Free Market question?

[faysalnals]

I was chatting with someone about libertarian and free market and they made this argument:

"So lets say a company decides to use foreign labour rather than local labour to obtain goods. now because these foreign labours are cheaper this company can sell their goods for less than every one else. other people realize this and go to do the same thing however they cannot as this company is blocking them by buying up exporters. this company can now go on become the only producer of these goods a they sell the cheapest goods. Yes some may not buy from them because of their actions but a majority will not"

So how would you answer that argument?

[AncapFTW]

I was chatting with someone about libertarian and free market and they made this argument:

 

"So lets say a company decides to use foreign labour rather than local labour to obtain goods. now because these foreign labours are cheaper this company can sell their goods for less than every one else. other people realize this and go to do the same thing however they cannot as this company is blocking them by buying up exporters. this company can now go on become the only producer of these goods a they sell the cheapest goods. Yes some may not buy from them because of their actions but a majority will not"

 

So how would you answer that argument?

"buying up exporters" sounds expensive, and like they couldn't sustain it for long.  It would increase their costs, as well, unless they do something with those exporters, and more will be created to meet this demand for exporters anyway.

[dsayers]

Without specifics, it seems as if "buying up all exporters" would raise the cost of operation to the point of being prohibitive. Thus raising the price of the good to the extent that the competitors employing more costly labor will still be able to satisfy demand for less.

[fer]

Adding to dsayers response, let's say that even after "buying up all exporters" the company can still make profit somehow.

 

What's wrong with a company outsmarting the competition? Is there any force involved?

[faysalnals]

Adding to dsayers response, let's say that even after "buying up all exporters" the company can still make profit somehow.

 

What's wrong with a company outsmarting the competition? Is there any force involved?

Well we were talking about corporations and her argument was without a government, corporations will form from the free market..

[shirgall]

Well we were talking about corporations and her argument was without a government, corporations will form from the free market..

 

The removal of limited liability for the owners and agents of a company may well transform corporations to something entirely new should a free market ever come about. I suspect they would be considerably smaller and more focused.

[fer]

Well we were talking about corporations and her argument was without a government, corporations will form from the free market..

What's wrong with corporations? If she fears corporations she can't be in favor of a government, which is the worst conceivable corporation.

[LibertarianSocialist]

I was chatting with someone about libertarian and free market and they made this argument:

"So lets say a company decides to use foreign labour rather than local labour to obtain goods. now because these foreign labours are cheaper this company can sell their goods for less than every one else. other people realize this and go to do the same thing however they cannot as this company is blocking them by buying up exporters. this company can now go on become the only producer of these goods a they sell the cheapest goods. Yes some may not buy from them because of their actions but a majority will not"

So how would you answer that argument?[/size]

This is something I have been concerned about myself too. Say we have a foreign country such as China who uses state violence to ensure cheap labour, using this to undercut their competitors.

 

This can play out a few ways:

 

1. The cheap products flood the market, causing the competitors to stop production, leading to an economic dependency, teamed with unemployment and an inability to pay for said imported goods.

 

2. Local producers accommodate the new price point, resulting in voluntary self-exploitation.

 

3. Local producers shift production to a new type of product or service whose market price is not suppressed, exporting this to the other country while importing the cheaper good, winning in the process. This last solution would possibly result though in lowered demand by the other nation due to their low wages, and so to either local unemployment or wage/profit increases teamed with greater (involuntary) leisure time, or else an increase in total labour by the low wage country.

 

To summarise, the trade ratios are the same but the amounts may differ. If the low wage country sells its products for half their competitors prices, for example, their trade ratios might be either 1 unit for 0.5 units or 2 for 1 or whatever, it entirely depends on the level of demand for the various products, and the supply of labour.

 

It is important to realise that the low wage workers are being exploited, and would not desire a low wage unless they were forced to by physical or legal or economic coercion. They are certainly not 'winning' by underselling their products.

[dsayers]

What's wrong with corporations?

Not being responsible for one's own risks/actions is not representative of the real world.

[fer]

Not being responsible for one's own risks/actions is not representative of the real world.

It was a leading question to compare the similarities with a government and show the contradiction.

 

But for argument's sake, purely free market situation, free to opt-out, what's wrong with a group of people offering their services but with the conditions of remaining anonymous and not taking liability if anything goes wrong?

[dsayers]

"I am not responsible for my actions" is always false. Because it would take knowledge of the same to understand the value of disconnecting from it.

[LovePrevails]

I was chatting with someone about libertarian and free market and they made this argument:

 

"So lets say a company decides to use foreign labour rather than local labour to obtain goods. now because these foreign labours are cheaper this company can sell their goods for less than every one else. other people realize this and go to do the same thing however they cannot as this company is blocking them by buying up exporters. this company can now go on become the only producer of these goods a they sell the cheapest goods. Yes some may not buy from them because of their actions but a majority will not"

 

So how would you answer that argument?

 

how can they remain competitive if they are buying exporters? that's expensive - someone who is not buying up will outcompete them on price

[Boss]

Well a smart competitor will have to find a cheaper way like maybe using robots thats cheaper in the long haul than the competitions combined shipping cost and hourly wages. Or do custom goods that can be made within a shorter time frame than getting it from the foreign labor company. A competitor could visit the foreign labor factory and collect video evidence of the work conditions and show it to the customers to try to get there business. 


 

[Cornetto97]

Ok so let's say business A and business B are competitors. Now let's also assume it is a free market, and they both get produce locally for their inputs. So their fighting to continuously meet market demand for the best price to consumers. Now business A decides to start using overseas exporters, let's say china. Now china has artificially low wage levels, therefore they can gain much cheaper inputs, and meet market demand at a cheaper price than business B.

 

So business A is already gaining cheap exports, and is already going to see their market share go up steadily. Now as the example says, they take control of the exporters in that country so as to stop business B from gaining the cheap exports. Now what this example puts forward is leaning towards failure for business A. Not only would they have to buy up the exporters in that country, an expensive venture, but the possible profitability of those exporters becomes cometely defunct, becasue business A is completely ignoring a demand for exports from business B. So not only would those exporting companies business A gained control of lose a huge amount of profitablitity, but by ignoring the demand created by busines B they would be inviting rivals from moving into the market.

[David Ottinger]

As many have already pointed out, "buying up exporters" is the detail that's sort of being thrown out there like, "What if I attacked you with a horde of zombies?"     It's just fiction.   "What if all my pawns on the chess board turned into queens, what would your move be?"

 

And, what are they telling you with these sort of fictitious economic scenarios?   "The rich can buy whatever they want when they want, and that's why they're rich and getting richer"   That's what you're really dealing with here. 

[GailG]

When you take away consumers, you take away demand.  The sole remaining company dies.  That's what's happening now.