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I think your view of reality is a little distorted. No offense intended. Would you be willing to pay $10 for a gallon of gas? Probably not. However, if you
by robomartin 14y ago
I think your view of reality is a little distorted. No offense intended.
Would you be willing to pay $10 for a gallon of gas? Probably not. However, if you were open to paying this much the entire gasoline supply chain would not have to worry as much about their costs. It's action-reaction. Supply and demand.
Put a different way: If government somehow mandated tomorrow that on Monday gasoline will be $10 per gallon, gas company CEO's would be able to relax and not have to optimize their cost structure for some time.
Of course, this does not happen. People shop at Walmart and price shop online. In most businesses with decent competition it is actually very hard to make money without extreme attention to cost optimization. Popular liberal lore is that CEOs optimize cost because they are greedy. That is almost indescribably ridiculous. You optimize costs because if you don't, you die.
You should go through the exercise on Excel to see the effects. Pretend to start a business that will sell five items picked at random from Amazon.
The conditions are simple:
- You mortgage your house and invest $200K in this
new business.
- You have to compete with Amazon.
- You have to pay yourself a reasonable salary.
- You have to hire some people (you can't do everything).
- You have to pay rent, utilities, marketing costs,
accounting, insurance, taxes, etc.
- You have to grow gross profits 25% per year or more.
- You also have to pay-off your $200K loan in, say,
five years.
Do that on paper and tell me what you learn. Post all your numbers online for us to see and verify.
Now do it in real life and realize it is TEN to ONE-HUNDRED times harder.
Then come to HN and read posts from people who firmly believe business is driven by greed. What would you say to them to have them understand?
Right. Most who have never started and run a business have less than zero clue as to the realities and basic math one must face. They can opine all they want, yet the reality is that they simply don't have a good frame of reference. All they see is the price at the pump. And they always want to pay less.
EDIT: Layout and punctuation. Typed earlier today on an iPad, which is just horrible for entering and editing text. There are times when vim makes so much sense...