Tuesday, April 15, 2014

We Do Not Live in a Post-Scarcity World

I found another blog from the Ludwig von Mises Institute and goes into the key issue of economics: scarcity.

http://mises.org/daily/6702/We-Do-Not-Live-in-a-PostScarcity-World

William J. Anderson argues that the market is able to maximize economic efficiency by rewarding goods and services that have the lowest marginal costs:

"It is true that the advent of low marginal costs has forced new ways of retailing, but economic progress always has done that. For example, a generation ago, Wal-Mart was able to seize huge chunks of market share because the company had developed a distribution and retail strategy that made it a much lower-cost producer than were the other retailers, including Sears, J.C. Penny, and K-Mart. That does not mean markets have disappeared or are no longer relevant; likewise, Wal-Mart now finds itself under pressure from other retailers as well as the internet. Markets still prevail, but in different forms."


1 comment:

  1. I agree with this statement, but not fully. I think for companies to be successful they need to have two things as mentioned in financial statement analysis. The first is Operational Efficiency, which Wal-Mart has basically mastered and has contributed to the theory of lows marginal costs. The second, innovation and proprietary assets, will keep the engine going for companies. Shareholders want to see growth and the only for that to happen is through innovation, not just operational efficiency and low marginal costs.

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