Message Number: 803
From: Kevin Lochner <klochner Æ eecs.umich.edu>
Date: Sun, 9 Sep 2007 19:45:29 -0400 (EDT)
Subject: Re: mind the gap
I'd like to chime in for just a second on this one.   The fact that 
companies prefer to represent some of their data in a pie chart doesn't 
automatically validate the daddy model, you're going to have to work a 
little harder than that:

company A builds 90 widgets
company B builds 90 widgets

the total "market" for widgets is 100.

Both comapanies have still created wealth of 90 widgets, they're just 
going to have to reduce their prices for widgets in order to sell their 
inventories.  Widgets have now become cheaper because of the extra "widget 
wealth" that has been created.	Pie charts are only reflecting the fact 
that companies restrict production to maximize prices.

- k


On Sun, 9 Sep 2007, James W Mickens wrote:

>> James, I think you're empirically wrong that wealth creation is anything 
>> like a zero-sum game and I'm working on my response!
>
> I think that the basic laws of economics are against you here. Trixie's 
> example of market share is a good one. Given a finite number of people 
> willing to pay for a service, the wealth acquisition of one service provider 
> is often in direct opposition to that of another. Even if the customer base 
> is growing, there's no guarantee that there's enough demand for multiple 
> businesses to run at their full profit capacity at a given moment. There's 
> certainly not enough room for multiple businesses to expand at arbitrarily 
> large rates forever. Once the customer base for widgets reaches its 
> saturation size, consumers will buy widgets from someone who is you, or 
> someone who is not you. If they buy from you, this increases your wealth 
> while decreasing that of your competitors, and vice versa. I don't think that

> this is a radical idea. CEOs talk about stealing market share from other 
> businesses all the time. Are they fundamentally confused about how businesses

> work?
>
> ~j
>