Forum Post: A profit cap on sales would improve the standard of living for all consumers.
Posted 12 years ago on March 15, 2012, 8:01 p.m. EST by FriendlyObserverB
(1871)
This content is user submitted and not an official statement
..and stimulate the economy.
A profit cap is the answer to today's economic woes.
NO , it isnt. Let the govt stop spending money it doesn't have.
Has anyone given any thought to how any of the hundreds of ideas tossed around in forums could actually be implemented? I'm ready to back even a mediocre idea if someone had a viable plan to actually get it implemented.
Hi JenLynn,
The implementation of a profit cap would have to be a government regulation.
And though it would correct the system, there would be strong opposition.
All the ideas proposed will have some opposition, that's what I was getting at. Saying to do one thing or the other, outlining what regulations or laws someone wants to put in place is pointless unless some organization develops to push politically for change.
You are absolutely right. Would you like to take this a step further? Would you like to draft a proposal and present it to congress?
The polical organization is already in place. With democracy , freedom, and the constitution , we can present ideas for discussion to the proper authorities. Whether or not the idea will get implemented will rely on it's overall benefit to society and its final vote. Consider how many laws were passed through democratic discussion and procedure. To pass another would basically follow the same steps.
The idea of a profit cap on sales markup will require a great deal of explanation, determination and presentation. So far it has practically no support by OWS. They have their focus on campaign funding reform.
JenLynn, if you are interested in writing something up , perhaps we could work on something offline privately. In regards to a profit cap proposal.
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where is the plan again
Hi Friendly, Good post. Best Regards
A " post-card " :-)
Thanks !
There already is a profit cap. its called the intersection of the supply and demand curves. when suppliers charge what demanders perceive to be to much, they stop purchasing that product. thus lowering the price back to a point of equilibrium. If we really want to stimulate the economy then we should get rid of unions which strangle business (like the UAW) and lower the minimum wage to around 6.50. yes that would lower the amount that people would make BUT it would also employ people who couldn't find a job because businesses that couldn't afford to hire them before could finally afford to. this would also help business expand. profit caps only serve to strangle small businesses and allow the large ones to flourish. besides, we already subsidize the hell out of most food. what industries do you propose to cap profits on? who sets these profits? how are they adjusted? the whole idea of profit caps is wrong. they help the consumer in the short run and in the long run they push people out of work and close businesses. they also serve to remove any incentive to start a small business. With profit caps, the situation could arise where the owner actually makes less than the workers, so why go through all the hassle and effort to maintain a shop when you could work for a large corporation (the only kind of business that would be able to operate with capped profits)?
All the wealthy have gained their income through profits. And you want to take it away from the poor. The cap takes it away from the rich. It is the rich that are strangling the consumer with their unfettered profits. A cap is the silver bullet for capitalism.
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Yes and also a Govt. mandated wage cap for specific jobs according to it's market worth and skill level.
A Govt. mandated spending cap on personal income according to how much you make.
A Govt. mandated personal income spending filter which would stop you from purchasing items and services that the Govt. deems as non essential and possibly harmful or unhealthy to you or the environment.
A Govt. mandated monthly family budget and "purchase permission rights" to make only Govt. approved purchases,again according to Govt. regulations.
See,we could solve all our problems.
You're being silly.
Why do say that? Are these not the type of solutions OWS is looking for?
I would personally like to see government run markets all at nonprofit.
it wud only drive up prices genius
How so ?
If you limit sales, you limit supply. You limit supply at a certain demand, prices would increase reflecting the constrained supply.
I am not limiting sales, but sales" profit".
And yes this would increase demand due to an increase in sales. On high demand product the manufacturer would benefit and this would encourage investors to invest in manufacturing. With all the increase in demand. It's a win win genius.
clearly define what you mean by 'sales profit' and how do you propose to limit it? For the purpose of my amusement I am willing to listen to your hair brained idea. Go ahead. I am all ears
All points between buy and sell will be limited profit by percentage.
It is the unfettered profit that sucked all the money out of the economy. A profit cap would have prevented that.
profit as a percentage of what? And yes your second assertion about profits sucking money out of the economy is the most stupid statement i have heard here in a while. but then i dont want to give u a lesson on economics
I was giving you the lesson.
The percentage is the allowable markup. It will be capped on all middlemen.
and therefore there will be no incentive for anyone to innovate to reduce costs. in fact it will reduce all products to mere commodities and kill all entrepreneurship as we know it. but hey who am i to question. you are the wise guy here giving the lesson. seriously what gives u the confidence to even write such nonsense. guess one can get away with any crap here because everyone is brain dead.
The manufacture will have plenty of incentive to innovate and design his product , and with the increase in sales he will be very busy. The middleman, well he doesn't know anything about innovate. Probably could not even spell innovation. It's best he doesn't even open the box. He would only break it.
Guess what you are in luck. Work is low right now and I can waste an hour and get back to work from 9:30.
So yeah you say middle man doesnt innovate. let me give you a few examples across sectors where they do. This is no way an exhaustive list but might help you to understand, provided you want to.
How does Walmart or target innovate? For one, they have great demand forecasting methods so as to predict requirements across every store and reduce wastage as much as possible and decrease inventory cycle time. They also have great statistical tools and models to segment customers based on a whole range of parameters (there was an article on this in NYTimes recently) and promote products that those customers may need. Frankly the math behind this is not all that awesome but the application and insights are very helpful. Then they also innovate in supply chain and logistic. Also behavioral marketing is employed in placing of products and shelves and even the layout of the store.
How do these IT firms innovate: Well the customization is an art. You need to understand the business processes of the client very well for that. So some firms do a good job and therefore charge less while others do a fantastic jobs and charge more. SAP also grades these firms based on the quality of service.
How do ibanks innovate: One needs to analyze a firm well to find out how sound it is before investing. That's what banks do for their clients. thats just one way and there are many others too.
Do you need more?
And yes, you argument that profit as a percentage should be capped is stupid on its face. You seem to be incapable of reasoned thought. Shows poor schooling and education. You should have paid more attention in class.
Regards,
Your arrogant friendly neighborhood smartass ibanker
sorry for being so blunt and rude. initially i tried to educate people but then there is no end to it. so i have given up
really? the middleman doesnt know anything about innovation? u have some delusions dude but thats your problem not mine. if only stupidity was a crime....
Are you amused yet.
Judging by your manners you must be a great tree clmber !
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Okay. I'll bite: what is the cap? Is it the same for everything?
The cap would be a percentage.
ie. Retailers purchases product from manufacturer. The allowable markup is capped by percentage of original purchase. What that percentage will be will correlate with federal interest rates. This will insure economic stimulus.
Recently when the fed lowered interest rates , the middleman raised their profits to compensate for the flood of borrowed money. With a cap correlating to fed rates the profit cap would rise and fall according to interest rates.
Interesting. Not saying I agree with you but it is definetly something to think about.
Yes it is. And this is just the tip of the iceberg. As the saying goes. A cap on sales profits would affect the entire global economy positively.
Another idiotic post by FOB. First off do you know what the markup is in different things? Grocery store markups are 1-2%. ExxonMobil had an 8% profit. The mark up on electronic goods is so low, that the only way to profit is by huge volumes.
Cars might be a 10% mark up? I want to know with links, where are these s huge ark ups?
I've worked at places in which the retail markup on certain items was 2.5 x to 10.0x and more, a markup of between 250% and 1000%.
Ever go to Bloomingdales or Macy's? A polo shirt that cost $5.00 dollars to manufacture routinely sells for $125.00 dollars. A mattress they bought from a manufacturer for $150.00 per unit is sold for $600.000 to $800.00 dollars, even when on sale.
I'm not saying I agree with the OP's idea - I haven't thought about it enough - but to assert that ALL retail markups are always small is belied by the numbers.
Station markup - Of course some of the money you spend at the pump does go to the service station. While some consumers blame high prices on station markup, service stations typically add on a few cents per gallon. There's no set standard for how much gas stations add on to the price. Some may add just a couple of cents, while others may add as much as a dime or more. However, some states have markup laws prohibiting stations from charging less than a certain percentage over invoice from the wholesaler. These laws are designed to protect small, individually-owned gas stations from being driven out of business by large chains that can afford to slash prices at select locations.
Yes but from thst mark up, evrrything needs to be paid: wages, rent, utilities, marketing.
And high end retail like Bloomingdales is not the local grocery store. Whats the markup on gasoline? maybe 10cents.
The markup is still HUGE there, far about your 10% markup on cars. And the store's workers, for the most part, don't get paid wages. They work on commission.
As I said, I didn't know if I agreed with the OP, (in fact, come to think of it, I really DON'T agree with it at all) but you simply can't make blanket statements about markups in all of retail. It is simply inaccurate.
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Youre full of shit. Gas prices are common knowledge.
Currently, with the fed interest rates at half percent? And the markup of two and half percent is in reality a 500% markup
And that relates to grocery mark up how? Gasoline mark up how?
no, its not.
Example: I borrow $100. i pay you back $100.50 in one year. I take it and lend it ti another for a year and get back $102.50.
$103.00 is a $2.50 gain on 50 cent investment. 500 %
Dire Straits - MONEY FOR NOTHING
Apt very apt.
We have those ( greedy corrupt & supporters of same ) who apparently believe that - MONEY FOR NOTHING - is OK.
While they do not see the workers whose backs they are riding.
And that those Workers are living in - Dire Straits.
no its not. he invested $100.
Gasoline is cheaper than bottled water.