I must not understand economics as well as I think I do.
There are a couple things I need some help understanding. These business owners who say they are going to either close or reduce their employee count because of the Affordable Care Act (here and here), they don’t think that their customers are going to go without their products, right?
Aggregate demand for their services won’t be reduced just because one supplier doesn’t produce any longer, will it?
So those customers will simply go to competitors, won’t they?
They’ll go to someone who can manage their business more efficiently (and profitably) in an environment of higher fixed costs–someone who can produce the quantities demanded.
Supply may be reduced when these guys (and they seem to all be guys) cut back, which potentially raisies prices (depending on its elasticity), but the supply won’t fall to zero. Those surviving business will generate more sales and (potentially, depending on their own capacity and efficiency) hire more people.
Isn’t that the way the system works? The inefficient producer is run out of the market and the efficient ones survive and prosper? Am I missing something?
Aren’t these guys who are making noise about this just admitting that their inefficient and bad managers?
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