Building on ewbronv’s response: The starving man is best off if you open a bakery which can profitably sell him bread at a price he can afford. If there are starving people, it is because food is not available at a price they can afford.
Right. So I am saying that businesses can affect both the price, and the affording.
In a trade balance sense, where imports are perceived to reduce the economic viability of an area and exports are perceived to increase it? Or are you saying that businesses that pay low wages are harmful compared to businesses which pay high wages, sell the same amount of the same product (at a higher price), make the same profit, and distribute that profit the same way?
The trade balance perspective is a pretty interesting one :P If the locals spend money at your store, how does it get back to the locals so they can buy more stuff? Is the entire cycle good for the locals (typical import/export), or is there a tragedy of the commons problem (the people hurt aren’t necessarily the same ones who shop at your store)?
But what I was mainly thinking of was labor distribution. The economy is (from the pragmatist perspective) a system for distributing goods and labor to where they’ll benefit people, better than a central planner could do it. If goods were previously produced locally, and now you import them, that’s not making the distribution of goods worse, but it can make the distribution of labor worse, imposing costs on the local economy. Moving people around is a pain.
The store hires locals to man it, and pays taxes at the local rates. The local currency (henceforth: lc, symbol #) can only be exchanged for foreign currency (henceforth: dollars, $) if there are things which can be purchased using the local currency that people who have foreign currency want. If the lc isn’t worth anything, nobody can make a profit buying bread for dollars and selling the bread for lc.
I think that it is overwhelmingly likely that the areas with the highest unemployment will have the lowest labor costs; If that is the case, the businessman imports wheat into that area, bakes it using local labor, and sells it in lc; he has now changed some amount of dollars into some amount of lc. He then invests that lc into a labor-intensive product and ships that product back home to sell for dollars.
Exactly the same thing can and does happen within a single currency: raw materials are shipped from where resources are plentiful to where labor is plentiful, and finished goods are shipped back out. The major hurdle is scarce raw materials limiting the number of factories that it is possible to operate, followed by political control of the economic system in order to ‘keep jobs’ within the privileged group.
Right. So I am saying that businesses can affect both the price, and the affording.
In a trade balance sense, where imports are perceived to reduce the economic viability of an area and exports are perceived to increase it? Or are you saying that businesses that pay low wages are harmful compared to businesses which pay high wages, sell the same amount of the same product (at a higher price), make the same profit, and distribute that profit the same way?
The trade balance perspective is a pretty interesting one :P If the locals spend money at your store, how does it get back to the locals so they can buy more stuff? Is the entire cycle good for the locals (typical import/export), or is there a tragedy of the commons problem (the people hurt aren’t necessarily the same ones who shop at your store)?
But what I was mainly thinking of was labor distribution. The economy is (from the pragmatist perspective) a system for distributing goods and labor to where they’ll benefit people, better than a central planner could do it. If goods were previously produced locally, and now you import them, that’s not making the distribution of goods worse, but it can make the distribution of labor worse, imposing costs on the local economy. Moving people around is a pain.
The store hires locals to man it, and pays taxes at the local rates. The local currency (henceforth: lc, symbol #) can only be exchanged for foreign currency (henceforth: dollars, $) if there are things which can be purchased using the local currency that people who have foreign currency want. If the lc isn’t worth anything, nobody can make a profit buying bread for dollars and selling the bread for lc.
I think that it is overwhelmingly likely that the areas with the highest unemployment will have the lowest labor costs; If that is the case, the businessman imports wheat into that area, bakes it using local labor, and sells it in lc; he has now changed some amount of dollars into some amount of lc. He then invests that lc into a labor-intensive product and ships that product back home to sell for dollars.
Exactly the same thing can and does happen within a single currency: raw materials are shipped from where resources are plentiful to where labor is plentiful, and finished goods are shipped back out. The major hurdle is scarce raw materials limiting the number of factories that it is possible to operate, followed by political control of the economic system in order to ‘keep jobs’ within the privileged group.