Why are Automated Car Washes being Downsized to 5 Guys with Rags?
Hint: Which is the Minimum Cost = Pl X(labor) or Pc Y(capital) machine
- “Our real problem is symbolized by the car wash. A car wash used to mean a machine. Now it means five guys with rags. There are now 20,000 hand car washes in Britain, only a thousand of them regulated. By contrast, in the space of 10 years, the number of rollover car-wash machines has halved – from 9,000 to 4,200. The free-market economic model, combined with a globalized labor market, has produced a kind of reverse industrialization.
Five guys with rags can undercut a machine that cost tens of thousands of pounds to build, because the entire economic system is geared to distributing the proceeds of globalization upwards and its costs downwards. Mark Carney had some very prophetic things to say about this problem, as well, but funnily enough the tabloids ignored it.”
The Model here is similar to a QM model in that we can look at a car wash in two ways, either using machines or using labor. In this model and due to globalization in Britain, why do you suppose that more hand wash car washers are replacing machine washes? How might the fact that the EU regulates Drive through Car Washes but does not do the same for a 5-man car washes? How does increases in Government regulation could also make a difference with the decreases in Drive through Wash establishments over the past 5 years?
- Why do you suppose the people in Russia are willing to remain in longer lines than the people of United States after watching that huge que that goes for several block of the first McDonald’s that comes to Russia. Also, why do you suppose the McDonald’s store size in Moscow is much larger than here? Finally, how has U.S. firms like McDonald’s contributed to the Americanization of countries, like Russia?
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