"Free market flawed, says survey"

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By Michael Vaillancourt on 9 November 2009 - 3:49pm

I would have responded "fatally flawed": Free market flawed, says survey.

And there is very strong support around the world for governments to distribute wealth more evenly. That is backed by majorities in 22 of the 27 countries.

If there is one issue where a global consensus seems to emerge from the survey it is this: there are majorities almost everywhere wanting government to be more active in regulating business.

I wonder whether this will result in policy and political changes here in Canada. Murray Dobbin's article has the results for Canada:

Twenty per cent of Canadians said the capitalist system was "fatally flawed" and another 40 % said it could be fixed with regulation and reform. That compared with 23% and 50% respectively for those polled in the U.S.

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Carbon Tax Panacea

Submitted by David Barclay on 10 November 2009 - 6:57pm.

Beautiful unbroken ‘supply-demand-price’ curves exist only in Economics textbooks.  Each market, submarket, industry, industry segment, geographical area and culture has its own set of unique intervening factors and obstacles that have to be taken into consideration.

. governmental: policies, subsidies, special standards, tax structures, regulations

. corporate: strategies, price 'signaling' (fixing), market share, unspoken agreements, predatory pricing, dumping, quasi-monopolies, disinformation advertising, investment priorities, co-producer agreements, acquisition of the competition, too-big-to-fail

. economic: size of market, payback period, return on investment, economies of scale, available capital, long-term mission and objectives

And with globalization often, the big fish eat the little fish. The ‘best’ product does not always win.

Just One example,‘Economies of Scale’.

If Canada introduces a carbon tax but the U.S. doesn’t, Appliance manufacturers will not totally retool to produce energy-efficient appliances just for the demand in Canada – the market is too small. If they do make energy-efficient appliances, these are treated as a “specialty market”, meaning low volume, high priced.

'Specialty' strategy: charge maximum the market will bear for highest profit per item. And competition will follow suit due to the over-riding impact of economy-of-scale manufacturing and complicity; its understood - you don't cut price on specialties. You make your money here on profitability, not volume.  For consumers, payback period will be very long - a luxury item.

While the old standard appliances will remain their “commodity products”; high volume, low profit-per-each. 'Commodity' strategy: continual cost reduction, maximize volume.

Respectfully, D. Scott Barclay