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Subject:  Re: Here's your chance: Balance the Fed budget Date:  1/2/2007  9:18 PM
Author:  Dwdonhoff Number:  200205 of 603176

Hi Mish,

By what logic?
By common sense: If there is a profit then competition for profits will tend to drive that profit towards zero over time

"Towards" yes... but never "INTO zero." Competition will almost never kill it's own life, instead it will shange the playing field.

You cannot find a market (ANY market) with zero profit. Again, that's like a 'healthy basketball game' where there is no scoring. (We'll ignore hockey for this metaphor! ;~)

There is a profit for the production of bombs but only at the expense of taxpayers subsidizing those profits.

Right... else there is no realistic demand for bombs. Bombs are a very poor competitive tool used by nations. The only semi-intelligent use for a bomb is as an unused threat... unfortunately, that threat is only credible after proven effectiveness (sting) of the threat. The stupidest and most economically insidious use of a bomb is pro-active employment of it for it's most destructive purposes.

As for the profit for non-bomb making non-government sponsored engineers, they make whatever they are entitled to so your argument is meaningless.

The fact that non-bomb engineers freely choose to gainfully work at whatever they will makes MY argument meaningless????

I think you've confused my points with the Capitan's.

Over time those profits would shrink and we see it now with global wage arbitrage and increasing pressures on the middle class. Again, that is not only what logic would dictate but what is actually happening in practice.

By the term "those profits" (in context of your paragraph) I have to assume you are referring to the profits of bomb-making. Toward this, there is very little global wage arbitrage, as the design and manufacture of war weapons is considered a "security issue" and competition is virtually eliminated by government control.

If you are referring to the profits of the NON-bomb-making engineers... we must assume each is ALREADY employed in a relatively efficient engineering and manufacturing market. If/As his employer is squeezed in one type of manufacturing practice, it will naturally shift to a different form, aspect, or niche where it can create a more unique value distinction, which will then yield a greater profit.

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