High Taxes Send Companies Away

[The Terrible Sweal]

... it can't be the case that Sweden's socialist measures alone have given her better life expectancy, because Hong Kong has even less socialist measures than the USA and yet has a higher life expectancy than either. Even if Swedish socialism has been partly responsible for the increase, it can't be a major part because the near-total absence of such measures in Hong Kong didn't stop them exceeding Swedish life expectancy ...

That is a possible, but not necessary, conclusion. It is equally possible that Swedish longevity has been obtained through social welfare and that Hong Kong's has been acheived through some other process (e.g. concentration of population near medical care facilities).

I'm saying that's incomplete, because it ignores the fact that substantial value is obtained by Swedes independent of the quantum of their income.

And what is that?

Pretty much the things you already acknowledged, though I probably view them as being more valuable than you would.

You said "It's macro benefit is stability, efficiency and flexibility in the labor market." In that vein, I would think that the Japanese scheme of job retention and retraining would work better than the scheme to let people lose their jobs and then redistribute wealth from the currently-employed to them.

Again, you misdescribe it. Canada's UI system has generated a surplus from premium payments for many years now. By sharing the risk of short term unemployment, it acheives the three benefits I listed.

But Mises' point is that, all else being equal, a product that has a potential market of 100 will almost certainly make less profit (and a lesser return on investment too) than one that has a potential market of 1,000,000.

Mises is wrong. Look:

Company A

# units = 100

Product A cost to market: $10,000/unit

Market Price = $100,000/unit

Revenue: 10M

Profit: 9M

Company B

# units = 1,000,000

Product B cost to market: $ 0.10/unit

Market price = $ 1.00/unit

Revenue= $1,000,000

Profit = $900,000

[Hugo]

One statement says that the poor and the middle classes in the US consume the same amounts of basics. Another says that the poor consume 100% more protein. Which is it?

Both, and it's the same source: the US Census Bureau. They consume the same amount of staples, but 100% more protein.

I suspect the latter and that the protein is from cheap ground meat since the poor in the USA cannot afford a better diet.

You suspect. Well, when you have some evidence, I'll consider it.

The "poor" in the US are worse off than in any other Western state.

Based on what evidence?

You continually avoid the reality that the bottom 20% in the US have lower incomes and wealth than in any other advanced nation.

Based on what evidence?

It is, in fact, part of the problem of poverty in that in Europe, the denser occupancies lead to superior social arrangements and to mobility that the poor in the US (and Canada) do not have.

We're not talking about population density here, we're talking about living space per individual. If 2000 people live in high-rise apartments with 1000 ft2 of living space each, that's dense population. If those same people live in detached houses with 500 ft2 of living space, that's less population density.

Besides, the "denser occupancies" were a bane of the Industrial Revolution, leading to disease, overcrowding, and so forth. Now they're a good thing suddenly?

One huge advantage Sweden has over the US is in healthcare. Healthcare costs in the US reduce millions to poverty but none in Sweden. For 6% or so of GDP, Swedws have a first class health system while, for 14%, the US has the worst Wetern system for half of its people - the lower half of course.

Where is the evidence that the US healthcare system is failing Americans more than the Swedish system is failing Swedes, please?

Pensions are not a "wealth redistribution" no matter what your Austrian school says. They are something that all have paid into and are getting the return on their investment.

Wrong. There are no savings accounts for pensioners. Taxpayers pay in and pensioners draw out on the same money. As TWS says:

Canada's UI system has generated a surplus from premium payments for many years now.

If it were a savings system, how could there be a surplus? There's no such thing as "surplus savings". However, there can be a surplus if you're redistributing wealth and you find that more people paid in than withdrew!

The difference between life expectancy in Hong Kong and Sweden is not an economic calculation only. It is genetic and lifestyle.

Based on what evidence?

The lack of pensions in Hong Kong is a deception. Hong Konk did not have the economic drags on the individual that we have suffered from in the past.

Based on what evidence?

That is changing and Chinese from Hong Kong quickly lose their advantage when transferred to a Western lifestyle.

Based on what evidence?

People also work because they must work. It is something inherent in human nature and humans have never merely lain on the cave floor until their stomachs began to rumble. The need is not merely material

I don't think many people work for spiritual satisfaction.

It is equally possible that Swedish longevity has been obtained through social welfare and that Hong Kong's has been acheived through some other process (e.g. concentration of population near medical care facilities).

Sweden has 287 doctors per 100,000 people. The USA has 279. Hong Kong has 160. I don't think it's access to medical care facilities.

Canada's UI system has generated a surplus from premium payments for many years now. By sharing the risk of short term unemployment, it acheives the three benefits I listed.

This scheme dates back to the New Deal, and even then that story didn't wash. FDR's government didn't try to achieve the benefits you list with UI alone, instead they embarked on massive public spending and job creation programmes. UI was primarily a compassionate scheme to try and abrogate poverty.

Mises is wrong. Look:

Look nothing! I specifically said "all else being equal, a product that has a potential market of 100 will almost certainly make less profit... than one that has a potential market of 1,000,000." What you did was make an example where all else was decidedly unequal, in fact, your "cost to market" shows a staggering disparity of almost 10,000,000%!

Run the equation again and this time, make "all else equal" as I originally said:

Company A

# units = 100

Product A cost to market: $100/unit

Market Price = $1,000/unit

Revenue: $100,000

Profit: $90,000

Company B

# units = 1,000,000

Product B cost to market: $ 100/unit

Market price = $ 1,000/unit

Revenue= $1,000,000,000

Profit = $900,000,000

Your theorem, besides, is not borne out in practice. Mass-market car manufacturers are doing far better than niche luxury manufacturers, like Ford vs. Rolls-Royce. No, wait: Rolls-Royce autos is out of business. Compare any high-end computer manufacturer (Cray, Sun, SGI) to Dell.

If what you say is true, provide a few real-world examples of niche market companies who are doing better than their mass-market counterparts.

Besides, this whole comparison is ridiculous. You are claiming that the wealth of a company is not measured in overall profits but in profit per unit, which is patently absurd. To investors, profit per unit takes a backseat to overall profit. If what you said was true, companies wouldn't bother trying to expand!

[The Terrible Sweal]

I have to point out that 12% of Americans are below the poverty line compared to 26% of Swedes (nationbynation.com and CIA World Factbook).

Here we go again. What poverty line? How measured? Including and excluding what?

Canada's UI system has generated a surplus from premium payments for many years now.

If it were a savings system, how could there be a surplus? There's no such thing as "surplus savings". However, there can be a surplus if you're redistributing wealth and you find that more people paid in than withdrew!

I feel you are improperly recruiting my comment to support you psotion there. First, you're discussing (unfunded government) pensions, but use my comment about UI. As I pointed out earlier, these are different programs with different characteristics.

As regards unfunded public pension plans, they are subject to a range of publicpoliy criticsm in their form and function. Most of those would be met by the simple application of actuarial reality to the pricing of the benefit. I.e. make it fund itself properly. If this were done, the program would effectivly become a savings/investment program.

In their present form, it is not untrue to say unfunded public pensions are a wealth redistribution program. However, in terms of left/right political economy, they redistibute wealth in very peculiar directions and theory fom either camp seems to overlook that.

UI has been generating a surplus because of improper pricing as well. Particpants have been charged more than the cost of the benefit, over recent periods. Instead of arguably legitimate uses (reduced premiums, risk mitigation, or cost control) the surplus as been approptirated into general funds by the federal government and spent on governemtn activities.

UI itself is therefor not an income redistribution program.

It is equally possible that Swedish longevity has been obtained through social welfare and that Hong Kong's has been acheived through some other process (e.g. concentration of population near medical care facilities).

Sweden has 287 doctors per 100,000 people. The USA has 279. Hong Kong has 160. I don't think it's access to medical care facilities.

There are two difficlties with this response.

First, you are addressing my example, but not my point of logic. Whatever the cause, longevity in Hong Kong does not disprove that Sweden's longevity is achieved through social welfare.

Second, your counterpoint actually supports my example. Possibly, concentration and proximity allows a mere 160 doctors to serve Hong Kong as well as many more do in other places.

This scheme dates back to the New Deal, ...

I'm not interested in that. I'm describing Canada's UI program.

Look nothing! I specifically said "all else being equal, a product that has a potential market of 100 will almost certainly make less profit... than one that has a potential market of 1,000,000." What you did was make an example where all else was decidedly unequal, in fact, your "cost to market" shows a staggering disparity of almost 10,000,000%!

Good grief Hugo! You can't just say "all else being equal" to eliminate the very point of the exercise! Mises theory is (supposedly) that as a general rule, a mass market will better returns. My answer is that this doesn't hold as a general rule because margins matter just as much as scale.

You can't meet that criticism by just saying 'Yes, but hold margins equal...!'

If what you say is true, provide a few real-world examples of niche market companies who are doing better than their mass-market counterparts.

That’s not the issue. High cost sellers in low margin areas will not succeed, obviously. 'If what I say is true', all I need to show you is what I aready have, the obvious: returns depend on scale AND margin.

Besides, this whole comparison is ridiculous. You are claiming that the wealth of a company is not measured in overall profits but in profit per unit, which is patently absurd.

I'm not sure what their cause is, but your frequent imprecisions tend to produce fallacies of ambiguity in discussions. I am most decidely NOT "claiming the wealth of a company is not measured in overall profits but in profit per unit". I don't understand how you can even say that since we've already been through the BECOME discussion once already. Mises (apparently) is claiming that the return of high volume business as a general rule will be better than lower volumes. He is wrong.

[Guest eureka]

Based on the evidence of your eyes and ears And of the application of intelligence - you might find that a difficult idea.

There is nothing there that has not been written about a thousand times.

Hugo, try reading Wilde's, "The Decay of Lying." He identifies a couple of problems with young intellectuals. One is the "failing of accuracy." That is the obsession with accuracy that stifles creativity, imagination and speculative ability.

[Hugo]

Based on the evidence of your eyes and ears And of the application of intelligence - you might find that a difficult idea.

There is nothing there that has not been written about a thousand times.

Yeah, yeah, but do you have any evidence?

That is the obsession with accuracy that stifles creativity, imagination and speculative ability.

I see. So basically, I should forget about trying to accurately answer the question and spend my time imagining and speculating about it. Is that what you've been doing?

Here we go again. What poverty line? How measured? Including and excluding what?

I edited that out because I realised that it didn't take into account government subsidy. Sweden has no official data on poverty levels, so it's hard to be certain anyway.

In their present form, it is not untrue to say unfunded public pensions are a wealth redistribution program. However, in terms of left/right political economy, they redistibute wealth in very peculiar directions and theory fom either camp seems to overlook that.

Check out the Austrian take on it.

In their present form, it is not untrue to say unfunded public pensions are a wealth redistribution program.

Exactly.

UI itself is therefor not an income redistribution program.

No, the way it is practiced in Canada it is, as you point out, neither insurance nor wealth redistribution. It's more like another tax since the money gets siphoned off into other government programmes. If it were an insurance scheme, each individual account would be paid into and then drawn out of in the event of need. If it were a wealth redistribution scheme, all collected money would be distributed to the unemployed. But neither of these things happen.

Just to clarify, I'm speaking of UI as it is practiced, not as it should be. In my opinion there's nothing wrong with savings for dire need - but I don't see why the government needs to monopolise the whole programme.

First, you are addressing my example, but not my point of logic. Whatever the cause, longevity in Hong Kong does not disprove that Sweden's longevity is achieved through social welfare.

It is certainly evidence that social welfare is not necessary for longevity, though. And based upon the Hong Kong example, it certainly is not outrageous to suggest that Sweden does not need public medicine for its longevity.

In another example, Singapore has an entirely private healthcare system and the same life expectancy as Sweden.

Possibly, concentration and proximity allows a mere 160 doctors to serve Hong Kong as well as many more do in other places.

If we isolate Stockholm (thus making it a purely urban populace, like Hong Kong), the life expectancy is for females is 81 and males, 75. In Hong Kong, 84.3 years for females and 78.6 years for males. This virtually eliminates the questions of proximity and concentration, since urban centers make facilities pretty much universally accessible.

Mises theory is (supposedly) that as a general rule, a mass market will better returns. My answer is that this doesn't hold as a general rule because margins matter just as much as scale.

He means the total return, and no, he isn't wrong. Big business takes home more cash than niche enterprises. That is a fact you haven't disputed. Margin per unit, which you are discussing, is a different concept. They are written in two different places in company record books. When you are talking about overall profit (as Mises was), margin is irrelevant. Net profit is what's being measured.

[I Miss Trudeau]

Look nothing! I specifically said "all else being equal, a product that has a potential market of 100 will almost certainly make less profit... than one that has a potential market of 1,000,000." What you did was make an example where all else was decidedly unequal, in fact, your "cost to market" shows a staggering disparity of almost 10,000,000%!

Fair enough. Let me translate Mises point, then, without any loss of meaning:

"Blah blah blah, blah, blah blah blah, blah!"

This is apparently one of our greatest economic thinkers?

I suppose his only real rival is the one who recently produced a shocking paper demonstrating that 2 and 2 is 4?

[Guest eureka]

Rwo plus two equals 4 is hug's dictum. Unfortunately, he has not yet discovered that 4 is only a number and one set of two may be much more powerful than another.

[The Terrible Sweal]

... And based upon the Hong Kong example, it certainly is not outrageous to suggest that Sweden does not need public medicine for its longevity.

Not outrageous, just extremely speculative.

Mises theory is (supposedly) that as a general rule, a mass market will better returns. My answer is that this doesn't hold as a general rule because margins matter just as much as scale.

He means the total return, ...

Really? Then it's a point that would be hardly worth making: 'bigger pools of capital are bigger than smaller pools of capital'.

I thought Mises was proposing that the untrammelled market would provide the need of the poor because of the attractiveness of mass markets. Ergo, he would be suggesting that mass markets are more profitable. (Which, as I have shown, does not hold.)

[Black Dog]

Canada is the least costly place to conduct business

[Grantler]

Canada is indeed not the most costly place to conduct business if you take away the health care costs companies must pay that are not tallied into the corporate tax rates.

[Hugo]

Really? Then it's a point that would be hardly worth making: 'bigger pools of capital are bigger than smaller pools of capital'.

The point is that bigger enterprises make more profit. You dispute this with talk of return per unit, but if that's true, then you go ahead and make something for $10 and sell it for $90, and I'll make a hundred and sell them for $20. According to you, you'll be richer, even though you end up with $80 in your pocket and I laugh all the way to the bank with $1000.

I thought Mises was proposing that the untrammelled market would provide the need of the poor because of the attractiveness of mass markets. Ergo, he would be suggesting that mass markets are more profitable.

They are. You're just trying to quibble by claiming that "profit" should not be measured in net for the business but only per unit sold.

Not outrageous, just extremely speculative.

Well, I could say the same for your arguments.

There's more to consider. For instance, between 1970 and 2003, American life expectancy increased by 7.4 years, whereas Denmark in the same period only saw an increase of little more than half of that, and Sweden only improved by 6.

The Hong Kong example proves that public pensions are not necessary for longevity. The Singapore and USA examples prove that socialised medicine is not necessary for health. Bearing in mind that public institutions of this kind have an alarming, indeed universal, tendency for waste, corruption, inefficiency, stagnation etc., and seeing that these institutions are apparently unnecessary, would it not be better to pursue other options for health and longevity besides state-provided ones?

Furthermore, the fact that the Scandinavian nations can be beaten in pretty much all metrics for standard of living, and not only that but beaten by more capitalistic countries, puts paid to Blackdog's original assertion that the Scandinavians have built themselves the best standard of living in the world. It simply isn't true.

[The Terrible Sweal]

The point is that bigger enterprises make more profit.

But focusing on absolute returns rather than on the rate of return makes a mockery of the very point (I think) you're trying to make. Investing is driven by the return. If you can invest $100 in a large company for a return of 1% or in a small company for a return of 9%, which one would you chose?

You dispute this with talk of return per unit, but if that's true, then you go ahead and make something for $10 and sell it for $90, and I'll make a hundred and sell them for $20. According to you, you'll be richer, even though you end up with $80 in your pocket and I laugh all the way to the bank with $1000.

???

If I can sell mine for $90, don't I make more money?

If I can't sell mine for $90, you've just recycled an example I've already dealt with a couple of posts above.

I thought Mises was proposing that the untrammelled market would provide the need of the poor because of the attractiveness of mass markets. Ergo, he would be suggesting that mass markets are more profitable.

They are. You're just trying to quibble by claiming that "profit" should not be measured in net for the business but only per unit sold.

First, I'm only using unit costs and margins to simplify and demonstrate the real point about profitability.

This is not merely quibbling. Rate of Return is the relevant question when assessing incentive to invest. Ergo, if Mises is purporting to identify a general rule about investment on something else that ignores the rate of return, he is simply not making any sense.

Furthermore, the fact that the Scandinavian nations can be beaten in pretty much all metrics for standard of living,

Oh really? What is your evidence?

[Hugo]

Investing is driven by the return.

You're trying to confuse the issue. You say that investment is driven by the return, and then try to sneak in the qualifier of return-per-unit, which isn't the same thing at all. In any case, investing is driven by the return on investment, and not on the profit per unit of the enterprise that is invested in.

If I can sell mine for $90, don't I make more money?

No. I get $1000 in my pocket, after costs. You only get $80. Last time I checked, 1000>80.

This is not merely quibbling. Rate of Return is the relevant question when assessing incentive to invest.

No. Net turnover, net revenue and net profit are the key financial indicators of a company. When considering investment, cash reserves and market share are also considered crucial. Profit-per-unit takes a backseat to all of these. Dell profit-per-unit is a lot slimmer than Alienware, but nobody denies that Dell generates greater net profit.

Oh really? What is your evidence?

We've been discussing my evidence for 5 pages. Americans are richer and have a lot more consumer goods and creature comforts. Hong-Kongers don't (didn't) have state pensions and live longer anyway. Singaporeans don't have any state healthcare and live just as long. It's also a fact that the Scandinavian countries are rapidly running out of money, with stagnating economies, and stagnation in the pace of their achievements. Swedish and Danish economic growth is nonexistent, and their life expectancy increases have failed to keep pace with less socialist nations.

[Guest eureka]

Sometimes I wonder about you and your IQ, Hugo. You persistently peddle the same unthought out malarkey. You seem able only to see the side of any coin that is pictured in whatever book you draw your "wisdom" from.

HongKong, as I pointed out to somewhere, did not need state pensions for two reasons. First, a culture that was somewhat similar to when the West also did not need state pensions.

Seond, its economic circumstances allowed that culture to thrive.

This may be about to change.

Life expectancy may not be increasing as much in those Scandivanian countries for the very simple and obvious reason that they has already achieved what some others are now striving for: America not very successfully since its gains are not shared by the lower stratas of society.

Scandinavian countries are not "running out of money;" they are not "stagnating;" and their growth is not "non-existent."

You have been given the evidence for that in the past, but no evidence that does not fit your little ideological mindset is permissible, is it.

[The Terrible Sweal]

You're trying to confuse the issue. You say that investment is driven by the return, and then try to sneak in the qualifier of return-per-unit, which isn't the same thing at all.

You may be confused, but it is not because of me. I am not sneaking in anything. The point of investing is to earn a return. Return is measured in the amount received as a proportion of the amount invested.

In any case, investing is driven by the return on investment, and  not on the profit per unit of the enterprise that is invested in.

This is really a side point. But look, if you are unaware that there is a profoundly robust relationship between return on investment and profit per unit, then it will take more work than I'm ready to do to edify you.

This is not merely quibbling. Rate of Return is the relevant question when assessing incentive to invest.

No. Net turnover, net revenue and net profit are the key financial indicators of a company.

We are not talking about the 'financial indicators of a company', whatever you may imagine them to be.

Do you deny that rate of return is the relevant question when assessing incentive to invest????

When considering investment, cash reserves and market share are also considered crucial.

Possibly. AS INDICATORS OF THE LIKELYHOOD OF A DESIRE RATE OF RETURN.

Come on Hugo, your love of a dispute is leading you into an absurd argument.

Profit-per-unit takes a backseat to all of these. Dell profit-per-unit is a lot slimmer than Alienware,  but nobody denies that Dell generates greater net profit.

BUT WHAT IS THE RATE OF RETURN???

Oh really? What is your evidence?

We've been discussing my evidence for 5 pages.

We've been refuting your evidence for 5 pages, so when you tendered the same tired lines, I assumed you had additional evidence you wanted considered.

Americans are richer ...

But by what measure? You seem to have forgotten the larger part of the exchanges which have transpired on this thread so far.

It's also a fact that the Scandinavian countries are rapidly running out of money, with stagnating economies, and stagnation in the pace of their achievements.

Again, where is your evidence?

[Hugo]

HongKong, as I pointed out to somewhere, did not need state pensions for two reasons. First, a culture that was somewhat similar to when the West also did not need state pensions.

Seond, its economic circumstances allowed that culture to thrive.

For the second time now, back it up. Prove it. You do understand the need to prove statements in debate, don't you?

Life expectancy may not be increasing as much in those Scandivanian countries for the very simple and obvious reason that they has already achieved what some others are now striving for

So they set a goal, reached it, and then gave up trying to get anything better? Nonsense. That runs contrary to everything about human nature.

Scandinavian countries are not "running out of money;" they are not "stagnating;" and their growth is not "non-existent."

For instance, Swedish economic growth has been slow since 1950 and very slow since 1970. This isn't up for debate, it is a fact. Check OECD, check the CIA Factbook.

Now, I might ask you to prove your assertions. However, I know this is a waste of time, since you consider imagination and speculation superior to research and facts.

You have been given the evidence for that in the past, but no evidence that does not fit your little ideological mindset is permissible, is it.

You've cited evidence? I must have missed that. Where was it again?

[Hugo]

The point of investing is to earn a return. Return is measured in the amount received as a proportion of the amount invested.

What you are forgetting is that the ceiling for returns from a niche market is much lower than for a mass market. Niche markets might offer a better return, but the limit of return is quickly reached. Mass markets offer less return per unit, but they scale far higher.

Do you deny that rate of return is the relevant question when assessing incentive to invest????

It's one of them. But wealth is not measured in rate of return, and wealth was what von Mises was discussing.

We've been refuting your evidence for 5 pages, so when you tendered the same tire lines, I assumed you had additional evidence you wanted considered.

Where did you refute my evidence? I don't see any dispute that Americans have more consumer goods and higher incomes or that Hong Kongers and Singaporeans live as long or longer than Scandinavians! And this is my evidence thus far.

But by what measure? You seem to have forgotten the larger part of the exchanges which have transpired on this thread so far.

By the measure of both parity-adjusted income and the material standard of living. You seem to have forgotten more than I.

Again, where is your evidence?

Link 1

Link 2

Solving the problem of extremely slow economic growth has become a major priority for the Swedish government.

[Guest eureka]

Speculation and imagination often are superior to "evidnce, Hugo: particularly where evidence is disputed. You are living proof of the fallibility of evidential argument and of the possibility of failure of the imagination - both.

What I said about Hong Kong requires only some understanding of the world - not some statistics. Statistics only serve to cause investigation of the reasons. That has now been explained to you.

As for economic groth, we have been through all that before. Then, your focus was on Denmark where you were shown to be wrong on all counts.

[Hugo]

Speculation and imagination often are superior to "evidnce, Hugo: particularly where evidence is disputed.

Only if you're writing fiction. We aren't. We are discussing the world as it is, not as you think it ought to be or as you imagine it. Perhaps the superior life expectancy in Hong Kong is due to magic somehow? The wizard Merlin has appeared and cast spells of longevity over the people? I don't think so. Get with the programme.

What I said about Hong Kong requires only some understanding of the world - not some statistics.

No, it requires some evidence. You are making claims that the longevity of Hong Kongers is due to genetic factors or some other unspecified factor (maybe one you imagined). If this is the case, it shouldn't be too hard for you to find a study showing that Asians, or Chinese, or Cantonese people naturally live longer due to genetic factors.

As for economic groth, we have been through all that before. Then, your focus was on Denmark where you were shown to be wrong on all counts.

I was shown to be wrong? Where? I've reviewed the thread and saw no such thing. Perhaps you'll quote or link. But I doubt it, because according to you, imagining that I was shown to be wrong is just as good as it actually happening.

So what you mean is, "I wish you had been wrong." Who is the one with the blinkered worldview, exactly? I see you refusing to accept or even read empirical evidence in favour of your self-confessed imaginative, speculative conclusions. You have blinders on, and the sad thing is that you put them there.

All those willing to discuss the real world are welcome to debate this with me. However, Eureka, if you want to discuss your fantasy worlds I suggest you set up your own forum. I won't join it, because I stopped believing in magic, the Tooth Fairy, Santa Claus and so on a long, long time ago.

[The Terrible Sweal]

What you are forgetting is that the ceiling for returns from a niche market is much lower than for a mass market.  Niche markets might offer a better return, but the limit of return is quickly reached.

Oh, I'm not forgetting it. Since it amounts to a restatement of your/Mises erroneous position, using different words, what I'm doing is denying/refuting it.

Rather than chase our rhetorical tails, however, let's go back to the basic points.

1. Investment is driven by a desire for a return, and selected based on the rate of return offered (with the risk calculated in the return numbers.

2. Rate of return is a calculation: net return/amount invested.

3. Net return is a function of Margin and Scale.

Is there any of that so far that you disagree with?

But wealth is not measured in rate of return, and wealth was what von Mises was discussing.

I thoguht he was discussing wealth generation, and what it implies about investment choice. Perhaps it would be useful for you to give a broad reclarification of Mises point so we don'tend up conferring pointlessly.

We've been refuting your evidence for 5 pages, so when you tendered the same tire lines, I assumed you had additional evidence you wanted considered.

Where did you refute my evidence? I don't see any dispute that Americans have more consumer goods and higher incomes or that Hong Kongers and Singaporeans live as long or longer than Scandinavians!

Ignoring you interlocutors points is an interesting approach to conversation. Regarding consumer goods(and disposable income), I have disputed that they represent a useful picture of quality of life. Your answer to that point was the relevant but not exhaustive life expectancy discussion. As I pointed out, life expectancy is also difficult to draw conclusions about because of the uncertainty of causes and effects. (The italisized portions highlight the refutations I have tendered.)

[The Terrible Sweal]

...

Perhaps the superior life expectancy in Hong Kong is due to magic somehow? The wizard Merlin has appeared and cast spells of longevity over the people?

Exactly. Conjectures about the life expectancy in Hong Kong are entirely just that. Hence, life expectancy figures in Hong Kong are of very little probative value in this discussion. Thank you for making this point so eloquently clear!

[Hugo]

Is there any of that so far that you disagree with?

No. What I will say is that larger enterprises offer better return on investment beyond a certain point. Because a niche market is necessarily very limited, beyond a given level greater investment will not generate any returns. Therefore, with larger investments, larger enterprises offer greater return on the investment. So if you only have $10, better to invest in your product and sell it for $90. But if you have $1000, better to invest in mine, since the same $1000 invested in your niche enterprise will still probably only generate a revenue of $90 or not much more.

For further illustration, just because you build one hundred thousand Ferraris doesn't mean you can sell them. On the other hand, if you invest that money in building one hundred thousand Fords, you'll probably sell them all. Hence, the rate of return on Fords is a lot greater.

I thoguht he was discussing wealth generation, and what it implies about investment choice. Perhaps it would be useful for you to give a broad reclarification of Mises point so we don'tend up conferring pointlessly.

Von Mises has simply said that a capitalist can become a lot wealthier if he pursues a mass market than if he settles on supplying a niche. This might seem an obvious point, but very many people don't get it. You see, the point refutes a widely held belief: that capitalists are evil, greedy, and fleecing the consumer. Evil and greedy they may be (although such terms are subjective), but the consumer is dictating to them, and not vice versa. If a capitalist doesn't heed the wishes of the masses, he'll fail in selling to them and won't get rich (or as rich).

Regarding consumer goods(and disposable income), I have disputed that they represent a useful picture of quality of life. Your answer to that point was the relevant but not exhaustive life expectancy discussion.

You have not been specific about how you measure "quality of life". Indeed, if we take Swedish opinions on the pace of life and compare them to American ones, we find that Swedes believe their quality of life is lower.

You have said that the Swedes have more social programmes, but in my estimation the end goal of such social programmes is to combat poverty (since stabilizing the labour market etc. is just a means to getting more people employed, which is a means to more money, which is a means to ending poverty). If the Swedes have sacrificed their incomes and consumer goods for less poverty, then we should expect that the USA has much greater poverty than Sweden, but this is not the case, as the US Census data I have already cited shows. Indeed, we often find that "poor" Americans are better off materially than the average Swede.

Conjectures about the life expectancy in Hong Kong are entirely just that. Hence, life expectancy figures in Hong Kong are of very little probative value in this discussion. Thank you for making this point so eloquently clear!

My point is that neither a state pension scheme nor state healthcare is evidently necessary for longevity. Hong Kong and Singapore prove that. Whatever causes their longevity, it isn't a state pension scheme (which Hong Kong lacks) or state healthcare (which Singapore lacks).

Eureka's talk of genetic factors is just about unproveable, since ethnic groups tend to also have material differences which affect longevity. For instance, in the USA, Asians are the richest ethnic group, and blacks the poorest, with whites in between. If we found that Asians lived longest, and blacks died soonest, this wouldn't prove anything about the genetic causes.

[The Terrible Sweal]

Is there any of that so far that you disagree with?

No. What I will say is that larger enterprises offer better return on investment beyond a certain point. Because a niche market is necessarily very limited, beyond a given level greater investment will not generate any returns.

If I've got you right, you're saying that once every rich man has a $10,000 Rolex, there is no more return to be had from making Rolexes.

So, by extension then, once every American has a $10 flag, there is no more return to be had from making flags.

The difference being, as between the two, that the market for Rolexes may be, say 200,000 units, while the market for flags is 200,000,000 plus.

So on Day Zero, an investor can buy either the Rolex company, or the American Flag company. How does he decide? Does he say to himself ... "hmmm American Flag will sell more units than Rolex can ever hope to. Well, that settles it, I'm buying American Flag."? Not if he's smart. Because without looking at the MARGIN on Rolex's vs. Flags he's going to come out looking pretty stupid when this comes out:

Flag margin/unit $ 1 x 200,000,000 units = $200 Million

Rolex margin/unit $ 9000 x 200,000 units = $1.8 Billion

... if you only have $10, better to invest in your product and sell it for $90. But if you have $1000, better to invest in mine, ...

I am sorry, but that is a fundamental misunderstanding of economics. in fact, if I have $1000 I am better off to invest the first $10 in the company with the best return, the next $10 in the company with the next best return, and so on.

For further illustration, just because you build one hundred thousand Ferraris doesn't mean you can sell them. On the other hand, if you invest that money in building one hundred thousand Fords, you'll probably sell them all.

Why would I invest in Ferraris no-one wants? Rather, if Ferraris pay better than Fords, I will invest in up to the exact number of Ferraris which I can sell at a better return than Fords. The moment the return on one more Ferrari falls below the return on making a Ford, I will stop making the Ferraris. But I won't do that UNTIL the return for Fords is better than for Ferraris.

Von Mises has simply said that a capitalist can become a lot wealthier if he pursues a mass market than if he settles on supplying a niche. This might seem an obvious point, but very many people don't get it.

This is BECOMING simply impossible.

Just earlier you said: "But wealth is not measured in rate of return, and wealth was what von Mises was discussing." Now you say "become a lot wealthier".

Every time I ask you which one you mean you switch over to the other.

Anyway, it is not an 'obvious' point; it is an incorrect point, as I have demonstrated.

[Guest eureka]

Hugo, your posts are becoming more and more indicative of your sublime ignorance of the world outside of Von Mises.

There have been many studies of longevity and the relation to genetic factors, diet and lifestyle. There have been many studies showing that - Okinawa - is a good example - longevity can decline with Western diets.

Hong Kong, Singapore are good examples of an economic condition that rendered state pension schemes unnecessary for some time: that plus the cultural requirement for families to take care of their elderly. Those factors are declining and pensions will become as necessary as they are in our culture.

Those are unarguable facts.

When you grasp that the world cannot be reduced to statistics and that statistics are only a starting point for investigation, you may develop the capacity to debate.

[Hugo]

The difference being, as between the two, that the market for Rolexes may be, say 200,000 units, while the market for flags is 200,000,000 plus.

Not to mention the fact that an American might buy more than one flag, at $10, whereas he's unlikely to buy more than one Rolex. I think you're also vastly overinflating the return on a Rolex. Very few luxury goods have a 900% markup. If they did, an investor would certainly have to be an idiot to invest in the company without first insisting on price reform since a small price cut would certainly increase total profits. It's very unrealistic of you to assume that a precision-made timepiece made with a great deal of precious metal by skilled craftsmen can be produced for $1000, and I'm not particularly interested in an argument that rests on such fallacies. Perhaps you could be bothered to research actual costs and profits of various industries. This, of course, will prove von Mises right, since it is an empirical fact that the Fords and Wal-Marts of the world are richer and make more profit than the Ferraris and Tiffanys.

Anyway, I have noticed that you have entirely given up arguing the original point and are now just quibbling about von Mises. Why? Is the original point - that Scandinavian countries have "the best standard of living in the world" - indefensible?

There have been many studies of longevity and the relation to genetic factors, diet and lifestyle.

If there have been "many" then it should not be too much trouble for you to provide one.

Hong Kong, Singapore are good examples of an economic condition that rendered state pension schemes unnecessary for some time

What, unrestrained capitalism? I couldn't agree more.

that plus the cultural requirement for families to take care of their elderly

Which, as if by coincidence, has disappeared in our culture since roughly the introduction of the welfare state. I think it's more a question of expediency than of cultural values.

Those factors are declining and pensions will become as necessary as they are in our culture.

You mean, now that Hong Kong has introduced state pensions, state pensions become necessary? This sounds about right. All the state does is perpetuate itself and expand its own power.