Chaya
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- Aug 9, 2015
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I've been reading a discussion bemoaning the high prices at retail in Argentina. I live here and also am surprised at how much a visit to either the cafe or supermercado costs.
What I don't understand is that people haven't grasped this is a result of a socialist style economy. An economy that has anti free market rules that causes serious distortions in the market place.
Simple, rapid and effective solution. Call it old fashioned supply and demand economics. Free up the damn market.
Take off import and export control's. Let there be open competition for goods and services.
Use competition to rid the economy of non business people who are running these protected stores etc.
I say they are non business people because they have no idea about having prices at a level that attracts increased demand. Yes you will have lower margins but at the end of the month you will have much higher income and yes even profit.
No these numbskulls store owners would rather keep and even increase markup margins and see their store traffic fall. Even fall to the point of getting 5 customers a day rather than 20.
If I had the time I would open a store. Slash margins. Advertise hard for the first 2 weeks and wamo, fill my store with customers, empty my shelves and have word of mouth bring in even more customer's.
But the socialists would say. You shouldn't do that. It's unfair to the other high priced stores. What I answer is it is more unfair to the people, the economy and the country to have no competition and businesses fighting for customers.
Yes, freeing up the market to the free flow of goods and services will be very dusruptive. But it is the only way to move from a 3rd world economy to a 1st world one. IMHO
What I don't understand is that people haven't grasped this is a result of a socialist style economy. An economy that has anti free market rules that causes serious distortions in the market place.
Simple, rapid and effective solution. Call it old fashioned supply and demand economics. Free up the damn market.
Take off import and export control's. Let there be open competition for goods and services.
Use competition to rid the economy of non business people who are running these protected stores etc.
I say they are non business people because they have no idea about having prices at a level that attracts increased demand. Yes you will have lower margins but at the end of the month you will have much higher income and yes even profit.
No these numbskulls store owners would rather keep and even increase markup margins and see their store traffic fall. Even fall to the point of getting 5 customers a day rather than 20.
If I had the time I would open a store. Slash margins. Advertise hard for the first 2 weeks and wamo, fill my store with customers, empty my shelves and have word of mouth bring in even more customer's.
But the socialists would say. You shouldn't do that. It's unfair to the other high priced stores. What I answer is it is more unfair to the people, the economy and the country to have no competition and businesses fighting for customers.
Yes, freeing up the market to the free flow of goods and services will be very dusruptive. But it is the only way to move from a 3rd world economy to a 1st world one. IMHO
I'm guessing you have never run a business here. Some factors you haven't taken into account: the HIGH cost of employees. Don't forget their 30% plus raises - and if you have union employees - you don't have any say in that. The huge increases in utility costs. The fact that your suppliers probably will be increasing the cost of your goods every single month. They're facing the same challenges you are (employees, raw goods, etc). The fact you may not even be able to get the products you need to sell them (have you ever noticed how supply varies from week to week in the supermarkets? It's not that they don't want to sell you things. They just can't get them.) The increase in NAFTA/Diesel and how that affects what it costs for you to get the goods you are selling. The 35% corp income tax you'll be paying on your profits. The costs for the accountant and lawyer that you'll be needing to a) file all the paperwork and B) deal with the inevitable lawsuits by your employees.