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URL:  https://boards.fool.com/without-waste-the-profit-rate-will-be-0-zero-24990833.aspx

Subject:  Re: Here's your chance: Balance the Fed budget Date:  1/2/2007  5:26 PM
Author:  capitanfracassa Number:  200179 of 603486


Without waste, the profit rate will be 0 (Zero).

This is silly. Profit doesn't come from waste, it comes from a competitive delivery of unique value to the consumer of that value. If it were "waste" then it would not be demanded and paid for.


"unique value" rarely exists. That is the meaning of overcapacity. Competition and profits are opposites. Under perfect comepetition there are no profits. Competition creates overcapacity. There is too much of almost everything relative to the purchasing power of consumers. Waste doesn't produce value for the buyers. It destroys value so that the remaining produce becomes "unique," i.e. scarce. Scarcity commands a premium, which translates into profits.

The engineers that work for Boeing are inovative and productive. They just happen to make bombs instead of gadgets. If they were all to make gadgets, there would be no profits in making gadgets. So thanks to the goverments, Boeing shareholders have a smile on their face. And they know whom to thank. Apple's shareholders have a grin for the same reason. Although they are less likely to be aware of the government service they recieve--reduced competition. Then the bombs fall somewhere, and that means a lot of bridges and power stations and whatnot to rebuild. Rebuilding them requires loans. Loans pay interest. Higher demand for loans means higher interest, which puts a smile on the face of bondholders. Then it requires doing the actual work. All these contractors who are hired could be competing on selling you a bathroom renovation. Which means no profits because there are already too many bathroom renovations and not enough people who can afford them. So half of them are hired by Halliburton and all profit.


In addition, most wasting is paid for by the government; that increases buying power, reducing overcapacity, since overcapacity is always relative to the buying power.



Regards,
Capitanfracassa
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