Flint
Posts: 478
Joined: Jan. 2006
|
haceaton:
| Quote | | It doesn't take a genius to realize that *margin* is not profit. Margin times volume = profit. Walmart, like all good profit making enterprises seeks to maximize total profit. They do this by trying to find the peak in the total profit curve. |
Sigh. Yes, I understand.
| Quote | | Evidently, they believe this peak lies at lower prices than they have yet been able to achieve. Bully for them, they may well be right. |
So the question is, could WalMart increase total profits by raising their prices? After all, most of what they sell is commodity items, and commodity items tend to sell on price alone. Which means you don't need to undercut your competition by more than a little bit to get all the sales.
My perception is that WalMart has a more complex goal structure than simply maximizing profits. They're aware that this goal, all by itself, is highly impermanent. If we layer on ancillary goals like maintaining acceptable (but not highest possible) profit levels for as long as possible, strategies change.
| Quote | | But at least he wasn't stupid like you and thought the way to achieve massive wealth was by maximizing his profit margin. |
You seem to be falling into the Sir Toejam mire of assuming anyone with whom you disagree is stupid (or would you allow ignorant in addition?) I thought on one of my posts earlier, I spoke of spending all of economics 101 creating and solving the total profit curve, to find the ideal price such that either lowering OR raising the price reduced total profits. Do you sincerely feel I don't follow this?
I think we agree that WalMart's total strategy is intended to both solidify and increase their market position, not to take the money and run.
| Quote | | Seriously, if you are wondering why the energy and chemical moguls are lobbying hard for trading pollution credits... |
Let me guess. It's because they are EVIL BASTARDS out to line their pockets by abusing their power at the expense of us poor schmucks who couldn't vote in an honest Congress because the Big Guys have all the politicians in their pockets, and are manipulating government regulation so that it protects them and their profits at our expense. Am I getting warm?
| Quote | | Really Flint, for a guy that argues that the rest of us are economic dolts, you're looking pretty pathetic...You have no idea how the game is played. |
Golly, I hope you feel better now. I understand SO MUCH MORE than I did before your fine little performance. You may pat yourself on the back and go enlighten some other pathetic ignoramus now. I won't mind. If you want to play some more after you grow up, that's fine too. You clearly have nothing to learn from anyone.
BWE:
| Quote | | And that is why we don't need a degree in economics to make judgements in economic arenas |
But nobody said we did. What you would learn in economics is how to do things like set product price and quality so as to maximize profits. And to analyze costs and benefits so that you are not taken by surprise.
| Quote | | in the end our economic activity boils down to moral choices. |
Yes, but the moral choices made by a very large number of actors can be generalized enough to make fairly accurate predictions in some areas.
We are still not communicating. Consider: The odds of rolling snakeyes can be calculated, regardless of whether gambling is considered moral. There is a qualitative difference between the optimal strategy for playing the game, and whether the game itself *ought* to be played. You seem to be trying to make the case that the best way to understand economics is to attend church so as to avoid sinful differential calculus.
| Quote | | Walmart is an absolutely beautiful illustration of that fact for the reasons listed above. |
But again, we are talking about different things. Even assuming that WalMart follows haceaton's implicit dictum that the more cynical he is, the more accurate he is likely to be about how the world works, and that assuming "the enemy" (everyone else) is as dishonest as they can get away with, supply and demand still operate. Haceaton apparently believes that Adam Smith missed the boat entirely, and that Al Capone was the real economist. But that doesn't make it true at all. Economics is a world of costs and benefits, where more of something means less of something else. An economy is where zillions of individual transactions determine relative values of everything. WHY those transactions are made really don't matter that much. If you wish to believe that people buy brand X canned peas for moral reasons, fine. Economists will note with amusement that the most moral peas ALSO tend to have the lowest price, all else being equal.
As these discussions continue, it becomes clear that WalMart, probably by their very success, has triggered deep-seated political instincts. You and haceaton seem so fanatically convinced that WalMart is evil that any effort to understand their business model that does NOT continuously rave and drool against the Unclean is regarded as either hopelessly uninformed (by haceaton), or outright immoral( by you).
But WalMart is nonetheless an economic actor, and their policies do in fact have economic effects beneficial to some and harmful to others. I think it's kind of sad that fanatacism has made this simple observation so difficult for you two to understand or accept.
To you, all I can say is bless you, brother. May you live in righteousness. To haceaton, I can say I'm glad I don't live in the world of his imagination, where he tries to puff up his withered soul by living among terrible enemies of whom he assumes the worst.
|
