Tio Pepe
According to my friend, people are criticizing the unfair advantage of Tio Pepe over its competitors in the karinderia industry in Philippines. My friend believes that it's wrong to put small businesses out of business.
As a business owner, would you replace a manager who runs your pin factory with 10 people producing 200 pins a day against a manager who can run your existing factory with no additional inputs yet produce 10,000 pins per day? Is it more beneficial for all the participants as a whole affected with this factory such as customers, suppliers, workers, competitors and etc. to have a factory producing 10,000 pins or 200 pins per day assuming ceteris paribus?
From a qualitative perspective, would you replace a manager with another one who can produce better quality pins to run your factory with no additional inputs in your factory? Again, which one is more beneficial for all the participants involved assuming ceteris paribus?
For a nation or society, is it beneficial for the nation as a whole to have superior players in an industry replace the sub par players? Will a nation progress at a faster rate and have higher standards with superior players running their industries or sub par players running their industries?
I don't know about you but I'm obviously for Tio Pepe and Adam Smith.
posted by Denz at 5:38 AM
19 Comments:
Wow! You have lots of questions here.
"As a business owner, would you replace a manager who runs your pin factory with 10 people producing 200 pins a day against a manager who can run your existing factory with no additional inputs yet produce 10,000 pins per day?"
Naturally, you are the business owner and you are concerned about your profits.
5:05 PM
"Is it more beneficial for all the participants as a whole affected with this factory such as customers, suppliers, workers, competitors and etc. to have a factory producing 10,000 pins or 200 pins per day assuming ceteris paribus?"
In the case you citied, nobody gets fired. Let's say that because of the increase in productivity and the limited demand in the market, you have to slash your headcount by half. Is it still beneficial for all participants? If you are the employee who will be cut, can you say that the increased productivity is beneficial?
5:08 PM
"For a nation or society, is it beneficial for the nation as a whole to have superior players in an industry replace the sub par players?"
Ahh! THis is the tricky part for me.
By nation, I will presume that you meant the citizens of that nation.
Because we live in a capitalist world now, we have no choice but to keep up with other countries.
So yes, it is actually more beneficial to increase productivity for the nation's benefit because if we don't, we don't only lose a few jobs, we lose all of them.
However, if you are asking - is it beneficial for the world as a whole to have more productivity, my answer is in my essay.
http://randomthingsthatmatter.blogspot.com/2007/07/are-human-beings-better-off-today-while.html
5:15 PM
"Will a nation progress at a faster rate and have higher standards with superior players running their industries or sub par players running their industries?"
An economy with high productivity standards and with a high growth rate looks good on paper. To say that an economy is successful because it has both qualities is errnoneous. Once again, if only a small percentage of the nation benefit from this growth and efficiency, then it is not necessarly a good thing.
5:20 PM
"An economy with high productivity standards and with a high growth rate looks good on paper. To say that an economy is successful because it has both qualities is errnoneous. Once again, if only a small percentage of the nation benefit from this growth and efficiency, then it is not necessarly a good thing."
True but that's a different problem, the problem of resource allocation. Naturally when there's growth, you'd want everyone to benefit from it. But assuming ceteris paribus, where the economy is controlled by certain minority key players to begin with, it's still beneficial for there to be high productivity standards and high growth rate since the citizens are quite poor to begin with.
It's like saying that you have a country with 10 people with 19 pesos worth of assets where 9 people have 1 peso each and 1 person has 10 pesos. But because of high productivity and growth, the country's assets as a whole increased to 29 pesos where the increment goes to the rich person. This is usually the case for most nations, where majority of wealth goes to the few. In this case, i believe it's up to the rich individual with 20 pesos to distribute his wealth WISELY and let the others benefit from it. Why in the world would he do that? Well, maybe there's a possibility that if your fellow citizens are richer, there's more potential for further growth for all of you. You can read my previous post on Andrew Carnegie :)
6:51 PM
"In the case you citied, nobody gets fired. Let's say that because of the increase in productivity and the limited demand in the market, you have to slash your headcount by half. Is it still beneficial for all participants? If you are the employee who will be cut, can you say that the increased productivity is beneficial?"
Well, if you are the employee, ofcourse not but maybe only in the short run. But what if you're the customer, won't you suffer from the inept and inefficient firm in both short and long run? As a competitor, you do benefit from a weaker competitor. As a weaker factory, when being efficient requires you to slash your work force at present and you don't, you may end up slashing your entire work force in the long run if your competitor kills you.
7:05 PM
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6:29 PM
Hmmm. . .I am finding it hard to argue because it seems like we are arguing with different assumptions.
Anyway, to simplify, you are saying that in the perspective of one nation (not the world as a whole) in today's capitalistic world, it is best to increase productivity. This way, you stay competitive and you retain some jobs instead of losing all of it to competition (which is other nations). Yes, you would have to slash jobs because of increased productivity but you have no choice.
Fine. I agree with this. Unfortunately, in today's world, we have no choice but to take from others to survive.
However, from the perspective of the whole world, not just a single country, increasing productivity is not necessarily a good thing. The world is not necessarily better off.
The point of increasing productivity is to stay competitive or to become even more competitive - to take from others, in short. Its side effect, naturally, is the concentration of wealth to a few. We can't talk about better off or worse off from increased productivity without talking about all of its effects.
As for the role of the rich to give back to the poor. This is ideal. However, obviously, it's not the reality. Until it becomes a reality, then increasing productivity is not necessarily good for the world.
http://randomthingsthatmatter.blogspot.com/2007/07/are-human-beings-better-off-today-while.html
6:49 PM
"The point of increasing productivity is to stay competitive or to become even more competitive - to take from others, in short."
I would disagree. The point of increasing productivity or the major contribution of increasing productivity is preserving more resources or using less resources to satisfy everyone. And because you're able to preserve the resources, you can also use it for other means. For example, Jesus was the most productive being in the world when he fed thousands of people with just a bunch of bread if I recall correctly.
With or without competition and from a one nation only or one company only perspective, increasing productivity is beneficial. Let's over, Over, OVER simplify a macro perspective. Imagine a world of only 10 people where 10 people are utilized to produce food everyday for all 10 people. Would you say that they are worse off if, because of productivity, you slashed 8 people and used only 2 to produce food for all 10? The eight who were laid off are still being fed by only the two who were, because of productivity, able to with the same effort provide more.
Productivity and efficiency enables us to serve more. That is the inevitable result of productivity. How the more is distributed is a problem of resource allocation and not productivity.
2:46 AM
You cannot say you take from others when you increase productivity. You can only take from others thru having more allocated to you. This then becomes a problem of resource allocation, not productivity. Increase in productivity, I would say , makes it more possible for those who have nots to have a bit. When that possibility is taken from them, it's because it wasn't allocated to them.
2:51 AM
for me.. the important thing is .. cleanliness then taste, then price.. if u can offer all three then i am for that concnept..
8:15 PM
"I would disagree. The point of increasing productivity or the major contribution of increasing productivity is preserving more resources or using less resources to satisfy everyone. And because you're able to preserve the resources, you can also use it for other means."
Den, if the only incentive to become more productive is to make resource usage efficient, do you think the world will be where it is today? Most businessmen strive for innovation not for this reason but to get ahead. Don't you agree?
Yes, there are a few who work for te betterment of the world. However, the majority is not.
Do you think Henry Ford had "saving the world" in mind when he invented line production?
9:09 PM
"And because you're able to preserve the resources, you can also use it for other means. For example, Jesus was the most productive being in the world when he fed thousands of people with just a bunch of bread if I recall correctly."
No offense to the Christian religion but this is an unconfirmed story. However, I admit that if it really happened, then Jesus was one of the rare ones who used productivity for the betterment of the world.
As for the rest, well, I think you could figure out the answer by asking businessmen why they strive to be more productive or better than the rest.
9:13 PM
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9:19 PM
"You cannot say you take from others when you increase productivity."
Not all the time but in most cases, companies take away from other companies when productivity increases. When Walmart becomes more efficient than its competitors, where does its market share come from? From aliens who shop in America from Mars? No, from Americans who used to shop elsewhere.
9:25 PM
"This then becomes a problem of resource allocation, not productivity."
Productivity is mainly an effect brought about by a competitive economy otherwise known as capitalism. The end goal is to win against competition. The side effect is wealth disparity. Therefore, productivity is not necessarily separate from the concept of resource allocation. In fact, most economists agree that these two are fundamentally connected.
9:32 PM
"Increase in productivity, I would say , makes it more possible for those who have nots to have a bit."
Maybe for some, this is true. However, I don't know if this is universally true. I will think about it.
9:33 PM
Hey Ches,
Let's focus not on the motives of ppl for productivity but on whether productivity is beneficial or not for everyone. For me, the answer is yes simply because more is produced with less and wastage becomes less as well and you remove and force the less efficient to become more efficient or more productive in other means. You talk about the effects of having to knock out competitors like what walmart did and that it's evil but it's evil to be laid back and charge your customers a higher price because you're inefficient. The customers are at the losing end and so are the inefficient service providers because they could have done more with what they have.
6:32 AM
Would you rather the world only has 10 cell phones instead of millions which can only be accomplished thru productivity? Of course, the big producers had to wipe out the slow moving competitors. Now assuming that only rich ppl bought these millions of cell phones making the gap bigger between the rich and poor, is that the fault of the cell phone makers like nokia? Is their productivity the reason for how the phones were allocated?
6:38 AM
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