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Old 08-08-2006, 10:40 PM   #313
Fender
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Join Date: Jun 2001
Location: Somewhere Boring, England
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Quote:
Originally Posted by Fealiks
Think about it, if every manufacturer in the world sold their products for much lower, more reasonable prices, and used that money to pay their employees more, the world would be better off (no really, think about it). Obviously, that will never happen.
Nope it won't. And you should know why.

Manufacturers and companies need to keep a steady cash flow in order to keep creating produce etc. This means that all the 'profit' the product makes has to go back into the company, in order to pay for the production of new produce.

This basically means the money is on a big cycle, savvy?

Now, if the workers are paid more, this means that a larger cash flow is necessary in order to make the idea of creating more of the product economically viable. This in turn can be gained by either:

(A) an unprecedented rise in demand for the product (thereby leading to a greater influx of monies)
(B) a reduction in manufacturing costs (either through increasing efficiency, or getting rid of some of those workers you care so much about Fealiks and replacing them with machines etc)
(C) raising the sale price of the product.

The most likely answer would be a combination of B and C. But then, why would the company voluntarily create this problem for themselves, when they could just carry on as they are? The workers have the trade unions to sort their problems out for them, and this means that rather than any radical increase in wage, most companies can keep the workers "happy" through steady increases in keeping with average currency rates at the time.

Seriously Fealiks, its not gonna happen, savvy?

(Any serious economists want to rip my arguements open, they are welcome. It's 2.30AM, and all my knowledge of economics is based on a year of not paying attention in AS Economics).


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