[Hemingway's Ghost]

Competition will prevent this. If you don't think competition will force pricecs down and wages up in an amount corresponding to the eliminated costs, then how do you explain today's pricing and wages being competitive?

Retail prices always go up. People get used to valuing goods a certain way and don't flinch at slight increases. Retail prices only seem to go down for obsolete products or products on the verge of obsolescence.

I simply can't envision retail prices dropping on the order of 20% across the board due to nothing other than manufacturer or producer benevolence. I simply don't think producers or manufacturers will pass any savings on through to consumers: I think they'll pocket the difference. If I were a businessperson, I sure as hell would. You're not in business to be a great guy; you're in business to make money.

[Principled]

I simply can't envision retail prices dropping on the order of 20% across the board due to nothing other than manufacturer or producer benevolence.

Me either! Price stability will not be due to anyone's benevolence - it will be due to a desire to survive.

Why doesn't a company go out today and simply increase prices? Why not?

[phil_will1]

"I simply can't envision retail prices dropping on the order of 20% across the board due to nothing other than manufacturer or producer benevolence."

Neither can I. However, I do understand how a free market economy operates and I see price competition all around me every day. It's very obvious.

This idea that the price drops are due to the generosity or benevolence of producers and retailers is one of the most common objections to the FairTax. In fact, as economic theory holds, maximizing price is NOT synonymous with maximizing profit because of the elasticity of demand. Businesses are in business to maximize profits, not prices. There are many, many, many examples of that principle all around us.

[phil_will1]

"Retail prices always go up. People get used to valuing goods a certain way and don't flinch at slight increases. Retail prices only seem to go down for obsolete products or products on the verge of obsolescence."

Not true ..... I can't imagine where you got that idea. It certainly doesn't square with economic principles nor with my experience.

Do you recall the pricing of DVD players when they came out? MUCH higher than they are now, and I would venture a guess that today's have better features and functions. What about computers? I saw a computer advertised the other day for $500 that is a killer machine. You don't have to go back very far to remember a time when a decent computer was over a grand .. and those machines were nothing compared to today's.