AboutWarren D. Miller, CFA, ASA, CMA, CPA Expertise My in-depth knowledge of economics is confined to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Other questions dealing with macroeconomics, the traditional neoclassical paradigm, labor economics, environmental economics, agricultural economics, health economics, and so on should go to those who have the appropriate expertise.
N.B.: I DO NOT ANSWER QUESTIONS MARKED 'PRIVATE' because I believe that knowledge should be shared, not hoarded. I also believe that such questions are likely to come those trying to cheat. Similarly, as one who was a full-time academic for half a decade, I can recognize test and homework questions several time zones away. Therefore, please do not demean yourself by submitting such questions to me. Those who do so are cheating, pure and simple, and I WILL call you out publicly if I believe you are doing so. I have a zero-tolerance policy where cheating and dishonesty are concerned.
In addition, please don't imitate the businessman who posted a request for help in August 2008. He expressly denied that he was seeking "investment advice" and said that his query was for, and I quote, "educational and informational purposes." Later, he allowed as how his questions related to the possible purchase of a $500K piece of equipment. I said I thought he had misrepresented himself. Bottom line: high-end business consulting is how I make my living. I am the sole support for my family. Please respect that fact and don't try to get for free what our clients pay for. If your company is big enough to have a sophisticated problem, it's big enough to pay for the kind of expert advice we provide. Beckmill Research, LLC, is a 95-octane firm. We're small, but we've been at this for nearly 18 years. We know what we're doing.
Finally, please DO NOT ask for investment advice. I am not licensed to provide such advice. If you want such advice, check with your financial planner or other financial adviser.
Experience I work with Austrian economics (which is different in major respects from the traditional neoclassical model), industrial organization (which is about industry structure, conduct, and performance), and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) everyday in my work. I appraise closely-held businesses, provide exit-planning services, and offer high-level strategic analysis, advice, and clients to CEOs and owners of mid-sized businesses. Understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.
Organizations CFA Institute, Strategic Management Society, American Society of Appraisers, Institute of Management Accountants, Academy of Management, Culver Legion
Publications CFA Magazine, Strategic Finance, Valuation Strategies, Value Examiner, Journal of Advanced Property Economics, Harvard Business Review, American Fly Fisher, CFA Digest, CPA Expert, and Business Valuation Review, among others
Education/Credentials MBA - Oklahoma State (1991)
BBA - U. of Oklahoma (1975)
Chartered Financial Analyst designation (2006)
Accredited Senior Appraiser (2006)
Certified Management Accountant (1992)
Certified Public Accountant (1992)
If everyone in the world, had the same amount of money. Which i think would make everyone in the world poor, as there are not enough resources to go around. Would people still in this world of equality be able to afford luxury items such as plasma televisions and playstation's?
My workmate is adamant that even in this world where everyone is poor, luxury items would still be affordable due to market demand and also manufacturers adjusting prices accordingly. I however disagree, as i think people due to lack of resources would buy necessity items.
Sorry if this question is quite vague.
Thanks
Duncan
Answer Dear Duncan--
Thanks for your question. It's hard to know where to start on this one because the world is not static the way your question would have one believe. Ordinarily I wouldn't respond to this type of question because it is so hypothetical and so unrealistic that I really think that no one, including you, benefits from it. I can only infer that you have not had any economics courses or training in your life. If you had, you'd never ask a question like this because you would know how unrealistic it is. I'm going to offer a few brief thoughts, but that is all.
Your workmate is right that manufacturers would adjust prices. But you're missing at least three other crucial factors, besides the fact that the scenario you describe would NEVER HAPPEN. The first is that the currencies in the world are different. That means different exchange rates. Those exchange rates are dynamic, which means that they are in a state of constant change and readjustment. So, as a practical matter, it is utterly impossible for everyone to have "the same amount of money." It cannot happen.
The second and more important issue that you're missing, it seems to me, is human nature. Like exchange rates, people are not going to stand still. They are going to take different actions, make different decisions, and work towards different goals. That throws your little Utopia into a state of, well, REALITY, Duncan.
And that brings up the third gaping hole in your idyllic scenario: Its complete failure to show a shred of evidence that you understand economic reality. That is why I say that you must never have had any courses or training in economics, or you wouldn't be wasting your time on something so trivial. I don't mean that to be insulting or anything, please understand. But it is trivial. And it's not worthy of the time of a guy who seems otherwise intelligent. Maybe you've been spending too much time in the sun. :-)
