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Forum Post: A Cap on sales profit would reduce outsourcing.

Posted 2 years ago on Feb. 13, 2012, 9:29 p.m. EST by FriendlyObserverB (1871)
This content is user submitted and not an official statement

A profit Cap would reduce outsourcing.

Here is how :

If the cap is ten percent allowable markup on sales , than an item brought in from china at $40 dollars would profit the retailer $4. But if the same item was produced domestically at $400 than the profit market up would be $40.. there fore the salesman would prefer to sell domestic made products because.. the profit would be higher on each sale.

Lets say the retailer sells furniture. and the table from china costs $200 plus tenpercent markup .. would than sell for $220 . at @0 profit for the retailer.

If the retailer buys the table domestically produced at $2000 with ten percent profit it would sell for $2200. this is a $200 dollar profit for the retailer.. with marketing tachniques the retailer will attempt to sell to the customer the item which makes the retailer the most profit.

With out the cap, the retailer buys the table from china for $200 and reslls it for $750 making $550 profit or 275% profit..

What we need to understand is the items brought in from china may be cheap but they make huge profits for the retailer , because the domestic competition is so highly priced the retailer can add on as much profit as he wants on the china product and still sell it less than the domestic product .. and his incentive is the huge profit he makes on the china product .. but withthe cap on profits his iincentive suddenly changes to selling domestic as I already explained.

108 Comments

108 Comments


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[-] 7 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Nope, doesn't work that way. WalMart undercut other, smaller, retailers by selling cheaper goods at small margins, putting local businesses out of business and fueling the exodus of manufacturers to China.

What's more, the difference of a wholesale cost of an item and its retail selling price is not pure profit. Renting a store can be very expensive. Hiring and training employees is expensive. And those expenses are different, not only in different cities, but in different parts of the same city. Store owners can have high markups and still barely break even. Profit caps hurt the small businesses in favor of big corporations, who have economies of scale on their side.

Finally, how on earth do you think something like this would pass as law? Do you really believe any business owners, especially the small struggling ones, would ever allow it to get within a hundred miles of congress?

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

"Hiring and training employees is expensive. "

not that much

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Depends. Some employers pay new employees up to 3 months for training without their doing anything to contribute to the business. At many places although they start working right away, a new employee needs up to 6 months before they are able to come up to speed. It takes resources, if not formal training, to bring a new hire into full productivity. those resources include the time other staff must spend away from their own duties to help the new hire learn policies and procedures and the "feel" of the place.

[-] 1 points by TechJunkie (3029) from Miami Beach, FL 2 years ago

Agreed. I hired somebody from this very web site three months ago. He's nearing the 90 day mark, and for the last two and a half weeks, his job has been to follow training courses. Not to work. He can't be useful to me until he has been trained, so I've had to invest a lot just in getting him to the starting line. Over the three months that he's been working, he's done maybe 3-4 weeks of real work. I'm not complaining at all, because he's going to be a very valuable asset. But not all employees just hit the ground running.

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

I understand

I think stocking and cashier take a day or so to learn

I've often seen unpaid training as a method to short new employees

[-] -2 points by FriendlyObserverB (1871) 2 years ago

the high rent is merely more greed . with A cap on profits they will be forced to lower their rent.

Show me the numbers ? Walmart is the wealthiest retailer in the world .. all because they buy for pennies and sell for dollars.. huge percentage on markup..

[-] 3 points by epa1nter (4650) from Rutherford, NJ 2 years ago

It would force nothing of the sort, and would only serve to disincentive landlords or businesses to keep the properties up. Park Avenue rents would remain higher than East Harlem ones, who sell their products for less already. So instead of helping East Harlem, it would simply ghettoise Park Avenue.

And it would decimate small businesses. As I said, the big corporations have economies of scale on their side. No small business would be able to compete.. No 600 square foot store could make a living, but a 50,000 square foot one with fewer employees per square foot, can make a killing. The one percent would just get richer faster at everyone else's expense.

And again, do you really think anyone would allow this to happen? Blood would run in the streets.

It's nice thought, but utterly unrealistic and damaging.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

if they are deincentivized to maintain their high class buildings , than maybe they weren't so high classed after all.

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

That's very clever, (and very judgmental) but does not address the issue. The issue is that it would wreck the economy, and I've tried to explain how a couple of times now.

I understand how one can get locked into an idea to the point of defending it at all cost. I've done it on occasion. The right wing doesn't do anything BUT that. But i've always considered progressivism to be superior to the right wing because if progressives come up with an idea that's shown to be wrong, they have the sense and humility to let it go. They look to evidence instead of hanging on to myth.

Let this one go. It's a non-starter.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

I've seen your debating points .. but honestly because park avenue may collapse is not reason enough to stop .

That would be like telling Thomas Jefferson a revolution would be harmful to king g3.. what would Jefferson say or do ?

[-] 2 points by epa1nter (4650) from Rutherford, NJ 2 years ago

It's not Park Avenue that is at issue. There are many problems with your idea in terms of how it would work out in the world. I haven't mentioned all of them, but only a couple.

Please understand, I'm not trying to be hard on you for its own sake. I think you're motivations are terrific. But I know that this particular idea is unworkable. I believe as surely as I believe I am typing right now that you would not have presented it if you thought is would do harm. But harm it would.

[-] 1 points by ronniepaul2012 (214) 2 years ago

Much more polite than my critique. My bluntness is a problem I will carry to the grave!!!!

FOB, I too, am sure you mean well.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

show me your thoughts .. and where you see harm .. but first show me at least three positives with a profit cap and than I know you are an honest person and we can discuss this openly further ..

Yes you have been correct in the idea the rich will lower their standards somewhat .. but there is no other way .. to create equality and still have a huge gap in wealth .. and since the gap is created unfairly than I see no harm in removing it.

your comment is welcome

[-] 2 points by epa1nter (4650) from Rutherford, NJ 2 years ago

I wish I could name 3 positive things about your idea, but I can't. That's why i oppose it. One positve is that beleaguered consumers can get a respite and have increased purchasing power temporarily by fixing prices. BUt because t would have deflationary effects, those temporary gains would be offset by greater recession.

It is a job and business killer. As i have mentioned a couple of times now, it automatically gives an HUGE, free advantage to large corporations. They would receive MORE gains and profits and ordinary workers would be shorted even more than they are now, since their only choice would be to work cheaply at large box stores that would inevitably take over all commerce. It would hand over, on a silver platter, the keys to the kingdom to the very people you don't want to have them, the 1%.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

what really happens with a cap is the profit is transferred from the retailer to the manufacturer .. where it is rightfull deserved , and by doing so employment and wages will increase in the manufacturing sector . This is where the bottom standard of living rises workers will afford to pay their bills , go on vacations, enjoy life . the american dream .. and all due to a cap on sales profits between points of buy and sell . If you could see how this works you would support the idea .. so the very fact that you do not support the cap tells me you do not understand how this works .. thanks for your patience.

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

But the retailer is the distributor. he brings together and markets a variety of goods and services to the public. Most employment is in the retail sector. By destroying the small retailer, you destroy most trade, and therefore most jobs.

[-] 0 points by FriendlyObserverB (1871) 2 years ago

well I can see why you have made the comments .. simply because you do not understand .. thanks for verifying this.

[-] 2 points by epa1nter (4650) from Rutherford, NJ 2 years ago

Thank you for rewarding my patience with an insult.

So now let me return the favor.

Your idea is adolescent. Take an economics class before your post more drivel like this. Stubborn ignorance only hurts the movement.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

where is the insult .. I was being patient with your ignorance .. but at first I thought it was arrogance .. ..you simply do not understand . its not an insult .. it's the fact and explanation why you disagree .

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

I understand exactly what you are proposing. You keep ignoring what I tell you.

You have yet to respond to the fact that there is different overhead involved in scale. That different overhead creates an advantage to large corporations. They automatically get to take everything over. When they take everything over, small business and workers are left out in the cold, begging for scraps. It actually has a name in modern economics: it is called "The Wal-Mart Effect".

Now, if you look at it from the perspective of wholesale instead of retail the problems become even more stark. And I'm frankly too tired to begin to get into that can of worms.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

which workers ? the markets or production ?and is this cap on all profits or as I suggest only on markets ..

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

All workers.

I'm tired. Look it up. Please.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

Does the Wal-Mart-Effect take into consideration a Cap on profit mark up ? than it is outdated.

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

It is all about how small markups (effectively caps on profits) on a grand scale actually hurts workers.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

I do understand your concern with this . But large or small they are both wolves trying to make a profit off the consumer.. they are middlemen and not producers worthy of respect. Why would the consumer be concerned about the middlemans profit? if a huge corporation could deliver the product for half the price .. than where is the support for your arguement? because the small guy will be out of his retail shop because his overhead can not compete with the corporations .. thats really not a concern for the consumer .. is it .. but there will still be demand for smaller locations in rural areas for example .. it all works out in proportion does it not ? .. when it comes to manufacturing ..well there is no cap , but the small guy would still need to compete with a large industry .. on certain products but again its all relevant .. .

here we are today with extreme accumulation of wealth on one end , and povertty on the other.. the real question you need to ask yourself , is this fair ? and how did this happen ? how can we change this ? or perhaps you believe things are great just the way they are .. in which case .. this discussion is over.

[-] 1 points by epa1nter (4650) from Rutherford, NJ 2 years ago

PLEASE PLEASE PLEASE google the "Wal-Mart Effect". Try to fond, if it's still available, the documentaries PBS made about the phenomena.

[-] 3 points by Okay1 (20) 2 years ago

Tariffs and outlawing outsourcing would accomplish the same things.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

look a little deeper.

[-] 2 points by ronniepaul2012 (214) 2 years ago

This post just proves why direct democracy can never work. General Assembly 'economists'. Jeesh

[-] -1 points by FriendlyObserverB (1871) 2 years ago

If it comes down to direct democracy the rich won't have a chance. I love freedom !

[-] 2 points by ronniepaul2012 (214) 2 years ago

I, too love freedom. However, direct democracy does not equal freedom.

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

direct democracy means that the people not the representatives would have to be lobbied

[-] 1 points by FriendlyObserverB (1871) 2 years ago

voting is an exercise of freedom.

[-] 1 points by ronniepaul2012 (214) 2 years ago

Yup, sure enough. That's why I never miss a chance to vote in our Representative Democracy.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

but really where in the post do I mention direct democracy? and what have the current economists offered ? are they not just a wealthymans henchman anyway ..setting up the game for themselves to win.

[-] 1 points by ronniepaul2012 (214) 2 years ago

Right here. Did I misunderstand your equating dd to freedom???

[-]0 points by FriendlyObserverB (270) 55 minutes ago

If it comes down to direct democracy the rich won't have a chance. I love freedom !

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[-] 1 points by FriendlyObserverB (1871) 2 years ago

you opened with dd not I. and the point was an insult to my post. belittling my idea and implying " it's a good thing we don't have dd.

what do you want .. a friendly discussion now ?

[-] 2 points by ronniepaul2012 (214) 2 years ago

Not really, to be quite frank,. your OP was exceptionally stupid.

Edit add: Oooops, my bad...(too much vino). You are correct, I brought dd up first. My apologies. I still say your OP was lacking in economic practicalities and dd seems to be a lynchpin of the occupy movement

[-] 0 points by FriendlyObserverB (1871) 2 years ago

Walmart made a killing in the early years by buying from china at low costs and having virtually no limit to their mark up .. and domestic just couldn't compete with walmart pricing due to labor costs .. and with those huge profits walmart grew very fast ..with currently a walmart in practically every city in north America .. the evidence that they made huge profits contradicts the claim they make very little.

[-] 0 points by Kirby (104) 2 years ago

Freedom is to be able to spend your money in the way that is best for yourself, and family, and others you might desire to help. The government(federal) has become a monster,never intended to extend into our lives like they have, taking away more and more of our freedom.

[-] 2 points by fairforall (279) 2 years ago

In your first example, if we set the cap at 50%, then the china table gets him $20 and the domestic gets him $1000 so that's better for him by 5 times in either case and still encourages domestic selling. So are you good with a 50% cap? I can calculate a 100% example for you if needed.

[-] -1 points by FriendlyObserverB (1871) 2 years ago

the point is to reduce outsourcing and encourage domestic selling as you have acknowledged . thanks. the allowable percentage cap should at least provide the retailer with an equivalent to minimum wage.

[-] 4 points by Mooks (1985) 2 years ago

Yes, that will give the retailer incentive to keep his shop open. Everyone would love to make minimum wage.

[-] -2 points by FriendlyObserverB (1871) 2 years ago

You asked the question earlier if there was a cap on loss also .. I began thinking perhaps there will be an application for a minimum wage supplement.

[-] 3 points by fairforall (279) 2 years ago

selling equivalent items for higher prices very seldom attracts consumers. When do we accept the fact we participate in a global market?

[-] -2 points by FriendlyObserverB (1871) 2 years ago

first the items are never equivalent. and second the profit incentive on the retailers part will provide incentive for the retailer to use his marketing tools to sell domestic .. there is simply more profit in it for him ..

[-] 1 points by fairforall (279) 2 years ago

no, your assumption is that buying offshore is cheaper and the "cap" gives less profit for selling cheaper items. if the domestic happens to be cheaper his incentive is to sell the foreign goods. if the items are not equivalent, then the consumer decides the quality level necessary and pays accordingly. You really should have spent an additional 5 minutes thinking through this concept.

[-] 2 points by fairforall (279) 2 years ago

FOB, think of it this way.........under your proposal/beliefs, the way a foreign manufacturer gets his products to be pushed by the salesman would be to ensure he was pricing them above the domestic mfg.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

good luck with that..

[-] 3 points by fairforall (279) 2 years ago

not sure what that means but as an offshore mfg, if I realize my products are not getting pushed because my prices are low resulting in low profits, the obvious thing to do is raise them to at least the domestic mfg's price.

question, does the saleman push the 20k ford fusion or the 25k vw jetta in your example?

[-] 1 points by FriendlyObserverB (1871) 2 years ago

you would have to ask the retailer.. if he sees a profit in it .. he would not be concerned about domestic or foreign .. profit is profit to the middleman where ever it comes from .. the more profit the better !

[-] 1 points by fairforall (279) 2 years ago

using your logic,the goal for the retailer is to pick the most costly supplier possible . does that sound like a business model you have seen that works?

of course, a component you haven't considered is the customer.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

the retailer does seem to be the evil factor in all of this doesn't he .. interesting debate.

[-] 2 points by fairforall (279) 2 years ago

there is no evil factor - we must compete in a global market. do you think the chinese/japanese/taiwanese/other ese are evil?

[-] -1 points by FriendlyObserverB (1871) 2 years ago

The middleman is evil.

[-] 1 points by fairforall (279) 2 years ago

how so?

[-] -1 points by FriendlyObserverB (1871) 2 years ago

The middleman steals profit that should belong to the manufacturer.

The middleman's only concern is profit.

The middleman destroys the momentum of a booming economy by raising profits as demand increases.

[-] -1 points by FriendlyObserverB (1871) 2 years ago

getting back to this. the salesman doesnt control the price of the ford fusion and at twenty k sales would be good domestically why would you suggest raising to the 25 k vw ?

[-] 1 points by FriendlyObserverB (1871) 2 years ago

if domestic was cheaper we wouldn't be having this conversation .. your 5 minutes are up.

[-] 1 points by fairforall (279) 2 years ago

some are, some aren't. protectionism is not the answer........learning how to compete in a global market is.

[-] 1 points by fairforall (279) 2 years ago

fob said: "The middleman steals profit that should belong to the manufacturer.

The middleman is evil.

The middleman's only concern is profit.

The middleman destroys the momentum of a booming economy by raising profits as demand increases."

just to be clear, who are you considering to be the middleman?

[-] 1 points by FriendlyObserverB (1871) 2 years ago

The cap is to be placed on all points between buy and sell. This is the middleman.

[-] 1 points by 1sealyon (434) 2 years ago

Caps tend to reduce the supply of a thing and hurts the consumer. Look at the US efforts at price controls in the early 70's. The market reacts to the loss by lowering production. Why produce more of a thing on which you lose money. Same problem with rent controls in NYC and elsewhere.

If you want to sell your car to your neighbor and she wants to buy it for $3000 but the Gov steps in and says you can't charge more than $2500 you may decide to just keep the car. Now your neighbor is stuck, she has no car and can't make it up to the mountains for that ski vacation this weekend. She cancels her dinner reservation at the Moose Head Ski Lodge, does not buy the gas needed for the trip, returns her snow-board rental, cancels the hotel reservation, and the local ski-town businesses all suffer. All because we let the Gov try to control us.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

just to clarify , the cap does not go on the producer/manufacturer , only on the middleman profit markup is capped. this will not reduce supply or production in fact it will increase due to an increase in demand created by lower middleman profits.

[-] 1 points by dalton (111) 2 years ago

that would just get rid of the middleman

[-] 1 points by FriendlyObserverB (1871) 2 years ago

would it ? or would it create a fair distribution of wealth..

how does a middleman justify his profits ? when times are good his profits are high , when times are bad his profits are low. where is the difference in work performed in relation to high or low profits .. ?

With the manufacture , his product value is increased by quality .. which earns his profit gain .. but with the middleman .. I see nothing added to the product he intends to capitalize on to justify a gain in profit ? And directly to your statement of get rid of the middleman " I strongly disagree ..

[-] 1 points by 1sealyon (434) 2 years ago

Actually the middle man provides a valuable service. The local grocery store is a great example. It would be difficult to impossible for all of the farmers, butchers, dry-goods makers, etc. to set up shops and get all of their products efficiently to the consumer. The grocery store provides this vehicle, reduces prices to the consumer because they have better buying power, saves energy,and absorbs the spoilage risk for the suppliers.

And the guy that sells his used car to his neighbor, also a middle man.

Caps tend to reduce supply and cause shortages.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

sorry that doesn't equate .

yes the middleman has value .. provides a location to gather and shop for goods .. I do not undervalue this importance.. but the cap would not prevent the middleman from having enough supply .

[-] 1 points by 1sealyon (434) 2 years ago

Caps tend to reduce supply.

The owners of the grocery stores will move on to other work that bring greater value for their efforts. This will reduce the supply of grocery stores and hurt the consumer.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

well than that is when government will take over and provide non profit store fronts .. but it would take a lot for a lazy @ss retailer to move on .. especially when moving on may mean getting off the backs of the working man and actually working for himself.. a dreadful thought in the back riders mind .. brings him nightmares even .. to think one day his free ride will be over .. ha ha hahaahahaha

[-] 1 points by dalton (111) 2 years ago

To simplistic. Takes, for most business to actually turn a profit, after costs, taxes, etc. approx. 38%

Oh, and that would be unconstitutional.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

well preventing outsourcing wasn't the cap's main objective. an after effect perhaps.

[-] 1 points by dalton (111) 2 years ago

where did I mention outsourcing?

[-] 1 points by FriendlyObserverB (1871) 2 years ago

the title of this thread: A cap on profits would reduce outsourcing. You responded , " to simplistic".

The cap on profit would not be unconstitional. The government has a responsiblity to the welfare of its citizens. Unfettered profits is harming the economy, and its citizens are being placed in harms way .. with job loss and foreclosure , the government has a responsibility to do something

[-] 1 points by dalton (111) 2 years ago

And yes, it would be unconstitutional. The government does not have a responsibility to protect us from ourselves. You are talking about Section I, Article 8 of the Constitution and I take a narrow reading of that whereas you take a broad view. As well, I take the view that Amendment 10 to the COTUS overides Section I, Article 8 leaving the power to the states.

That is where all of our actual problems are arising from. Congress has warped the COTUS and taken the power from the states and given it to the federal gov,t. The federal gov't has grown bigger and stronger, the opposite of what the founders wanted and what the citizens of today want.

As well, the Washington Post and SC Justice Ruth Bader Ginsburg do not believe in the COTUS.

http://townhall.com/columnists/chriswcox/2012/02/13/justice_ginsburg_reminds_us_what_is_at_stake_in_november

http://www.foxnews.com/politics/2012/02/10/former-dea-chief-says-3-other-federal-agencies-knew-about-furious/

http://www.nraila.org/news-issues/articles/2012/diminishing-the-constitution.aspx?s&st&ps

[-] 1 points by FriendlyObserverB (1871) 2 years ago

I was refering to the preamble, " " promote the general welfare" .

[-] 1 points by dalton (111) 2 years ago

I did not mention outsourcing. I mentioned that it takes more than 10% profit to run a business.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

well that would all depend on sales volume would it not ?

[-] 1 points by dalton (111) 2 years ago

No. It would not.

[-] 1 points by notaneoliberal (2269) 2 years ago

No need to reinvent the wheel. Tariffs are far less convoluted and are time tested and shown to work. Price controls have been tried in the past. They have always backfired. You're making something simple into something very complicated. Imagine the bureaucracy that would be needed to try to enforce such a system. Not a good plan.

[-] 1 points by FriendlyObserverB (1871) 2 years ago

A cap on profits between points of buy and sell has to my knowledge never been attempted. price controls were different. tariff is different. a tariff does not provide the consumer with a fair price created by competition. tariffs were removed to lower the cost of goods for the consumer. a cap would also lower the costs of goods for the consumer .. a tariff would raise the cost.

[-] 1 points by DanielBarton (1345) 2 years ago

Outsourcing vs Offshoring

outsourcing is just asking another company to do your work and is usually done domestically. Its like having a cleaning service do your cleaning for your building instead of hiring a private janitor.

offshoring is sending jobs over seas by either building your own factory to do it or giving it to another company

but now that we know how these two work

Capping profits is a horrible idea if anything it would send businesses running away from our market.the whole idea of making someone not have profit is absurd. The whole idea of a business is to have a a profit.

Now lets look at supply and demand, demand is high when the prices are low so more people would buy the lowered price one and the seller would make more of a profit from this option than the other. the supplier could also afford to put more on the market. Especially if the two products are the exact same. In that case people would substitute the higher price table with the lower price. To finalize this case the Americans manufacturers would make no money and the Chinese manufacturers would make all of it

This is high school economics to, so please go read up on supply and demand for products that are the substitutes before posting something like this.

[-] 0 points by FriendlyObserverB (1871) 2 years ago

well at least we agree demand is high when prices are low .. and thats exactly the what a cap will create. high demand is the fire of the economy. markets never run away when there is profit to be made..

[-] 1 points by DanielBarton (1345) 2 years ago

yeah but in your example the greater profit would be from china not from america.

and outsourcing is not always a bad thing GM does it with most of their parts and in this case most of these plants are in areas close to GM plants

[-] 0 points by FriendlyObserverB (1871) 2 years ago

please know the profit cap will not go on the manufactures price .. he can set his own price .. the cap goes on the markets .. and they never run from profit making ventures .. unless walmart wants to move to china .. let them ..someone will fill their spot here .. and yes the outsourcing - offshoring is an important clarification thanks ..

[-] 1 points by DanielBarton (1345) 2 years ago

yes but due to manufacturing cost we have a higher base price here in America. I'm sorry i cant go into why things are more here because its a multitude of things from wages to equipment it all depends on the market and item being made.

i will say on paper you idea looks great but it is not realistic it would drive manufactures to find a place to get cheaper goods aka third world countries. Capping the market is too restrictive on a market no one would go for it. The idea is too risky

[-] 0 points by FriendlyObserverB (1871) 2 years ago

but why do you say it would drive manufacturers away ? they will not be capped . to get cheaper goods .. that makes no sense ?

[-] 1 points by DanielBarton (1345) 2 years ago

http://www.investopedia.com/university/economics/economics3.asp#axzz1mMZO8xlP

it will because manufactures are fighting this battle already the Chinese are producing things too cheap for manufactures to compete. So we battle them with better made stuff and more precise stuff but the buy only what is good for his pocket and buys the cheaper item. We try to make items as cheap as possible for the consumer but sometimes that is impossible to do.

This also means that those who can buy in bulk will get an even bigger leg up. Since they can buy it so cheap they can sell it for profit and since they sell more they make more.

Also putting an artificial cap on the market which is something living is like putting a chain on a dog it has the are it can move in but it is not a free dog

[-] 1 points by FriendlyObserverB (1871) 2 years ago

Consumers buy cheap quality because they can not afford good quality. But the cap on profits has a deeper impact on this. The cap allows the consumer to afford good quality.. american quality. The cap has a compounding effect; one, it saves the consumer money , and two, the money they save allows them to shop better quality.

[-] 1 points by DanielBarton (1345) 2 years ago

but your missing the big point of this we have the right to make a profit. the chance to become rich on something is the entrepreneurs dream. by capping that you take it away. Prices will reach equilibrium overtime you cant force them.

[-] 0 points by FriendlyObserverB (1871) 2 years ago

The cap on profits creates an oppportunity of equal wealth for everyone. ..and that is the big picture. The problem today is the unbalanced wealth caused by uncontrolled profits. It is very unethical.

[-] 1 points by DanielBarton (1345) 2 years ago

It "unethical" no its called business. there is not such thing as equal wealth for everyone. It is a consumer own will to buy something at that price People who buy the ipad and BMW buy them because they weigh the cost vs need . People will spend lost of money on things because they can. Companies also already sell items for a loss too so they raise the price of other things to counterbalance these cost.

Also how do we justify all forms of art is it just free since no product or value can be put on it. Is a painting worth only 10% more than the paint put on it or acting since most guilds buy the rights to a play is the the play you see only 10% of the original cost.

this makes sense in your head because you refuse to accept things that play in effect outside of the manufacturing cost. Many things that you cant predict will happen.

this is high school economics pick up a text book and read about supply and demand before you respond to me.

[-] 0 points by FriendlyObserverB (1871) 2 years ago

May I remind you , I posted this thread. I will respond if I please.

How does a retailer justify profit?

[-] 1 points by DanielBarton (1345) 2 years ago

i still suggest you read a economic text book because ignorance in you case my be bliss but its painful to me as i try to pound basic economic principles into your head.

expansion and improvements both cost money and that money comes from profit. profit from sales that are restricted can not provide as much capital as sales that are unrestricted. unless they sell more but what if they sell that same amount then they lose money

that is basic and unless we want the business to take out loans which is what got us into this recession

[-] 0 points by FriendlyObserverB (1871) 2 years ago

in response to your comment below.

Your preofessor is wrong by no fault of her own .. this post does not get into the full detail [or enough detail ] to properly provide defence for it's value. First this is not a fixed income.. yes the percentage cap is fixed , but the volume of sales is not fixed .

2nd , the true value in this cap is not for the profit side of business but for the people who carry the world on their shoulders , the working class. so of course a business class would disagree and claim it interupts with free market value ..

If I could ask your professor and classmates one question ..

But first let me be clear, the cap is placed on profit mark up between all points of buy and sell, excluding transportation costs. The cap does not go on manufacturing, manufacturing may set any price they please. This cap on profits will bring prices down for the consumer which will increase sales , an increase in sales creates a need for resupply, this increases production in manufacturing which also creates jobs. Creating jobs will than increase consumer demand and so on. the cycle begins over.

Black Friday is a good example of how lower prices can create huge sales .. consumers will sleep in the retailers parking lot for lower prices. The cap on profits will have the same effect on the demand side of the equation.

Also consider the huge accumulation of profits at the top wealthiest individuals , it was mostly gained through profits , and is now mostly sitting idle not creating demand. A cap would prevent the huge accumulation of wealth by leaving money in the consumers wallets with the ability to make further demand on future purchases.. keeping the economy alive.. and keeping the working class alive and well ..

The business model will still beable to function as they normally would .. please consider there is the production side of business and the distribution part of business . The distribution is the segment between the manufacture and the consumer . This segment is neither skilled nor qualified to manufacture goods. They simply buy and sell.

Now the amount of demand placed on the manucturer will ultimately determine the the price of the product [with a cap in place on distribution].

so now , with a little more understanding of how this cap effects the economy, one will begin to realize the interference becomes necessary .

One more thing I would like to add. An increase in sales and jobs would also generate an increase in tax revenue. As we see globally economies are failing with governments deep in debt.

Sales profit cap = increased sales = increased demand/production = increased jobs = increased tax revenue = economic recovery.

Question : How much should the sales profit cap be ?

please forward this to your classroom.

Thank you

[-] 0 points by FriendlyObserverB (1871) 2 years ago

if they sell the same amount than why the need for expansion .. ?

and just a reminder , the cap does not go on manufacturers .. there fore they will grow according to the value of their product.

I am trying to teach you economics on an improved level . The cap on profits would benefit everyone.

[-] 2 points by DanielBarton (1345) 2 years ago

because all business expand it the step in growth the idea is to always to improving so you have a leg up on your competitiveness.

So i talked about and showed her this post this today with my business professor and the whole class she said this " the idea of a capping a market is a unproductive way to manage the market. it will reduce the competitive edge that one companies have over each other. It will also provide only a fixed income which is considered worse than variable income." i then asked would you ever cap or suggest o cap it she said " no i wouldn't because the to interference with something that moves for various reasons is a bad bet. The consumer will drive the price" then i asked could this ever be enforced to get a reply " not on a global scale it would have to be in small markets which would ruin them. This sounds good in theory but everything does." she also told me not to argue with people who don't know what they are saying

after this a few students debated whether or not this even work we all voted that this is a bad example of interference in the market place

the people have spoken, your idea is not approved

[-] 1 points by TrevorMnemonic (5827) 2 years ago

Disagree. Just pass labor laws in with trade agreements. To sell items in the US they should have to be from businesses that follow the same labor laws we have in our country. Tada. No more sweat shop labor.

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[-] 0 points by smellyowsloozer (-51) 2 years ago

Spoken like a true communist. Price controls. Ask Cuba how well that's working i out for them. Or just ask the people who are floating here in inner tubes to get out of there as they wash up on Miami Beach

[-] 1 points by FriendlyObserverB (1871) 2 years ago

I know , at first it looks like price control .. but really it is not .. it is something much more efficient and ensures a fair distribution of wealth and economical well being.

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[-] -1 points by tomahawk99 (-26) 2 years ago

i like to say this first, F$% Communist China. Having said that, i'd propose taxing imports from China , go after Chinese counterfeiters, and industrial spies and hackers. Lower taxes to encourage key manufacturers to stay here. If they can't relocate to U.S. propose Mexico to help boost their economy. i don't think your idea of a profit cap would fly. Even import taxes would be difficult as would trade wars, but at this point who cares, China cheats and lies on everything anyway, lets go and beat those commie bastards.

[-] -1 points by smellyowsloozer (-51) 2 years ago

Is see...cheap goods from China only make "huge profits" for the retailer.

Apparently the cheap prices the consumer pays, or the jobs for the workers at the huge retailer now have (and pay taxes on), or the taxes the huge retailer pays... doesn't count in the world of the small minded socialist.

Get used to it you fucking morons...it's a world economy..it ain't going away

[-] 1 points by FriendlyObserverB (1871) 2 years ago

It must be tough going to work everyday knowing you sold out your fellow countrymen.

[-] -1 points by smellyowsloozer (-51) 2 years ago

Must be tough going to work everyday....oh wait. I forgot....you guys DON"T work. Nevermind

[-] -1 points by BradB (2693) from Washington, DC 2 years ago

there is nothing left to outsource ... we do not manufacture anything anymore...

[-] 2 points by fairforall (279) 2 years ago

you should get out more.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

yeah... probably ... but it's close to true

[-] 1 points by fairforall (279) 2 years ago

not even close.