Monday, 24 January 2011

Krugman is on his toes ....The Competition Myth - NYTimes.com

What is the issue with competition?

In my view it is that having so much money sloshing around makes it too easy for firms to acquire competitor's assets rather than create their own through innovation. What we should have is a term for a form of efficiency and competition that involves job creation and appropriately rewards brain power applied to business creation and survival? Some business success arises from luck, even though this is claimed a business acumen. Business acumen is when you haven bad luck and still survive as a great business. Business acumen is through the use of brains overcoming circumstance. The focus should be ton help a designated community and not short term gain.

Old style economics looks at labour as a cost rather than a benefit to the employer. Labour is, in fact, a bonus of being in business and employers should use that bonus effectively and with due respect.

A firm makes a profit because it's labour creates a product that remains competitive. People should be appropriately rewarded for creating that bonus benefit. Once a design is established, it is capital that produces the product, but the original design comes from brain power. More and more brain power enters products and keeps them competitive irregardless of price. The fact that prices are falling in many technology products is due to increasing economies of scale from capital that benefitted from brainpower. Using that capital and locating it appropriately are the brains behind business. Business should be mindful of the human element behind profit.

http://www.nytimes.com/2011/01/24/opinion/24krugman.html?_r=1&src=ISMR_AP_LO_MST_FB


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