Economists Please

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Originally Posted by anthonyvop

Seriously?

Who told you that? Socialism is one of the major cause of starvation.

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I think she's talking about the way the numbers were fudged to make it look like the agricultural output was growing.

I've heard/read this before about the USSR - the guys at the top would demand higher production numbers; the ones in charge of production would say "Can't be done", but the year end numbers would show that production had increased. This would happen year after year. The reality was that production never changed - the books were just fudged to keep heads from rolling.

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Originally Posted by Firstgear

I think she's talking about the way the numbers were fudged to make it look like the agricultural output was growing.

I've heard/read this before about the USSR - the guys at the top would demand higher production numbers; the ones in charge of production would say "Can't be done", but the year end numbers would show that production had increased. This would happen year after year. The reality was that production never changed - the books were just fudged to keep heads from rolling.

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This is true.
However to Gadjo's point, she is right, at least as far as Romania is concerned, we did not need to import food before 1989, now we need to import a lot of it even though there is 10% less population.

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Originally Posted by Rudy Tamasz

World economy is not a single entity. It consists of competitors. Each one behaves rationally, but individual rational behavior often produces a general mess. True, you may decide that the market needs an X number of items you produce, but then there are others who also want to make a little money. They start producing same stuff and compete with you. And if you only produce a fixed quantity of items, how do you develop your business, fund marketing, research and development etc.? The good strategy would be to try to occupy as big a part of the market as you can and grab as much profit as you can. And everybody does the same.

You cannot ban competition unless you subordinate everybody to a single body of authority and let it do the planning for everybody. Hey, but you and I have been through that in Communist years. Did it work?

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Ideally every smart company would produce very few products over what they think they can sell in order to limit loses. Practically this is not true. Why is that? I say there are too many idiots out there in charge of marketing strategies.
What use to throw away 20% of your production just because some might think that there is a small chance to sell those 20%?

I keep watching and the companies who do best are those small companies who only produce to fulfill pre-ordered volumes of their products. They are not reporting billions in profit however they are
reporting healthy growth year after year.

Same goes for retailers, those who keep their expenses in check due to ordering only what they know that they will sell and thus not throwing away expired food are the ones who afford to sell cheaper and thus give the customer better value for their money.

The strategy of getting market share by over-saturating the market is not working as often as it fails.

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Originally Posted by ioan

This is true.
However to Gadjo's point, she is right, at least as far as Romania is concerned, we did not need to import food before 1989, now we need to import a lot of it even though there is 10% less population.

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Really? Do you know why this is happening? Is farmland being left bare because farming is not profitable?
In the Ukraine the land was divided and people each got 4ha (or something to that effect - I'm not really certain how the proccess worked). This wasn't enough to make farming profitable, so people would have to join a co-op or just leave the land unfarmed.

It is mostly because farming in Romania is not heavily supported with government subventions unlike in other European countries.
As such the import goods will always be slightly cheaper (and way worse in quality) and this is what matters to people who have financial difficulties like most Romanians have.

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Originally Posted by ioan

Ideally every smart company would produce very few products over what they think they can sell in order to limit loses. Practically this is not true. Why is that? I say there are too many idiots out there in charge of marketing strategies.
What use to throw away 20% of your production just because some might think that there is a small chance to sell those 20%?

I keep watching and the companies who do best are those small companies who only produce to fulfill pre-ordered volumes of their products. They are not reporting billions in profit however they are
reporting healthy growth year after year.

Same goes for retailers, those who keep their expenses in check due to ordering only what they know that they will sell and thus not throwing away expired food are the ones who afford to sell cheaper and thus give the customer better value for their money.

The strategy of getting market share by over-saturating the market is not working as often as it fails.

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Sounds reasonable. Most of those small companies, though, work in either highly specialized areas or upscale segments of certain markets. I.e. demand is naturally limited, it is extremely challenging to enter the market and so competition is soft. If you operate on a global market of mass products your only chance of survival is producing and selling craploads of stuff and giving hard time to your competitiors.

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Originally Posted by anthonyvop

Seriously?

Who told you that? Socialism is one of the major cause of starvation.

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There's no need to be told. I lived a part of my life in the so called "socialist society multilateral developed" and today my work deals with agriculture problems. I'm more than entitled to do a comparison.

It’s a fact that in socialist agriculture the figures were inflated in order to report record productions. However Romania has a high agriculture potential and could easily feed at least ¼ of Europe.
Socialist agriculture developed in cooperatives and the land was exploited in common. During the 60’s and 70’s food was plenty, good and very cheap despite maybe a rudimentary technology. More than all it HAD TASTE unlike the food from abroad. And I really miss the taste of my childhood. Then in the 80’s Ceausescu had the crazy idea to extinguish the country’s debts. Imports were ceased and since we couldn’t export many items we exported our food. The shelves of our shops were empty and the main alimentary products were rationalized ( 1 kilo of sugar or oil/month/person, you could buy once only 300 g of salami/person or 1 bread/person; bread was bought with the ID card only, etc. ). Now it’s fair to say that nobody died from starvation. We are an innovative nation and developed a parallel black market. But the 80’s were really hard times .

After 1989 the land started to be given back to the owners so it is divided in small properties and a big part of it is not exploited anymore. The population of villages is mostly old and unable to work. Then they can’t afford modern technologies of exploitation. The irrigation system is destroyed ( either left or stolen ). Production is affected by natural calamities and peasants don’t use to insure their crops. Subventions in agriculture are still very low ( despite a substantial increase in latest years )

On the other hand competition made farmers to look for easy ways to gain money. They use seeds and sorts from abroad. They may be more productive but products don’t have taste. In my opinion that’s the real drama. We have food, plenty of it, but the quality sucks. Food is not healthy anymore. Meat is injected with salted water ( to be heavier ), vegetables and fruits are treated with chemicals to grow earlier and bigger.
Market is full of imported products, most of them tasteless, the jovial peasants in the markets are replaced by gypsies who would cheat you with the scale and sell you imported vegetables as romanian.

Etc. etc.

There is a joke explaining a little how things worked in communist Romania. They say at some point they brought a sow that was supposed to have around 20 little baby pigs. So time came and only one little pig popped up. The people directly supervising the situation were pretty worried and decided that they can't report only one piglet, they should say they have at least 4 but their supervisors where not happy either with that number. They couldn't go to their supervisors saying the wonder sow only had 4 piglets when everybody was expecting 20 so why not say there were 10 of them, it's not like someone is going to number them. And by the time the report got to the beloved leader there were 20 pigs. Ceausescu, pretty satisfied, decided we would export two and eat the rest and that's just what we did, sold the sow and the piglet and ate the rest.

Don't think it's a joke. The period was full of absurd facts. But they really had happened.
They are reflected in 2 excellent comedies: Tales from the Golden Age -part1 and 2

Amintiri din Epoca de Aur 1 - Tovar
Amintiri din Epoca de Aur 2 - Dragoste în timpul liber - Trailer - Trailere - Trailere

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Originally Posted by Rudy Tamasz

Sounds reasonable. Most of those small companies, though, work in either highly specialized areas or upscale segments of certain markets. I.e. demand is naturally limited, it is extremely challenging to enter the market and so competition is soft. If you operate on a global market of mass products your only chance of survival is producing and selling craploads of stuff and giving hard time to your competitiors.

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This is a much more correct statement IMO than Ioan's view of more product creating waste. Consumers will flock to any product most of the time, it just has to be available to them. And a company that always has extra inventory is much less likely to miss out on sales, while the company that lets inventory fall too low watches profits walk away when that product isn't sitting on the shelf.

Product saturation into the market creates both on hand inventory and visual advertising impressions, and both are a good thing.