On Jul 2, 2013, at 11:25 AM, Sharon wrote:
On page 1 in your book, you refer to excess management capacity as
something importers rely upon to identify suppliers overseas. I'm
not understanding excess management capacity or excess credit
capacity. Is there another way to explain this?
Hey Sharon
Say you are an orange juice seller. And you buy oranges from a
grove. The grove has a bumper crop, and so they have an excess supply
of oranges. What happens? The price goes down so you get more
oranges at a lower price. Other people who were buying pineapples to
make fruit smoothies, start pushing orange smoothies, so more people
show up to buy at the lower price.
Instead of oranges, what about instead of ten people who can manage
footwear production, you have 100. What happens to the cost of hiring
managers?
What if banks had a million dollars to lend today, and then tomorrow a
billion. What would happen to the price of borrowing money?
When there is an excess of anything, the price drops...even management and credit. That is
what we exploit, management, not labor.
what we exploit, management, not labor.
Feel free to forward this by email to three of your friends.
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