less, they pay less in wages, and
so the buyers may have less to buy with, so we have a very complex set
of simultaneous equations here leading towards the equilibrium of a
healthy economy.
EMPLOYER AND EMPLOYEE
An employer or store owner, is actually a buyer himself on three
fronts.
First he is a buyer to his own vendors who provide him his raw
products and domiciles for production. As a buyer he wants to pay the
lowest price for his material like every other buyer.
Second the store owner is a buyer when he looks to employ a
employee or worker to work for him, he is buying their services.
Again as a buyer he will try to pay the least he can for such
services, and the employee will try to charge the most he can for
those services.
In the presence of many employers competing for the services of a
work force of workers, the employers are forced to compete with each
other on the wages they offer.
If one employer is paying too little and workers are grumpy, then
another employer can raise the ante and offer a little more, and take
workers away from the first employer. In this way wages and the quality
of the work place rise naturally in exactly the same way that the price
of proudcts come down and their quality goes up through competition.
SELLERS NOT ONLY COMPETE WITH EACH OTHER FOR BUYERS, EMPLOYERS
COMPETE WITH EACH OTHER FOR EMPLOYEES.
Of course the employer who pays a higher wage, either has to raise
the prices of his products too, or suffer a lower standard of living
himself. If his products get too pricey, he may have lots of employees
who are very happy, but no customers, and he will go out of business.
Thirdly, the employer is a buyer when he spends the profits of his
business as a normal buyer purchasing from the stores of other vendors
and employers.
In the presence of healthy competition, both amongst sellers
competing for buyers, and amongst employers competing for employees,
market forces bring about a very complex equilibrium of prices and
wages, and a distribution of wealth that relfect the ability, talent and
intelligence of the people involved.
To each (money) according to his ability (to produce), and from
each (money) according to his need (to consume).
(Marx got it backwards.)
Putting down employers because they like to pay bottom dollar to
their employees, is like putting down buyers, because they like to pay
bottom dollar to their sellers, and shows *EXCEPTIONAL*, almost
cultivated, economic illiteracy.
Buyers have a moral mandate to bid bottom dollar to their sellers,
and sellers have a moral mandate to ask top dollar from their buyers.
*COMPETITION*, not law and guns, produces a healthy economy where
everyone is happy with the fairness of the game, in that the game inures
to the benefit of the able. It may not be fair that some are more able
than others in the grand scheme of things, but that's not the fault of
the GAME.
In a healthy economy everyone knows they are getting what they
deserve: each according to his ability to produce and not consume.
Laws that use force to prevent competition from being destroyed
by force or other deceit, are good laws.
Laws that try to make up for a lack of competition by fixing
wages and prices are bad laws.
They are often more designed to benefit hidden vested interests
(selfish evil) at the expense of the economically illiterate, by
catering to the vote of those who are trying to make up for their own
survival inadequacies by ripping off the adequacies of others.
This includes minimum wage laws.
When monopolies bloom however, competition dies, and thus prices
spiral upward out of control, and wages spirial downwards in the same
way. That's because when one seller or one employer becomes the only
game in town, the game is no longer a game of competition and thus goes
to hell.
It is in this kind of environment that laws are passed to
fix wages and prices based on the judgement of central committee.
In other words monopolies lead to communism, as a communism *IS* a
monopoly (of the state as corporation of first and only resort).
Homer
------------------------------------------------------------------------
Homer Wilson Smith Clean Air, Clear Water, Art Matrix - Lightlink
(607) 277-0959 A Green Earth, and Peace, Internet, Ithaca NY
homer@lightlink.com Is that too much to ask? http://www.lightlink.com
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