Berkeley CSUA MOTD:Entry 24446
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2018/11/21 [General] UID:1000 Activity:popular
11/21   

2002/4/15-6/8 [Finance] UID:24446 Activity:insanely high
6/7     Please read this over and see if you get excitied at all near the
        end
          Relationships between owners and workers can be found throughout
        the world. The owners primary concern is the accumulation of
        wealth through capital while workers are primarily concerned
        about the simple accumulation of utility usually generated from
        consumption. Thus our problem of maximizing capital and
        maximizing utility invades all aspect of economics. However for a
        business to succeed it takes stategy. A strategy on how best
        tackle the problem at hand. We will see that capital ownership is
        but a small issue and instead of one simple problem we are faced
        with a daunting problem of corrordination of ALL firms.
        Relationships on how businesses utilize capital owned by others
        will turn out to be our biggest cordination issue.
          A simple model business is the best place to start. Lets assume
        for simplicity (or complexity as we will see) that we have a new
        good called Unobtanium
          To get an idea of the complexity we are dealing with consider the
        purpose of production. This is a simple question but upon
        inspection leads to some interesting observations. A product
        really serves three functions; one for the economy, one for the
        buyer (agent), and directly one for the producer (firm). It is
        best to start with the firm. The purpose of production in
        relation to the firm is profit. The firm is in the business of
        production for the profits obtained. If we assume domestic
        owndership this is an optimal condition. The agent has a similar
        purpose in their accumulation of utility from consumption of the
        good. Less known however is the interaction of the economy and
        the production of the good.  Ideally the objective of economics
        is the efficient allocation of resources.  Goods are the
        mediators (along with money) which allow for allocations to
        occur. Thus goods have a very strong effect in reallocating
        resources. Secondly a good has secondary effects upon markets.
        Its best to see by example. Consider the sale of a car. A car is
        a good which has very high secondary effects upon markets in that
        it induces demand in a myriad of other markets namely, service
        stations, tires, roads, insurance, etc.
          The question of why produce a good must therefore answer what
        will be the effect of not only the firm but also the agent and
        economy as a whole. Stategically its important to produce
        whenever the net effect is positive FOR ALL involved. However how
        can we determine the net effect? When dealing with firms and
        agents this is a fairly simple matter, but gets significantly
        more difficult with our introduction of the economy
        considerations. First we must consider the distribution of money.
        If production leads to cause money transfered OUT of the country
        we will rule this as a negative effect. Conditions where costs
        paid to foreign entities are perfectly offset with revenue from
        foreign entities will be considered neutral. Secondly we must
        deal with our secondary effects. We have already dealt with money
        so now we must deal with capital. The secondary effects can be
        negative if the capital appreciation of foreign interests are
        higher than the capital appreciation of domestic interests.
          What we can see is that even though we generally consider foreign
        ownership of capital as negative conditions can be manipulated
        such that positive effects domestically can offset any negatives.
        \_ The firm should produce guns so that I, the buyer-agent, can
           purchase one and shoot you in the knee.
2018/11/21 [General] UID:1000 Activity:popular
11/21   

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