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> the futures market should never determine if a factory is operating But what about washing machine futures? Or more realistically, how much is shutting down

> the futures market should never determine if a factory is operating But what about washing machine futures? Or more realistically, how much is shutting down the factory going to cost the washing machine manufacturer in terms of employee compensation, lost employees (more hiring and training), washing machine brand losses in the market, failure to deliver on existing contracts, and similar? They can't claim force majeure when they shut down the factory merely because they see a way to make slightly more profit than normal.

londons_explore 4y ago
True... but that has to be compared with those same set of losses the car factory up the street will suffer if they don't get the chips... If there is only enough chips for one factory to run, someone has to shutdown and take those losses. And the shutdown factory should be the one with less to lose, not the one who didn't buy futures in time.
- axiolite 4y ago
  > the shutdown factory should be the one with less to lose, not the one who didn't buy futures in time. That sounds highly communist. The factory with the most to lose should have been looking out for themselves. They did not, so they suffer economically, and hopefully learn a lesson (or their bankruptcy stands as a lesson for others) for the future. Because of their decisions, one of the factories can claim force majeure to protect them from some of the consequences of shutting down, while the other cannot, so the other shutting down and reselling their chips is probably not an option. Salvaging chips out of washing machines might be the best possible option for everyone to fulfill their contractual obligations.
- biosonar_ 4y ago
  That's what you'd do in a command economy. In a market economy it's up to the company what they do; there are far more things "real people" try to maximize than just profit. You can see this as people acting irrationally, or you can see it as there're important factors your missing and/or not understanding. Economists be like "guys, your doing it wrong - not maximising profit", economy be like "nah, your theories incomplete".

londons_explore 4y ago

True... but that has to be compared with those same set of losses the car factory up the street will suffer if they don't get the chips... If there is only enough chips for one factory to run, someone has to shutdown and take those losses. And the shutdown factory should be the one with less to lose, not the one who didn't buy futures in time.

axiolite 4y ago
> the shutdown factory should be the one with less to lose, not the one who didn't buy futures in time. That sounds highly communist. The factory with the most to lose should have been looking out for themselves. They did not, so they suffer economically, and hopefully learn a lesson (or their bankruptcy stands as a lesson for others) for the future. Because of their decisions, one of the factories can claim force majeure to protect them from some of the consequences of shutting down, while the other cannot, so the other shutting down and reselling their chips is probably not an option. Salvaging chips out of washing machines might be the best possible option for everyone to fulfill their contractual obligations.
biosonar_ 4y ago
That's what you'd do in a command economy. In a market economy it's up to the company what they do; there are far more things "real people" try to maximize than just profit. You can see this as people acting irrationally, or you can see it as there're important factors your missing and/or not understanding. Economists be like "guys, your doing it wrong - not maximising profit", economy be like "nah, your theories incomplete".