Reply #192: What about workers who are paid more than the ones in your scenario?

[Heddi]

I am a nurse, so I don't produce anything. My salary is not dependent upon widgets, or patients, or illness, or wellness. I get paid for working a set amount of hours per week regardless of whether the hospital has 10 patients or 10,000.

The worker who is making the widget might not be able to afford the widget they are helping produce in one paycheck, but they may be able to afford it in one and a half paychecks (I don't wish to look back up at number 1 in an ever increasing series of ridiculous analogies that are rife with mathematical and basic economic principle errors). Maybe the widget is something they can "go in halves" on with another worker, something they can share.

Maybe the workers are part of a household with more than one income---where the individual worker may not be able to afford the widget, but individual worker + spouse can afford the widget.

Then you have to figure in the people who don't work making anything. I don't "make" anything but a wage. I could afford the widget, if I wanted it, by virtue of the fact that I may make more than the widget maker, or maybe I need it more than the widget maker, or maybe the person who made it doesn't need/want it at all.

I make profit all the time by selling items online:

I have $20 in my hand which I earned in 1/2 hour at my job as a nurse.

I go to a yard sale and I buy 4 books for $5 each. THat is the price that the yard-seller is selling them for, and they are valued at a cost that *I* find acceptable. I would not buy them if they were $20 a piece or even $7 a piece.

I then go to ebay and list the books for $7 each. Shipping is $3. The total price for a $5 is now $10 because that is what people on ebay value them as being worth. They would not buy them for $10 for the book and $3 for shipping, or $7 for the book and $10 for shipping.

So someone buys the book for $7 (net profit of $2 on the book itself). I buy my packing supplies in bulk, so the real cost of shipping is $1.50 plus $.75 in packing materials. That's $2.25 for shipping (.75 profit from shipping).

For each book I sold and shipped, I made $2.75 profit above what I paid for the book, the shipping costs, and the packing materials.

The person that I bought the books from made a profit because perhaps when the books were new they cost $20 a peice, but now they are old, they have creases, and they're unwanted. They may have been left by an old roommate so the seller actually paid nothing for the books and they were pure profit just by their being left. So the book seller has made $5 a book for a book that may have cost them nothing, or whose cost is so old as to be meaningless.

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People will pay what they think things are worth (for the most part). There are people who will buy a $20,000 car, and people who will spend $200,000 on the car. Look at the Dutch Tulip Craze in the 1600's, where bulbs that were worthless one week were going for astronomical prices the next just because someone felt their worth had increased, even though the methods used to produce the bulbs had not increased equally dramatically as the price had in that period of time.

Beanie Babies were a craze in the 1990's. People were paying hundreds of dollars for stuffed animals that cost less than a nickel to make. Now you can't GIVE the damn things away. Their value had increased, then decreased, solely because of consumer demand.

The Widget your company is selling for $5 today may be worth $2 tomorrow or $40 next week. Values change. Very few commodities are fixed in price. Not everyone makes the same wage. Some people make more, some people make less. Some people will value your widget as being better, or more important than widget being sold by the guy down the street. People think your widget is so much better, you're able to figure out that they're willing to spend $2 more on your widget now than they were a week ago because your widget has proven the test of time.

People in this insanely long thread (that I only participate in because I cannot sleep) have suggested that you take a basic course in economics, finance, etc. I think you should. Your answer will be found within the first 2 weeks of a class. Hell, email a professor---just go to your local university website adn find the email of an econ or finance professor and email them and get an answer.

Your examples are too fixed, too unrealistic, and do not reflect the reality of a consumer or market-driven economy. Hell, I took economics in high school and have a pretty basic, yet good understanding of basic economic concepts. I am afraid you do not, or if you do, you're not explaining yourself very well and you switch from example to example to example, none of which in any way mirror reality.

In your situation, there can NEVER be profit, but in real life there is profit, and it has been explained to you many times how this occurs. I'm sorry you're having such a hard time understanding this.