One cost that Mr Etchison might wish to consider when speculating about cars being undersold/overpriced is the cost of paying stockholders large dividends, chief executives large salaries and bonuses, and so forth. Investor and managerial income is a very big cost in the USA and elsewhere, but always seems to be sacrosanct when it comes to discussion of 'cost-cutting'. Another thing to consider is that cars and other goods and services may not be selling as much as necessary to cover production costs because too many workers are low-paid or unemployed--i.e. there is a shortfall in effective demand resulting in under-consumption, which in turn is tied to a large degree of inequality of income distribution, with the better off tending to save more, rather than consume more of their extra income, or to consume it, but in the form of imported luxury goods, foreign holidays, etc. Obviously, the way to deal with this problem is not to encourage wage cuts and lay-offs. I am not sure either whether Mr Etchison is conceding in his latest post that there is such a thing as involuntary unemployment. If there is, then this would be one reason for maintaining a welfare state. Doing so would also have the advantage of mitigating the under-consumption problem. Peter [EMAIL PROTECTED]
