IdleRich
IdleRich
Well that's the thing isn't it. The diffrence between the price it buys them at and the price it sells them at is its profit. It could buy the things at a higher price, sell them the same and face a slight decrease in its profit with none of the other consequences occurring."If the MNC (or whoever) agrees to pay more on every item to cover the rise in labour cost to the sector or firms in question, because the marginal cost of producing said items will have gone up, then its own costs will have risen dramatically without any increase in profit. Do you think it will just continue to buy the same amount of goods from the same producer, even though they now cost a lot more? Of course not, as with the local factory owner, the MNC doesn't have unlimited amounts of cash lying around and maximising profit is its raison d'etre. The company will have to incorporate the price rise. It will say item x now costs whatever it did plus the rise in labour costs. Our returns on every item sold are now much less (economy of scale), so we are less interested in selling them. ."
But if profit is the only thing, more important than people's lives it can't do that. That's what I meant earlier when I was saying that companies do things that none of the individuals would choose to do because they have to maximise profits to their share-holders.