Thanks for sharing. You got a lot of things right.
What you didn't get right was my example. I'm not talking about a situation where Microsoft is pricing a $100 product at $80. That does not result in wealth destruction, as you explained in detail. (It does result in less $$$ in Microsoft's bank account, though.)
My example was specifically about an Xbox that people were only willing to pay $80 for, and that Microsoft spent $100 to create. (Obviously, $100/$80 are illustrative, not actual figures.)
I will continue to assert that spending $100 to create a product that no one else values at more than $80 does, in fact, destroy global wealth. And that that is a Bad Thing, not "wise". You're free to continue to tell people the opposite.
Have you considered disposable razors, printer ink cartridges, cartridge-based coffee makers, those dust mops that use sheets, highway toll transponders, etc.
You might not be making a profit up front, but there can well be profit from convincing a customer into a particular revenue stream.
In cases like that, the wealth effect would have to consider the entire value stream, not just an individual transaction.
If the company with products you describe, over many years, lost money consistently and it was not due to just "giving away" product at lower than the market would pay but was truly because the market would not pay the company's cost of production for the goods and services offered, then in that case, the company will have destroyed global wealth.
I agree that spending $100 to create $80 is wealth destruction. However Microsoft justified it at the time by taking a cut of game sales. If people bought enough games, then they made a profit per unit.
Later generations of the console had much better profit margins for them.
What you didn't get right was my example. I'm not talking about a situation where Microsoft is pricing a $100 product at $80. That does not result in wealth destruction, as you explained in detail. (It does result in less $$$ in Microsoft's bank account, though.)
My example was specifically about an Xbox that people were only willing to pay $80 for, and that Microsoft spent $100 to create. (Obviously, $100/$80 are illustrative, not actual figures.)
I will continue to assert that spending $100 to create a product that no one else values at more than $80 does, in fact, destroy global wealth. And that that is a Bad Thing, not "wise". You're free to continue to tell people the opposite.