US Economy

Merrill Oveson moveson at gmail.com
Fri Apr 8 12:04:24 MDT 2005


On Apr 8, 2005 10:03 AM, Dan Stovall <dbstovall at gmail.com> wrote:
> > > 3) Lastly, because OSS was free and still is, this huge cost saving
> > > spurred a ton of new innovation and businesses.  Smart guys, like you
> > > all, grabbing Linux and Apache and setting up ISPs, or websites for
> > > commercial enterprises, or websites for your own commercial
> > > enterprise.  Heck I have a commercial website, it cost next to nothing
> > > to host, the software for it is free.  Without OSS, this would have
> > > never happened.  OSS and the internet (a result of OSS mentality) has
> > > reduced the cost of advertising, marketing, customer filfullment,
> > > mailing (Yes email makes the post office think twice before raising
> > > the cost of a stamp.), even shipping, banking, etc, etc, etc -
> > > everything.
> >
> > This looks like a pretty good argument on the surface, but still lacks any
> > substantive examples. Prove that email makes the post office "think twice"
> > before raising the prices of stamps.
> >
> > --Dave
> > .===================================.
> > | This has been a P.L.U.G. mailing. |
> > |      Don't Fear the Penguin.      |
> > |  IRC: #utah at irc.freenode.net   |
> > `==================================='
> >
> 
> Actually, I have heard it reported that email has actually caused the
> post office to raise the price of stamps.  The volume of mail the post
> office moves has dropped significantly over the last few years.  This
> is somewhat becuase of fewer people writing and mailing letters, but
> it has more to do with the ease and lower cost of spamming compared to
> mass mailing.  The cost to run the US postal service has increased
> slightly but the revenue has fallen.  To keep the govt. from loosing a
> ton of money in the US postal service they have to raise the cost of
> stamps.
> 
> Dan
> .===================================.
> | This has been a P.L.U.G. mailing. |
> |      Don't Fear the Penguin.      |
> |  IRC: #utah at irc.freenode.net   |
> `==================================='
> 
You probably correct.  I should have used a different example.
I can well imagine that the fixed costs of the Post Office have remained flat
while revenue has fallen.  This puts the squeeze on them, thus forcing
them to increase the price of stamps - except - and this is a big one
- raising the price of stamps will cause people to buy less of them
(Economics 101) - which may further hurt revenue - (and that depends
on how elastic the market is for stamps).  The fact is any competition
will cause downward pressure on prices.  In fact, and this is going to
blow everyone's mind - in a perfectly competitive market profit is
driven to zero.  That is if excess profits are to be made by new
competition, new competition will emerge until there is no profits. 
This fact ensures that the market is balanced, for example, that there
are enough dry cleaners around - but not too many.  So, you ask
yourself what do you mean zero profit?  This doesn't necessarily mean
that an owner of a dry cleaner business isn't taking home any money. 
It simply means that he/she probably needs to work there managing the
business and can thus draw a salary as manager - this assumes, of
course a perfectly competitive market.  Business owners try to limit
competition, how? Licencing, Regulation.  I'm a lawyer and I notice
lots of other lawyers out there and more coming in.  So I get together
with the other laywers and say we need to make sure that people don't
get taken by bad lawyers.  We need a test, which we'll design and
administer and score.  Of course, the government will need to approve
this so we'll argue that this is in the best interest of society
(protection from bad lawyers)  And who better to design, administer
and score the test then us, the existing lawyers.  Guess what this is
called? - The Bar.  The bar limits the number of lawyers keeping wages
high for existing lawyers.  This type of regulation exists all across
our country.  Please all of you read Milton Freidman's book Free to
Choose!  This means of limiting competition is called an artificial
barrier.  The other type is a natural barrier.  This includes the high
cost to start some businesses.  For example, there is an natural
barrier for almost everyone from building an oil refinery.  But if
we've got the money and the stomach it's an investment that would
probably pay off.

Again, it would be worth everyone's while to read up on some of this
stuff.  I'm only telling you what is taught in BYU's Econ 110 class.



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