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Economics

09/21/2009 4:12 PM

The GNP (Gross National Product) represents everything that is manufactured for sale within or outside this country. The products include everything from toys, jewelry, cosmetics, appliances, cars, trucks, machines, food, etc, etc. These products can be divided basically into necessary and luxury items. I would place, for example, toys, games, cosmetics, junk food, yachts, Ferrari's, Rolex watches, jewelry in the "luxury" category while such items as transportation, tools, machines, basic foods in the "necessary" category. It may not seem (to me at least) that we need all the luxury items that we have or can have. If we didn't have them, we could survive quite well on the necessities alone.

I'm not quite sure where I'm going with this. I think one point in my discussion is the amount of energy that is expended in the production of luxury items could be better utilized in the production of the necessities; oil that could be used for necessary purposes. I'm sure the women would condemn me for taking some luxuries out of the GNP; items like jewelry, beauty products, expensive clothes, etc. men also would condemn me for removing HD TV's, tobacco, football etc from the GNP list. None of the before mentioned items are necessary to sustain life (I admit they are nice to have).

During times of economic troubles, war for example, people are forced to shed the luxuries for the absolute necessities. Are we now at a point where we should be trading necessary for luxury? I have no idea what the percentage would be between luxury and necessary items. A rough guess might be 50/50. Of course this is nothing new. Retirees on a fixed income and the very poor have to forgo luxury for the necessities of life. People, who lose their jobs, have to do the same.

The emergence of a backward third world country goes through the necessity stage before it can acquire luxuries. Certain luxuries can be considered as pleasant to have, although not a necessity. In this country, I feel we overdo it to the point where our infrastructure is straining. We need to slow down a bit in order to recover.

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#1

Re: Economics

09/21/2009 4:42 PM

I'm not quite sure where I'm going with this.

I think your views are too simplistic for economics/GNP, and at one point the Phillips Curve was used but not any more because it was also found to be too simplistic.

Later on John Nash who develop an algorithm for market economies that later was found that it can be apply to different criteria. In 1994 he won the Nobel Prize for Economics.

Interesting Character.

IMO I do believe a strong manufacturing base is healthier that a service oriented one.

p911

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#2

Re: Economics

09/21/2009 4:58 PM

I probably should rephrase the title as: "Do we have too much of a good thing"?

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#3
In reply to #2

Re: Economics

09/21/2009 5:40 PM

Back in the 90's there was a luxury tax put in on high priced nonessentials, such as luxury yachts. So many company's laid off, that this even effected needed items. At the local grocery and hardware stores.

The luxury tax was appealed and eliminated. By that time the damage was done, and the company's that produced these luxury items lost market share to foreign competitors

Government found out the hard way, don't Ph#k with something they don't understand, but they won't learn.

p911

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#4
In reply to #3

Re: Economics

09/22/2009 9:28 AM

When the economy is languishing, luxury items follow suit. The out puts of these companies drop and so does their stock prices.

Their production drops, eg. Look at the Private Aviation Industry.

I hope your not suggesting that we need Government to step in, when the law of supply and demand is already on the job!

Best wishes Ronseto

K

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#5
In reply to #4

Re: Economics

09/22/2009 11:00 AM

I hope your not suggesting that we need Government to step in, when the law of supply and demand is already on the job!

Do not how one could view it that way. I am just putting forward what I have seen/experienced

when the law of supply and demand is already on the job!

Not when government steps in.

The problem was the government did step in....think that they could collect revenue from the rich buying their toys. Only sector at the time that had disposable income.

And in effect hurt the common working man, which at times seems thats what the government does best.

And when the government did step in. the demand still there from the rich, but the government kill it. Because of the luxury tax as the government called it. The rich went to foreign suppliers. And not only hurt the immediate sales, but market position for future sales.

You looked at the private aviation industry. I was looking at luxury yachts.

Palmer Johnson for one. They laid off skilled labor that was in place. It is very difficult to bring up efficiency after a down period. One just trys to minimized the down period length as short as possible. The government actually increased the length.

Thats why the OP as far as pointing that one should reduce luxury output, should look at the trickle down effect that it has. i.e. It hurt the common working man. and not the upper society. But still a good topic ronseto brought forward.

btw, I haven't learn so much about economics till you experience the down side.

p911

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#6
In reply to #5

Re: Economics

09/22/2009 11:19 AM

911, Sorry about that, but my reply was to item 1 by Ronseto,I inadvertently Posted it to your response!!!

From your statements, I am in total agreement!!

Best

K

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#7
In reply to #6

Re: Economics

09/22/2009 11:25 AM

anytime, gave me a chance to get on a soap box.

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#8
In reply to #4

Re: Economics

09/22/2009 11:59 AM

I still don't seem to be making my point. The thought in my head isn't transferring to the written word very well. (I probably should have taken more communication classes in school) Again, I will try to re-phrase. I know that it's nice to have the latest and greatest toys, but "do we really need them or as many as we now have available?" Wouldn't the energy, effort and brain power be better served by concentrating on the necessities of life? For example; all the resources that goes into making a golf ball fly a few yards more could be better utilized to improve fuel economy of a vehicle. Remember, I'm not saying we shouldn't have some luxuries, just not so many of them.

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#9
In reply to #8

Re: Economics

09/22/2009 12:12 PM

I do think I see your point. But if all we did was manufacture the necessities of life, with no toys or luxury items. How would this effect employment.

I am looking at even the bigger picture.

I do not have the stats for percentages or ratios of these luxury items to reflect on the economic impact, but I feel it is a high share in over all GNP.

I hope you see my point that allot of average conservative workers that are just making a living to produce these luxury items that would only buy the necessities.

p911

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#10
In reply to #8

Re: Economics

09/22/2009 1:18 PM

Ronseto, as long as someone will pay for the better golf ball someone else will manufacture it and sell it.

Lets say you and the little lady go to the Farmers market and she wants artichokes!

Nobody else in southern Miss.eats artichokes, well I would take a guess that none of the Farmers are going to grow them.But your wife "really likes artichokes" and is willing to pay any price to put them on her dinner table. So 1 young farmer decides to grow artichokes, and sells them to you for $35.00 ea. The other farmers see this and start growing artichokes thinking that they can make a lot of money. Soon there are too many artichokes and only 1 Mrs. Ronseto, who says I'll buy the artichokes from the farmer with the best price . Well you can guess what happens next!

Its all about supply and demand,and when you talk about "big ticket"

items like Yachts and Planes, Financing comes into play,the really rich folks don't need to borrow the money while the "I like to look rich" people do. Money is tight in an economic downturn so the sales of these items go down.etc.etc.

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#11
In reply to #8

Re: Economics

09/22/2009 10:50 PM

Ron, I live in Philly and I can walk through the poorest most depressed area of town,and guess what? ALL THE KIDS HAVE CELL PHONES! I agree with your premise but the whole rest of the world is going to buy what they want, not what they need!! K

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#12

Re: Economics

09/22/2009 11:08 PM

A lot of development occurs via luxury items.

Your golf ball that flies further can lead to development of methods of reducing air resistance on ordinary cars, or water resistance of ships (reducing transport costs).

A large number of the features of ordinary cars started their life on luxury cars, sometimes previously in F1, before becoming common practice on low cost vehicles.

The reason is probably that there is more profit margin on luxury items to carry the R&D needed. When the idea has been developed, it can then be cheapened and put into other things for the wider market.

Perhaps we need more luxury items? The trickle down effects can be unexpected, as eg the luxury tax mentioned earlier.

Maybe if the government kept it's nose out and let the market work it out, we would all be better off. (Does this make me a closet anarchist?)

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#13
In reply to #12

Re: Economics

09/22/2009 11:21 PM

No it makes you a realist, this is what I love most of all about engineers. THEY ARE PRACTICAL

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#14

Re: Economics

09/26/2009 7:59 AM

i am a strong believer in the smallest government with the fewest functions. i also believe in personal property rights and the value of a non-fiat currency....

the endgame does bother me at times

with new astounding technological advances increasing productivity by leaps and bounds....in a private ownership, capitalist economy, how can we expect demand to keep up with productivity?

does this not forshadow a dark time for capitalism, when productivity is so great that only a small fraction of those who desire employment are required to meet the demand for goods and services?

wouldn't that be a great time to be communist....and make work optional.... (i don't believe in that fairey tale either)

benbenben

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