"So why don't they jack up their prices above the market price? You seem to think that's the solution."
Geez, YN, I thought you were better than this. It is usually a challenge to debate you, but you are lobbing softballs today. You must not be a "morning person". LOL
The answer to your question is obvious. If ALL auto manufacturers were unprofitable, prices would go up. However, since the market is competitive, more efficient producers can offer their product for less and the market won't pay a premium to subsidize inefficient producers. There is a fundamental difference between individual uncompetitive producers and the cost structure of the entire industry. Please see my soft drink story above if you still don't get that.
Why have the prices of electronic consumer products dropped so much in the past few years? Because the Chinese can make them so much cheaper than we can. The reasons have to do with more than just labor costs, but we will leave that alone for later discussion. The point is that their production costs get translated into lower consumer prices. This whole equilibrium is recalibrated each and every day. That is the way that a free market economy works and the global economy is getting freer all the time.
This stuff isn't nearly as difficult as you are making it.
"This stuff isn't nearly as difficult as you are making it."
I am reminded of a recent thread in which an SQL posted something like: "The rising popularity of the FairTax is a testimony to the economic ignorance of the American public."
And then we get into these ridiculous extended debates about whether prices and costs have any relationship.