Non-minimal production-cost-locations shunned, a tale of global net loss
Imagine an ideal production location, location A, which is ideal for the purposes of producing product B, and selling product B to consumer group C, which is located at location D. Population group E is used to produce the product B at location A. Aside from wages, the production costs for product B at location A are the lowest in the world.
For various reasons, location A is ideal for producing product B and selling it to population C.
Group E, which is employed in the production of product B at location A, is both mentally and physically speaking, relative to other population groups, superior in terms of the abilities required to produce product B.
The river running through location A, the nature of the land at location A, the sunshine and wind conditions at location A, are such that location A is a superior location for the production of product B.
Location A is ideally situated in terms of transportation of product B that is produced at location A from location A to location D for sale to population C.
By way of contrast, imagine another location, location XA, which also produces product B, and sells product B to population XC, which is located at location XD; population XE is used to produce product B at location XE. Production costs aside from wages at location XA, are amongst the highest in the world.
Group XE, which is employed in the production of product B at location XA, is both mentally and physically speaking, inferior in terms of the abilities required to produce product B; this contrasts with the superior abilities of group E producing product B at location A.
The nature of the land, bodies of water, sunshine, and wind at location XA, are such that location XA is inferior to, and more expensive than (aside from wage costs) location A when it comes to the production of product B.
Location XA is inferior to location A when it comes to efficient transportation of product B to location D for sale to population C.
Historical Aside re Locations A and XA
For many decades, both location A and also location XA, produced product B, even though the production cost of product B was higher in the naturally gifted location A, due to higher wages being paid to the workers.
The natural trade barrier which was the high cost of transportation of good B, stimulated the production of product B in location A, a location where production costs aside from wage costs, were lower.
In the early stages of the production of product B at location A, looking at production costs aside from wages, the production costs for product B were higher than the production costs aside from wages for product B at location XA.
In the early stage, if transportation costs for product B were as low as they are today and free trade had been in effect, product B would never have been produced at location A.
Nevertheless, the peoples around location A persevered. The previously ignorant and habitually mentally lazy population E was trained; as a result, population E became able to utilize its superior abilities, to produce product B in high quantity at high quality. The leaders at location A realized that superior ability if not combined with adequate training can produce inferior performance.
The people of location A at first were incompetent in terms of exploitation of the natural resources around location A for the production of product B. But gradually, they became expert in terms of the exploitation of the natural resources for the purpose of the production of product B.
At first the location A people were foolish in terms of exploitation of the natural wind, land, water, and solar resources they were blessed with, for the purpose of transporting product B from production point A to sale point D where it was sold to customers C. But gradually, they learned to harness the wind, sun, water, and land for the purpose of transportation of product B.
Thus in the presence of the natural trade barrier which was the high transportation costs of product B, the production of product B developed in location A, whereas if the natural trade barrier that is high cost of transportation of product B had not existed, product B would never have been made in location A.
Location A improved and developed so that whereas previously aside from cost of wages it had been a more expensive place to produce product B in, it became, aside from wages, a less expensive place to produce product B in.
End Historical Aside
Then, a problem developed when technological advances in the art of transporting product B over thousands of miles, eradicated the natural trade barrier that had allowed location A to continue producing product B, even though production costs were higher at location A compared to location XA, due to high wages at location A (despite the fact that aside from wages production cost was lower at location A).
Due to the wage differential, production of product B at location A came to an end, and location XA became the only location at which product B was produced; this despite the fact that aside from wage differential--location XA was in every way a more expensive place to produce product B; and location XA was in terms of transportation cost in an inferior position compared to location A.
As a result of the shift of production of product B from location A to location XA, and as a result of the eradication of the natural trade barrier of high transportaion costs for product B through technological advances, the world experienced a general negative impact of the technological-progress-disrupts-nature type.
The world experienced negative impact, because whereas previously the natural advantages for production of good B which had developed in location A had been taken advantage of by the world, after the end of production of product B in location A, the world became a world which no longer took advantage of the natural advantages for production of product B that existed in location A.
The world experiences a negative impact in that whereas previously it did not expend resources shipping product B long distances (an unnecessary activity), now it expended considerable resources shipping product B long distances.
The reduction in wages paid to the producers of product B, resulted in price reductions for product B, which were balanced by a reduction in spending by the workers who previously made product B in location A.
Thus the world experienced negative impact, because a negative impact, plus a second negative impact, combined with two things that cancel each other out, is in the end, two negative impacts plus zero.
Other details of the not-so-happy ending of this tale (in brief):
World production and consumption of product B, a clean environment-friendly, fully bio-degradeable organic natural re-cyclable product, declined from 20 million tons per year which was the case when product B was produced in location A and location XA, to only 15 million tons per year which became the case when product B was produced in location XA alone;
Everywhere, all over the earth, there ensued a chilling effect that retarded progress in the art of decreasing costs of production in locations featuring non-minimal production costs, and a slowdown in technological progress;
All over the world, the abilities of people with talent in terms of the production of various products went unutilized, because the products were no longer made in lots of different places;
Ecological problems that naturally follow when a given thing predominates in a given eco-system arose, because whereas previously a given place produced lots of different things, the reduction in transportation costs produced by man's technological advance, created a situation where every place produced only one thing;
Places that used to rotate crops switched from crop rotation to growing only one crop, the result being soil depletion;
Unnecessary transportation costs increased because whereas previously a thing was produced in many places, the new situation was the the thing being produced in only a few places;
and there were yet more negative effects not now described.
@2009 David Virgil Hobbs
For various reasons, location A is ideal for producing product B and selling it to population C.
Group E, which is employed in the production of product B at location A, is both mentally and physically speaking, relative to other population groups, superior in terms of the abilities required to produce product B.
The river running through location A, the nature of the land at location A, the sunshine and wind conditions at location A, are such that location A is a superior location for the production of product B.
Location A is ideally situated in terms of transportation of product B that is produced at location A from location A to location D for sale to population C.
By way of contrast, imagine another location, location XA, which also produces product B, and sells product B to population XC, which is located at location XD; population XE is used to produce product B at location XE. Production costs aside from wages at location XA, are amongst the highest in the world.
Group XE, which is employed in the production of product B at location XA, is both mentally and physically speaking, inferior in terms of the abilities required to produce product B; this contrasts with the superior abilities of group E producing product B at location A.
The nature of the land, bodies of water, sunshine, and wind at location XA, are such that location XA is inferior to, and more expensive than (aside from wage costs) location A when it comes to the production of product B.
Location XA is inferior to location A when it comes to efficient transportation of product B to location D for sale to population C.
Historical Aside re Locations A and XA
For many decades, both location A and also location XA, produced product B, even though the production cost of product B was higher in the naturally gifted location A, due to higher wages being paid to the workers.
The natural trade barrier which was the high cost of transportation of good B, stimulated the production of product B in location A, a location where production costs aside from wage costs, were lower.
In the early stages of the production of product B at location A, looking at production costs aside from wages, the production costs for product B were higher than the production costs aside from wages for product B at location XA.
In the early stage, if transportation costs for product B were as low as they are today and free trade had been in effect, product B would never have been produced at location A.
Nevertheless, the peoples around location A persevered. The previously ignorant and habitually mentally lazy population E was trained; as a result, population E became able to utilize its superior abilities, to produce product B in high quantity at high quality. The leaders at location A realized that superior ability if not combined with adequate training can produce inferior performance.
The people of location A at first were incompetent in terms of exploitation of the natural resources around location A for the production of product B. But gradually, they became expert in terms of the exploitation of the natural resources for the purpose of the production of product B.
At first the location A people were foolish in terms of exploitation of the natural wind, land, water, and solar resources they were blessed with, for the purpose of transporting product B from production point A to sale point D where it was sold to customers C. But gradually, they learned to harness the wind, sun, water, and land for the purpose of transportation of product B.
Thus in the presence of the natural trade barrier which was the high transportation costs of product B, the production of product B developed in location A, whereas if the natural trade barrier that is high cost of transportation of product B had not existed, product B would never have been made in location A.
Location A improved and developed so that whereas previously aside from cost of wages it had been a more expensive place to produce product B in, it became, aside from wages, a less expensive place to produce product B in.
End Historical Aside
Then, a problem developed when technological advances in the art of transporting product B over thousands of miles, eradicated the natural trade barrier that had allowed location A to continue producing product B, even though production costs were higher at location A compared to location XA, due to high wages at location A (despite the fact that aside from wages production cost was lower at location A).
Due to the wage differential, production of product B at location A came to an end, and location XA became the only location at which product B was produced; this despite the fact that aside from wage differential--location XA was in every way a more expensive place to produce product B; and location XA was in terms of transportation cost in an inferior position compared to location A.
As a result of the shift of production of product B from location A to location XA, and as a result of the eradication of the natural trade barrier of high transportaion costs for product B through technological advances, the world experienced a general negative impact of the technological-progress-disrupts-nature type.
The world experienced negative impact, because whereas previously the natural advantages for production of good B which had developed in location A had been taken advantage of by the world, after the end of production of product B in location A, the world became a world which no longer took advantage of the natural advantages for production of product B that existed in location A.
The world experiences a negative impact in that whereas previously it did not expend resources shipping product B long distances (an unnecessary activity), now it expended considerable resources shipping product B long distances.
The reduction in wages paid to the producers of product B, resulted in price reductions for product B, which were balanced by a reduction in spending by the workers who previously made product B in location A.
Thus the world experienced negative impact, because a negative impact, plus a second negative impact, combined with two things that cancel each other out, is in the end, two negative impacts plus zero.
Other details of the not-so-happy ending of this tale (in brief):
World production and consumption of product B, a clean environment-friendly, fully bio-degradeable organic natural re-cyclable product, declined from 20 million tons per year which was the case when product B was produced in location A and location XA, to only 15 million tons per year which became the case when product B was produced in location XA alone;
Everywhere, all over the earth, there ensued a chilling effect that retarded progress in the art of decreasing costs of production in locations featuring non-minimal production costs, and a slowdown in technological progress;
All over the world, the abilities of people with talent in terms of the production of various products went unutilized, because the products were no longer made in lots of different places;
Ecological problems that naturally follow when a given thing predominates in a given eco-system arose, because whereas previously a given place produced lots of different things, the reduction in transportation costs produced by man's technological advance, created a situation where every place produced only one thing;
Places that used to rotate crops switched from crop rotation to growing only one crop, the result being soil depletion;
Unnecessary transportation costs increased because whereas previously a thing was produced in many places, the new situation was the the thing being produced in only a few places;
and there were yet more negative effects not now described.
@2009 David Virgil Hobbs
Labels: free-trade, non-minimal production cost, production costs, protectionism
posted by David Virgil at 12:28 AM
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