A Good Corporate Citizen

[Nice Squirrel]

I was looking at a BS MicroEcon textbook on the pot yesterday that spoke about perfect competition. The author used the personal pronoun "I" throughout the text. Maybe LD knows the book and author.

But he did talk about "perfect competition".

Perfectly competitive markets exhibit the following characteristics:

There is perfect knowledge, with no information failure or time lags. Knowledge is freely available to all participants, which means that risk-taking is minimal and the role of the entrepreneur is limited. (Which means perfect competition can never exist in reality.)

There are no barriers to entry into or exit out of the market.(Can be argued to exist in limited situations)

Firms produce homogeneous, identical, units of output that are not branded.(Also, while they can exist the mere fact that different suppliers identities are known will skew the perceptions due to the irrationality of the market (consumers))

Each unit of input, such as units of labour, are also homogeneous.(Can be argued to exist in limited situations)

No single firm can influence the market price, or market conditions. The single firm is said to be a price taker, taking its price from the whole industry.(Does not exist in the real marketplace. The players in any market interact and make a dynamic marketplace.)

There are a very large numbers of firms in the market.(This would also assume that all firms provide equal access in the same location and same advertising since factors like geography or visibility will influence the market. I cannot see this happening in reality.)

There is no need for government regulation, except to make markets more competitive.(This contradicts itself. You want perfect competition without government intervention, but government should intervene to make it more competitive meaning the natural competitive results if not ideal require government regulation. Would this come in the form of price and profit controls?)

There are assumed to be no externalities, that is no external costs or benefits.(Which means perfect competition can never exist in reality.)

Firms can only make normal profits in the long run, but they can make abnormal profits in the short run.(Somebody help me out with this one. Why does this matter?)

 

[SimpleDon]

I was looking at a BS MicroEcon textbook on the pot yesterday that spoke about perfect competition. The author used the personal pronoun "I" throughout the text. Maybe LD knows the book and author.

But he did talk about "perfect competition".

Perfectly competitive markets exhibit the following characteristics:

There is perfect knowledge, with no information failure or time lags. Knowledge is freely available to all participants, which means that risk-taking is minimal and the role of the entrepreneur is limited. (Which means perfect competition can never exist in reality.)

There are no barriers to entry into or exit out of the market.(Can be argued to exist in limited situations)

Firms produce homogeneous, identical, units of output that are not branded.(Also, while they can exist the mere fact that different suppliers identities are known will skew the perceptions due to the irrationality of the market (consumers))

Each unit of input, such as units of labour, are also homogeneous.(Can be argued to exist in limited situations)

No single firm can influence the market price, or market conditions. The single firm is said to be a price taker, taking its price from the whole industry.(Does not exist in the real marketplace. The players in any market interact and make a dynamic marketplace.)

There are a very large numbers of firms in the market.(This would also assume that all firms provide equal access in the same location and same advertising since factors like geography or visibility will influence the market. I cannot see this happening in reality.)

There is no need for government regulation, except to make markets more competitive.(This contradicts itself. You want perfect competition without government intervention, but government should intervene to make it more competitive meaning the natural competitive results if not ideal require government regulation. Would this come in the form of price and profit controls?)

There are assumed to be no externalities, that is no external costs or benefits.(Which means perfect competition can never exist in reality.)

Firms can only make normal profits in the long run, but they can make abnormal profits in the short run.(Somebody help me out with this one. Why does this matter?)

He is saying that the market can have short term disequilibrium where profits can be abnormal, but that the market forces always push back to a general equilibrium where profits and all other factors of production are reasonable in relation to the value that they add to the product.

 

[Nice Squirrel]

Thank you.

 

[SimpleDon]

The concept of a self-regulating free market came about with the marginalists and the neoclassical economists of the late 19th century, Marshall, Walras, Menger, etc. The concept of perfect competition came about from the thought experiment of what would we have to have in order accomplish the self-regulating free market and is the self-regulating free market possible?

The answers to the two questions were we would have to have perfect or near perfect competition and no way in hell is that possible, therefore the self-regulating free market isn't possible.

 

[coloradoatheist]

The concept of a self-regulating free market came about with the marginalists and the neoclassical economists of the late 19th century, Marshall, Walras, Menger, etc. The concept of perfect competition came about from the thought experiment of what would we have to have in order accomplish the self-regulating free market and is the self-regulating free market possible?

The answers to the two questions were we would have to have perfect or near perfect competition and no way in hell is that possible, therefore the self-regulating free market isn't possible.

What are you defining as self-regulating?

 

[jonatha]

That said, perhaps an investigation of the suspicious similarity between 'Aramark' and 'Armonk' warrants investigation

Armonk is corporate HQ. The food there is outstanding.

(Stayed at the company resort for visiting customers when on trips to Yorktown some years back.)

 

[lpetrich]

Not long ago, Aramark became one of the biggest caterers in the North Sea (still are AFAIK) - umpteen oil rigs and offshore installations where end consumers had pretty much the same choice as prisoners. Good food and 'flotel' service turned into rubbish food and service, including proven cases of food poisoning and rat infestation. The clients negotiating the contracts - not IBM, but Shell, BP et al - punished Aramark by awarding them more contracts and punished their procurers with bonuses. The same procurers in yer average gov't dept would have at least got a bollocking, possibly corruption charges.

Could part of the problem be that those Aramark-loving managements can easily avoid eating Aramark food? That way, they would not personally suffer from Aramark's degenerating quality of food. If their main experience of Aramark was Aramark's sales force, then that would not be surprising.

 

[Axulus]

Is anyone else noticing the one-dimensional intellectually inconsistent view the left has of large corporations? Corporations are so greedy and profit driven that they'll poison our food, poison our air, poison our water, don't care if their product or the poison they've released into the environment kills us, will beat and enslave their employees and their children if they thought they could get away with it and could care less about their safety, and yet, they apparently aren't greedy enough to try to maximize profits doing the mundane, day to day, things it takes to run a successful business, such as ensuring good procurement and hiring competent employees for their roles.

 

[laughing dog]

Is anyone else noticing the one-dimensional intellectually inconsistent view the left has of large corporations? Corporations are so greedy and profit driven that they'll poison our food, poison our air, poison our water, don't care if their product or the poison they've released into the environment kills us, will beat and enslave their employees and their children if they thought they could get away with it and could care less about their safety, and yet, they apparently aren't greedy enough to try to maximize profits doing the mundane, day to day, things it takes to run a successful business, such as ensuring good procurement and hiring competent employees for their roles.

I should be surprised if anyone noticed that straw man as a valid observation, but I won't be.

 

[PyramidHead]

Is anyone else noticing the one-dimensional intellectually inconsistent view the left has of large corporations? Corporations are so greedy and profit driven that they'll poison our food, poison our air, poison our water, don't care if their product or the poison they've released into the environment kills us, will beat and enslave their employees and their children if they thought they could get away with it and could care less about their safety, and yet, they apparently aren't greedy enough to try to maximize profits doing the mundane, day to day, things it takes to run a successful business, such as ensuring good procurement and hiring competent employees for their roles.

I should be surprised if anyone noticed that straw man as a valid observation, but I won't be.

In any case, it's not hard to imagine corporate CEOs as being both greedy and incompetent, so I don't see the inconsistency.

 

[Jason Harvestdancer]

Those are not requirements for a free market, although people (who do not support free markets) often say they are.

They are requirements for the free market to self-regulate. It strains the definition of "free markets" to say that they can't regulate themselves.

Um, no.

In truth, if we had that perfect state that the zealots try to say is necessary, we wouldn't have economics in the first place, much less any particular economic system.

 

[coloradoatheist]

Is anyone else noticing the one-dimensional intellectually inconsistent view the left has of large corporations? Corporations are so greedy and profit driven that they'll poison our food, poison our air, poison our water, don't care if their product or the poison they've released into the environment kills us, will beat and enslave their employees and their children if they thought they could get away with it and could care less about their safety, and yet, they apparently aren't greedy enough to try to maximize profits doing the mundane, day to day, things it takes to run a successful business, such as ensuring good procurement and hiring competent employees for their roles.

I think the mantra of profits at all costs should die.

 

[laughing dog]

They are requirements for the free market to self-regulate. It strains the definition of "free markets" to say that they can't regulate themselves.

Um, no.

In truth, if we had that perfect state that the zealots try to say is necessary, we wouldn't have economics in the first place, much less any particular economic system.

Utter nonsense, since people will always have to make choices on how to use resources.

 

[Jason Harvestdancer]

Yes, but given all the perfections in the ... whatever you call it since you can't actually call it a market ... people would have sufficient knowledge to never make the wrong choice. There would never be a malinvestment, everyone would be prosperous as a result.

 

[Canard DuJour]

Could part of the problem be that those Aramark-loving managements can easily avoid eating Aramark food?

Certainly.

That way, they would not personally suffer from Aramark's degenerating quality of food. If their main experience of Aramark was Aramark's sales force, then that would not be surprising.

Well it's not like they're daft enough to be bamboozled by sales people. How likely they are to accept dirt cheap catering tenders depends on the regulatory environment.

 

[DBT]

Is anyone else noticing the one-dimensional intellectually inconsistent view the left has of large corporations? Corporations are so greedy and profit driven that they'll poison our food, poison our air, poison our water, don't care if their product or the poison they've released into the environment kills us, will beat and enslave their employees and their children if they thought they could get away with it and could care less about their safety, and yet, they apparently aren't greedy enough to try to maximize profits doing the mundane, day to day, things it takes to run a successful business, such as ensuring good procurement and hiring competent employees for their roles.

I think the mantra of profits at all costs should die.

As should the myth/illusion of perpetual growth within finite ecosystems.

 

[ksen]

Certainly.

That way, they would not personally suffer from Aramark's degenerating quality of food. If their main experience of Aramark was Aramark's sales force, then that would not be surprising.

Well it's not like they're daft enough to be bamboozled by sales people. How likely they are to accept dirt cheap catering tenders depends on the regulatory environment.

you obviously don't know too many executives

 

[laughing dog]

Yes, but given all the perfections in the ... whatever you call it since you can't actually call it a market ... people would have sufficient knowledge to never make the wrong choice. There would never be a malinvestment, everyone would be prosperous as a result.

Of course you can call it a market. And since when does sufficient knowledge prevent people from making wrong choices?