So, i was at class and received my daily dose of communist brainwash. My teacher told us that there was a company in my state that had 80% of the salt market and they wanted a loan to buy some machines that would low the cost of production. Apparently it was some government loan because he said they refused the loan because the cut in the production costs wouldn’t be passed on to the consumer. So this whole thing was presented as a market failure because salt was an inelastic product and any cut in the production cost would only benefit the capitalist pig that owned the company.
Can anyone refute that or indicate me some material on this subject?
You should ask your teacher if he will pass on the savings from any further education he does to whoever employs him, or if he will use additional training as a means to increasing his pay scale.
Socialists hate to be reminded that they work for profit.
This sounds like a very confusing example. If I understand it properly, he’s saying that any loan to the company to lower the cost of production wouldn’t be passed on to the cosumer, and thus, this is a market failure. But the example clearly says that the company only has 80% of the market share, so what about the other 20%, and why aren’t they able to take advantage of the situation, charge less, and capture a larger share of the market?
I don’t see why "inelasticity"is the focus of the example, iinstead of competition. I would also be cautious about anything being described as inelastic without more specific information or context to understand the degree of elasticity involved–I’m not sure there’s anything that’s completely inelastic, just varying degrees of elasticity.
And last, but possibly not least, I can’t imagine that a private bank would deny the loan simply because they thought the costs wouldn’t be passed on to the consumer–their concern would be on how likely the company would pay the loan back. Government shouldn’t even be in the business of making loans.