The BBC’s Roland Buerk, speaking on American Public Media’s Marketplace news show, talking about deflation in Japan.
You know, companies start to pander to people’s needs to pay less. McDonald’s for example introduced a 100 yen — just over $1 — menus a few years ago. There’s a battle between companies to make jeans for the cheapest possible price. You can buy a pair of jeans for about $5 now in Japan. Once you’re in that downward spiral, it’s very hard to pull out of it.
Very true. Once businesses start responding to competitive pressures it’s very hard for them to (successfully) quit doing it. Thank god.
This snippet is a classic example of why Marketplace drives me crazy. It’s a great source for business news–not the stock market report, but stories on what real businesses and consumers are doing in the constant process of market adaptation–and yet they so often feature people who seem not to know even the most basic principles about markets.
[Hattip to Don Boudreaux, who, of course, >a href=”http://cafehayek.com/2011/05/the-problem-began-when-the-invention-of-the-spear-reduced-the-price-of-food.html” target=”_blank”>wrote a letter.