Rick Perry schools the US on economics: Supply it, then demand will follow

Supply is based on projected demand at a certain price point;

So - Demand is driven by supply, not the other way around.

That's a contradiction.

The incentive to supply anything at any price point is based on the belief that demand will exist. Period, full stop.

As several people here have pointed out, suppliers don't know what the demand will be so they operate on the assumption, the belief that there will be a demand for whatever it is they are creating.

Now If it were me, I would research my product, I would ask questions. I might even make a few of the things that I want to produce is very small batches (suppliers call these prototypes) so they can test what it is people like and don't like.

Of course, that still does not guarantee success because there are often factors that suppliers fail to consider. But the fact remains that the only reason to ever, ever make anything with the intention of creating profit is that you believe that there will be a demand for it. It is that demand that drives suppliers to create goods and services.

Without the capacity to consume, no amount of supply would change that fact, but without supply, people can still have the desire to demand.

To the contrary there's no contradiction at all. You are ignoring the price, which depends on the cost of supply. The world knows that demand depends on the price of the product or service, end of story. You yourself said as much in an earlier post, you decide whether or not to buy something depending on the price. No producer in his/her right mind is going to start making a product without having a good idea up front what the demand will be AT A CERTAIN PRICE POINT, which in turn depends on the cost of supply. A lot of research goes into trying to figure out what the costs for everything are going to be so you can then determine what your costs of production and distribution are going to be. THEN you can try as best you can to determine what the demand will be AT THAT PRICE. Doesn't matter how much demand there is if you can't sell the product at a price that people will pay AND you make a reasonable profit. Nor can you estimate what the demand will be if you have no idea what the price will be that you can sell the goods or services at.

This ain't rocket science, if demand is estimated to be sky high for a product or service at $20 but you can't produce it for less the $25, guess what? You're going to go make something else. Maybe you'll try to cut costs down below $20 by automation, moving ops offshore or to a non-union state, or maybe a smart federal gov't cuts your taxes and the costs of compliance with regulations down to where with some other factors you can get your costs down below $20, now you'e got a viable proposition if you think it'll stay viable for the near future, say out 5 years. For sure demand has to be there, but it's gotta be there at or below the price you can produce your product at. And again, that is why demand does not drive supply.
 
Now If it were me, I would research my product, I would ask questions. I might even make a few of the things that I want to produce is very small batches (suppliers call these prototypes) so they can test what it is people like and don't like.
.
actually all do obviously that and still 99% fail because demand is mostly not knowable even to those who will be doing the demanding. Do you understand?

Question:

Do you know that at some point I'll be hungry? Unless there's something seriously wrong with you, the answer is yes.

My hunger is a demand that exists whether there are people making food to sell or not.

Do you know specifically what I want to eat? Unless you're my wife, you don't.

People create specific foods in order to meet my demand for food, but since I like some foods better than others people can't just offer any old food, but the food I like.

This illustrates the difference between non-specific demand that exists because of our base desires and specific demand that exists because of our preferences.

If you own a restaurant, the fact that you make food doesn't inspire me to eat, I wanted to eat before I stopped pooping my pants, but you're making food I like meets a specific demand for food that I have.

Do you understand the difference?
Got it. you will demand food in future. You always act like you are a kindergartner and you are the only one in the world who knows 1+1 = 2. What are economic policy implications from your kindergartners conclusion .


I'm just surprised that I have to explain this to you. As if people wouldn't have demands unless producers were making stuff. Ridiculous.
 
Supply is based on projected demand at a certain price point;

So - Demand is driven by supply, not the other way around.

That's a contradiction.

The incentive to supply anything at any price point is based on the belief that demand will exist. Period, full stop.

As several people here have pointed out, suppliers don't know what the demand will be so they operate on the assumption, the belief that there will be a demand for whatever it is they are creating.

Now If it were me, I would research my product, I would ask questions. I might even make a few of the things that I want to produce is very small batches (suppliers call these prototypes) so they can test what it is people like and don't like.

Of course, that still does not guarantee success because there are often factors that suppliers fail to consider. But the fact remains that the only reason to ever, ever make anything with the intention of creating profit is that you believe that there will be a demand for it. It is that demand that drives suppliers to create goods and services.

Without the capacity to consume, no amount of supply would change that fact, but without supply, people can still have the desire to demand.

To the contrary there's no contradiction at all. You are ignoring the price, which depends on the cost of supply. The world knows that demand depends on the price of the product or service, end of story. You yourself said as much in an earlier post, you decide whether or not to buy something depending on the price. No producer in his/her right mind is going to start making a product without having a good idea up front what the demand will be AT A CERTAIN PRICE POINT, which in turn depends on the cost of supply. A lot of research goes into trying to figure out what the costs for everything are going to be so you can then determine what your costs of production and distribution are going to be. THEN you can try as best you can to determine what the demand will be AT THAT PRICE. Doesn't matter how much demand there is if you can't sell the product at a price that people will pay AND you make a reasonable profit. Nor can you estimate what the demand will be if you have no idea what the price will be that you can sell the goods or services at.

This ain't rocket science, if demand is estimated to be sky high for a product or service at $20 but you can't produce it for less the $25, guess what? You're going to go make something else. Maybe you'll try to cut costs down below $20 by automation, moving ops offshore or to a non-union state, or maybe a smart federal gov't cuts your taxes and the costs of compliance with regulations down to where with some other factors you can get your costs down below $20, now you'e got a viable proposition if you think it'll stay viable for the near future, say out 5 years. For sure demand has to be there, but it's gotta be there at or below the price you can produce your product at. And again, that is why demand does not drive supply.

I'm not ignoring price. Though I don't point out that price is a factor in consumption in every follow-up I've had, if you read back, I specifically mention price as part of the decision to consume.

However, as I explained to Ed, I have the desire to eat and I always will. Costs are relative, this is why capitalism promotes competition. As competition increases margins decrease until they reach a point where a business cannot or will not go any lower. This is where efficiency comes in. Two producers making the same exact product, but one can do it for 5% less. Assuming they are both within the law, the difference is that one has found a way to be more efficient.

Conversely, consumption is limited to the private sector's propensity to consume. There is a limit (assuming ceterus paribus) to how much the private sector can reasonably consume. From that point, new products introduced, displace current productivity rather than add to economic growth. In other words, at some point consumption becomes a question of either/ or not and.
 
Supply is based on projected demand at a certain price point;

So - Demand is driven by supply, not the other way around.

That's a contradiction.

The incentive to supply anything at any price point is based on the belief that demand will exist. Period, full stop.

As several people here have pointed out, suppliers don't know what the demand will be so they operate on the assumption, the belief that there will be a demand for whatever it is they are creating.

Now If it were me, I would research my product, I would ask questions. I might even make a few of the things that I want to produce is very small batches (suppliers call these prototypes) so they can test what it is people like and don't like.

Of course, that still does not guarantee success because there are often factors that suppliers fail to consider. But the fact remains that the only reason to ever, ever make anything with the intention of creating profit is that you believe that there will be a demand for it. It is that demand that drives suppliers to create goods and services.

Without the capacity to consume, no amount of supply would change that fact, but without supply, people can still have the desire to demand.

To the contrary there's no contradiction at all. You are ignoring the price, which depends on the cost of supply. The world knows that demand depends on the price of the product or service, end of story. You yourself said as much in an earlier post, you decide whether or not to buy something depending on the price. No producer in his/her right mind is going to start making a product without having a good idea up front what the demand will be AT A CERTAIN PRICE POINT, which in turn depends on the cost of supply. A lot of research goes into trying to figure out what the costs for everything are going to be so you can then determine what your costs of production and distribution are going to be. THEN you can try as best you can to determine what the demand will be AT THAT PRICE. Doesn't matter how much demand there is if you can't sell the product at a price that people will pay AND you make a reasonable profit. Nor can you estimate what the demand will be if you have no idea what the price will be that you can sell the goods or services at.

This ain't rocket science, if demand is estimated to be sky high for a product or service at $20 but you can't produce it for less the $25, guess what? You're going to go make something else. Maybe you'll try to cut costs down below $20 by automation, moving ops offshore or to a non-union state, or maybe a smart federal gov't cuts your taxes and the costs of compliance with regulations down to where with some other factors you can get your costs down below $20, now you'e got a viable proposition if you think it'll stay viable for the near future, say out 5 years. For sure demand has to be there, but it's gotta be there at or below the price you can produce your product at. And again, that is why demand does not drive supply.

I'm not ignoring price. Though I don't point out that price is a factor in consumption in every follow-up I've had, if you read back, I specifically mention price as part of the decision to consume.

However, as I explained to Ed, I have the desire to eat and I always will. Costs are relative, this is why capitalism promotes competition. As competition increases margins decrease until they reach a point where a business cannot or will not go any lower. This is where efficiency comes in. Two producers making the same exact product, but one can do it for 5% less. Assuming they are both within the law, the difference is that one has found a way to be more efficient.

Conversely, consumption is limited to the private sector's propensity to consume. There is a limit (assuming ceterus paribus) to how much the private sector can reasonably consume. From that point, new products introduced, displace current productivity rather than add to economic growth. In other words, at some point consumption becomes a question of either/ or not and.


"However, as I explained to Ed, I have the desire to eat and I always will. Costs are relative, this is why capitalism promotes competition. As competition increases margins decrease until they reach a point where a business cannot or will not go any lower. This is where efficiency comes in. Two producers making the same exact product, but one can do it for 5% less. Assuming they are both within the law, the difference is that one has found a way to be more efficient."

YES! Perfect example of supply driving demand. If your price is too high, guess what? No demand. Demand doesn't have jack squat to do with whether or not you can produce something for 5% less than somebody else.


 
Now If it were me, I would research my product, I would ask questions. I might even make a few of the things that I want to produce is very small batches (suppliers call these prototypes) so they can test what it is people like and don't like.
.
actually all do obviously that and still 99% fail because demand is mostly not knowable even to those who will be doing the demanding. Do you understand?

Question:

Do you know that at some point I'll be hungry? Unless there's something seriously wrong with you, the answer is yes.

My hunger is a demand that exists whether there are people making food to sell or not.

Do you know specifically what I want to eat? Unless you're my wife, you don't.

People create specific foods in order to meet my demand for food, but since I like some foods better than others people can't just offer any old food, but the food I like.

This illustrates the difference between non-specific demand that exists because of our base desires and specific demand that exists because of our preferences.

If you own a restaurant, the fact that you make food doesn't inspire me to eat, I wanted to eat before I stopped pooping my pants, but you're making food I like meets a specific demand for food that I have.

Do you understand the difference?
Got it. you will demand food in future. You always act like you are a kindergartner and you are the only one in the world who knows 1+1 = 2. What are economic policy implications from your kindergartners conclusion .


I'm just surprised that I have to explain this to you. As if people wouldn't have demands unless producers were making stuff. Ridiculous.

For 5th time: What are economic policy implications from your kindergartners conclusion that people will demand food?? Do you know why you are so afraid to answer?
 
"However, as I explained to Ed, I have the desire to eat and I always will. Costs are relative, this is why capitalism promotes competition. As competition increases margins decrease until they reach a point where a business cannot or will not go any lower. This is where efficiency comes in. Two producers making the same exact product, but one can do it for 5% less. Assuming they are both within the law, the difference is that one has found a way to be more efficient."

sorry but even in its most rudimentary form supply-side economics is about tax cuts for business so they can grow the economy through supply innovation, not so they can lower prices.
 
Demand doesn't have jack squat to do with whether or not you can produce something for 5% less than somebody else.
well, usually low cost production is a function of where you are on the learning curve, production economies of scale, and real or potential demand for product. So again I think you are a little off base here since you are talking about demand that is largely know for an existing product. Supply-side economics is more about how you foster or supply the innovations that got us from the stone age to here. Low cost production, which requires innovation to be sure, might be a significant part of that but I don't think the essential part.

Tesla for example is trying to get down the learning curve to a mass market $35,000 car but the heart of the company is not that but rather Musk's IQ, entrepreneurial psychology, and the capital he needed to get started.
 
Right wingers seem to be saying that if you make it, no matter what it is, and throw it out there, people will buy it. Could be anything.
 
Right wingers seem to be saying that if you make it, no matter what it is, and throw it out there, people will buy it. Could be anything.

wrong, they are saying if you encourage the supply of something innovative that people want and can afford , people will buy it.

left wingers are saying if you give people welfare they can buy or demand necessities plus this will encourage a company to produce more and hire more. It's totally idiotic of course since the taxes to pay for the welfare have the opposite affect.
 
Last edited:
I have the desire to eat and I always will. .
and so does everyone on the planet !!! Brilliant deduction Sherlock!!!! Thus, desire or demand existed since the first humans appeared on earth and economists needed to do nothing to stimulate demand.

However, supply was 10000% opposite. The main object of life on the planet has been to figure out how to supply more and more food to save million and millions from starvation. Thus the main object of economics is to ignore demand and encourage Republican capitalist supply in all possible ways!
 
So if I put a big supply of turds out there, will Republicans rush to enjoy those turds? There's plenty of supply. Rick said if you had supply, they will come running and demand will follow.
What? You seem to have an obsession with excrement. I was going to say, Police under such scrutiny that few people can live up to those standards. It's too bad we don't hold civilians or all people to the same high standards we expect from police. Then we wouldn't need policing, would we?
 
Demand doesn't have jack squat to do with whether or not you can produce something for 5% less than somebody else.
well, usually low cost production is a function of where you are on the learning curve, production economies of scale, and real or potential demand for product. So again I think you are a little off base here since you are talking about demand that is largely know for an existing product. Supply-side economics is more about how you foster or supply the innovations that got us from the stone age to here. Low cost production, which requires innovation to be sure, might be a significant part of that but I don't think the essential part.

Tesla for example is trying to get down the learning curve to a mass market $35,000 car but the heart of the company is not that but rather Musk's IQ, entrepreneurial psychology, and the capital he needed to get started.

I dunno Ed, you gotta have investors to get off the ground right? And to get a bank or big lender behind you means you pretty much gotta convince them of the profit potential and the risks/rewards. For that you better have a reputable forecast of the costs of supply and the price you intend to sell at and the forecast of demand at that price. You simply cannot expect a rosy forecast of demand at any price, cuz it won't sell at any price. And then there's the copycats that'll eat into your market.

My question for you is, if low-cost production is a significant but not the essential part then what is? To me, in general demand is driven by price, which in turn is driven by costs of supply. Not every time, but most of the time.
 
Demand doesn't have jack squat to do with whether or not you can produce something for 5% less than somebody else.
well, usually low cost production is a function of where you are on the learning curve, production economies of scale, and real or potential demand for product. So again I think you are a little off base here since you are talking about demand that is largely know for an existing product. Supply-side economics is more about how you foster or supply the innovations that got us from the stone age to here. Low cost production, which requires innovation to be sure, might be a significant part of that but I don't think the essential part.

Tesla for example is trying to get down the learning curve to a mass market $35,000 car but the heart of the company is not that but rather Musk's IQ, entrepreneurial psychology, and the capital he needed to get started.

I dunno Ed, you gotta have investors to get off the ground right? And to get a bank or big lender behind you means you pretty much gotta convince them of the profit potential and the risks/rewards. For that you better have a reputable forecast of the costs of supply and the price you intend to sell at and the forecast of demand at that price. You simply cannot expect a rosy forecast of demand at any price, cuz it won't sell at any price. And then there's the copycats that'll eat into your market.

My question for you is, if low-cost production is a significant but not the essential part then what is? To me, in general demand is driven by price, which in turn is driven by costs of supply. Not every time, but most of the time.
Reputable forcast for demand for new product??? Not really nobody had a clue how big internet , automobile, plane, credit cards, PC, copy machine, Amazon etc etc etc demand would be. This is class one day one in MBA school. Bezos of Amazon said the most important $50,000 of his life was the first 50,000 that no one would give him to start the company with uncertain demand for books over internet. Basically with innovation you are looking for someone as crazy as you for the funds.
 
Last edited:
Demand doesn't have jack squat to do with whether or not you can produce something for 5% less than somebody else.
well, usually low cost production is a function of where you are on the learning curve, production economies of scale, and real or potential demand for product. So again I think you are a little off base here since you are talking about demand that is largely know for an existing product. Supply-side economics is more about how you foster or supply the innovations that got us from the stone age to here. Low cost production, which requires innovation to be sure, might be a significant part of that but I don't think the essential part.

Tesla for example is trying to get down the learning curve to a mass market $35,000 car but the heart of the company is not that but rather Musk's IQ, entrepreneurial psychology, and the capital he needed to get started.

I dunno Ed, you gotta have investors to get off the ground right? And to get a bank or big lender behind you means you pretty much gotta convince them of the profit potential and the risks/rewards. For that you better have a reputable forecast of the costs of supply and the price you intend to sell at and the forecast of demand at that price. You simply cannot expect a rosy forecast of demand at any price, cuz it won't sell at any price. And then there's the copycats that'll eat into your market.

My question for you is, if low-cost production is a significant but not the essential part then what is? To me, in general demand is driven by price, which in turn is driven by costs of supply. Not every time, but most of the time.
What is essential part of capitalist Republican supply side success: product IQ, entreprenial psychology, access to capital, persistence , dumb luck, youthful ignorance, a supportive Republican culture. Musk has said only in America although he apparently didn't know he should have said only in Republican capitalist America.
 
Last edited:

New Topics

Forum List

Back
Top