In the short term a jobs guarantee and decent minimum wage are better solutions.
However, in a few generations we will have a world in which 1/2 to 3/4 of people are literally unemployable because there is nothing they can do a robot can't do faster, better and more efficiently. At which point the choices are going to be a "UBI" set at a level high enough to approximate a solid working-to-middle-class lifestyle (single income being enough to support a family, buy a house, take a holiday once a year, etc), or - the neoliberalists' preference - a return to a feudalism-esque system of serfs reliant on their UBI to barely survive overseen by a handful of incomprehensibly wealthy elites. Or a honkin' great big war.
Also, taxes don't fund expenses. Taxes are there to control inflation, address income and wealth inequalities and incentivise behaviour. Thirty years of mismanaged taxation (ie: always reducing it) is why inflation and wealth/income inequalities are through the roof. Money inevitably flows upwards.
This is tax "minimization" or tax "avoidance". All people are supposed to practice it, and it's through this mechanism that you can set public policy through tax policy, ex. solar rebates.
No, that is not the "mechanism that you can set public policy through tax policy" at all, and no, "all people" are not "supposed to practice it".
The "mechanism you can set public policy" *is* tax. That's the reason it exists.
"Tax avoidance" inevitably involves schemes of varying complexity to move money around, obfuscate its origin or destination, and otherwise make your financial dealings opaque enough so that it's not worth examining them. It's the nudge-nudge, wink-wink way of describing tax evasion.
Competition isn't competition when the player deliberately plays bad? I don't agree.
Right. So you’re the kind of guy who would argue there should be no laws against, say, fraud ? Or theft ? You know, "deliberately playing bad" ?
And I've never said that I want to drive down US living standards.
You keep arguing for things that will cause it and against things that will improve it.
No, for two reasons. First, cheaper is an important category of better.
Buying some stolen speakers out of the back of someone’s truck is a lot cheaper than buying them in the store, but it is not “better”.
Second, China in particular is doing a much better job here than the US is, including a much better job of taking advantage of US R&D.
That’s because China doesn’t care about things like pollution or safety.
They can always sell to markets that aren't as screwed up like China or India. These demand problems don't exist there. There may be a huge oversupply of employees in those markets, but it's getting sopped up. Meanwhile developed world countries like the US seem to try to make people useless.
LOL. Actually, genuinely, LOL.
China ? You're serious ? The free-market zealot is idolising *China* ?
Labour in China is “sopped up” by Government employing people (either directly or by proxy) and paid for through massive credit creation. China has tariffs and other regulations on immigration and foreign investment out the wazoo. They manipulate their currency with abandon. They build entire empty cities, for fuck's sake. All that stuff you’ve been arguing for the last few days is “delusional”, they are doing as hard and fast as is humanly possibly (ultimately too hard and too fast - it's probably going to screw them, but it'll be interesting to watch and see if they get away with it).
And I note once again, the ridiculous ideological bias against employers rears its ugly head in your words. You keep harping on how lower wages hampers consumption and hence, economic progress, but you continue to completely ignore that this goes both ways. Increasing the cost of employees to employers also reduces demand for labor and cause all that stuff.
There is no bias against employers and I have not ignored “that it goes both ways”. You either don’t understand what’s being said, or you are too far down your ideological rabbit hole to comprehend anything different.
You could drop the cost of labour to zero tomorrow and it would likely have a negligible effect on unemployment (in the short term, anyway - it would send it through the roof in the long term). Businesses aren’t going to start employing people “just because it’s cheaper”. They’re only going to employ people when the demand for their products or services increases beyond the ability of the existing employees to meet it. The economy is driven by demand. No demand, no need for production. No need for production, no need to hire employees.
If you genuinely think that simply reducing the cost of employees to business will cause them to hire more people, please explain why.
The obvious actual reason is that capital doesn't have to compete with several billion people.
*sigh*
Workers wages aren’t lower simply because they have to compete with other people. They are lower because those other people are systemically cheaper, because they have lower standards of living.
There is no reason CEOs and their ilk are inherently excluded from that, *except* through the protections they get from policy. Ie: it’s a choice.
No, I was speaking of wealth. It sounds like the problem here is that you are zero-sum thinking in a situation where it doesn't apply. In your scenario, you grew the real wealth of your poor by a factor of five, but that wasn't good enough because you also grew the wea
Were it not for those protections, then the wages of lowest paid probably would be bumping up against zero. Already huge swathes of the population are dependent on welfare for survival because they cannot earn enough to survive on themselves due to a) wage suppression and b) structurally-imposed unemployment.
I mean to edit this to say:
In fact, arguably wages are already bumping up against zero. Huge swathes of the population are dependent on welfare for survival because they cannot earn enough to survive on themselves due to a) wage suppression and b) structurally-imposed unemployment.
The US doesn't compete in the global labor market, yet you feel the need to reduce access to cheap labor through immigration, apply tariffs to equalize costs of foreign-manufactured goods, and employ idle labor in useful work. But the US doesn't compete in the global labor market and hence, doesn't have a reason for these measures which are all purely protectionist measures for a global labor market.
The US does not compete in the global labour market in the sense that it is selling cheaper labour (like, say, China, or India). It can’t sell cheaper labour because it is an advanced country and the costs of maintaining that lifestyle are too high. Unless of course you want to drive down US living standards to the level of China or India (and there are plenty of people who seem to think that’s a good idea - for everyone except themselves, of course).
I would have thought this meaning was obvious from the second part where I said “it’s not trying to make a cheaper mousetrap, it’s trying to make a better mousetrap”. I suppose I could have been more explicit and said ““it’s not trying to make a cheaper mousetrap through reducing input costs, it’s trying to make a better mousetrap”. Would that have helped ?
And here you are again, only ever looking at one side of the equation. The obvious rebuttal is that employers always have attempted to reduce costs through lowering wages.
How is that a rebuttal when I’ve been talking about it throughout this entire discussion ? Of course employers have always attempted to reduce costs through lowering wages. The point I keep making is that allowing them to do it is a policy choice.
The reason they've failed to reach zero is because employers have to compete to get the labor they need to profit. The more employers looking for employees, the better the deal for workers. That's the supply-demand dynamic that you keep ignoring.
Ignoring ? Supply and demand is at the bloody core of everything I’ve written !
The reasons employers haven’t reached zero salaries are because some small protections still exist for workers (mainly the minimum wage, but unions still have some small pockets of presence). Note that businesses are constantly agitating to remove or reduce these protections. We - the entire western world - have an enormous glut of available workers. Were it not for those protections, then the wages of lowest paid probably would be bumping up against zero. Already huge swathes of the population are dependent on welfare for survival because they cannot earn enough to survive on themselves due to a) wage suppression and b) structurally-imposed unemployment.
You write “the more employers looking for employees, the better the deal for workers” as if “employing people” is what businesses are there to do. They are not. Businesses are there to produce stuff and sell it. Having to employ people is simply an inconvenient consequence of producing stuff to sell. They only produce stuff if there is someone on the other side of the equation to consume that stuff. There is a demand shortage because most people are broke. With this stagnating or declining demand, there is no reason for employers to produce more (because why would you produce more than you can sell?), since employers have no need to produce more, they have no need to hire more employees (why would you hire employees if you had nothing for them to do?), since they have no reason to hire more employees, and there is a huge oversupply of employees in the market, there is no competition between employers and therefore, “the deal” is most certainly not getting any better for employees.
If you still think I am not accounting for some aspect of “supply and demand”, then be more specific about what it is and I will try to explain it differently.
The obvious question here is what changed between the first two d
How is it that I am only considering "certain demand" ? How is it that "employers are excluded" ?
Credit doesn't consume in itself, it just makes it a bit easier.
Yes it does. That's where speculation and bubbles come from.
And it's worth noting that a lot of people were just find with that credit being used to build a lot of houses and other things. That physical activity generates a lot of economic activity while pure credit would not.
I'm sure the people making a motza out of flipping houses because they were lucking enough to get in early were very happy with it, but it's mostly unproductive activity.
I agree. I just think it is policies you favor which do that.
To reiterate, the policies I favour have barely even been discussed, let alone implemented, for about forty years. They were in place from the end of WW2 to the early '70s. They ended about where that fairly well known divergence between productivity and real wages happens.
It's supply and demand for labor. You cripple the demand and then the price of labor, namely, wages and other benefits goes down.Another effect is that if you force employers and employees to vastly overpay for low value benefits (like weak return pensions or greatly overpriced health care), then you shrink the actual benefit that workers get from working.
The shrinking of the benefit workers get from working is the result of the race-to-the-bottom policymaking endemic to supply-side neoliberalism.
The number one economic fallacy is that we compare our world to some unattainable goal rather than the alternative choices we could have made. No choice of the past fifty years would allow the US to maintain its relative standard of living and compete on the global labor market at the wage differentials that existed in 1965.
The choice to undermine labour absolutely did. It is the foundation on which subsequent growth in inequality and the economic malaise that has come with it was built.
The US doesn't compete in the global labour market. The idea that it could is absurd. The US is an advanced economy that competes on the global product and service market. It's not trying to make a cheaper mousetrap, it's trying to make a better mousetrap.
And whenever this falsehood rears its head, I point out this graph [voxeu.org] (see figure 1). It shows the wealthiest indeed increasing their wealth over the recent period 1988-2008. But it also shows two thirds of humanity getting substantial increases in their wealth as well. Just because your policies help the wealthy in your country more than they help you, doesn't mean that others in the world aren't becoming better off through no fault of you.
Neither the graph, nor your statement, do anything to refute the point.
Here's a simple example.
Let's say at the beginning, the poor have a dollar and the wealthy have ten dollars. Thanks to productivity increases, after fifty years the poor now have 5 dollars but the wealthy have a hundred dollars.
That's an upwards transfer of wealth. Because the growth in wealth is a result of everyone's productivity increases. If it had been an even transfer of wealth, the poor would have ten dollars and the wealthy would have a hundred dollars. Ie: their growth rates would have been the same.
This is what happend for the first couple of decades after WW2 (in actual fact it was even better - incomes for the working and middle classes grew _faster_ than incomes for the upper classes).
Name another good or service, for which people pay money, which you can increase the supply by a factor of five to ten without having the price fall through the floor and stay there.
Begging the question fallacy.
Despite your vigorous and reality-free assertion, wages didn't collapse in the US or the rest of the developed world (except for some particularly dysfunctional count
The problem is that you're re-writing it, then responding to 'real world' issues in your re-write, without giving me the opportunity to chime in with my thoughts on your re-write. Ask for clarification.
I'm basing it on your previous description, which is the BIG as a universal payment set at subsistence levels.
Is that not what your proposed BIG is ?
Correct. I'm willing to accept those on low-paying jobs being, at least partially, dependent upon the payment because of my principles - basically that working should be better than not working, and that generally means you have to wean people off welfare, not cut it off. While there are indeed those that would use it as a hammock, not a net, you tweak the amounts such that they're at an acceptable number.
Setting the bar for a (full time) low-paying job high enough that people prefer it over (subsistence) welfare satisfies the same principle without providing a crutch for business.
On the other hand, which is better - completely dependent upon your employer for your income, or half and half?
False dichotomy.
Can't just up and move? Tell my whole bloody family that. Except for grandmother, we're all states away from where we first started. I've lived in 8 states and 5 countries.
And you think this is something people should have to experience as a matter of course when they find themselves unemployed ?
Also, as more people move to the cheaper areas, they'll need services and such, which will increase the numbers of jobs available.
As I said earlier, a kind of ghettoisation.
Dude, I lived that life. That being said, if your social support structures are that important, they can probably kick in some help. $500/month should be enough to cover the basics even in expensive areas even if you end up sleeping in the living room of your social support network for a bit.
As I said above that live is something you think should happen to people as a matter of course ?
Social structures are a lot more than money. Your Grandma might have barely enough to pay for her food and live in a tiny one bedroom apartment, but she can watch your baby while you go looking for work (or working). Your sister is a shoulder to cry on after months of trying to find work but not succeeding. Etc.
Your worldview seems to be that people are just irrelevant cogs in a machine that exists solely to make more stuff.
Then it acting as unemployment so they have time to seek a new job before losing their house or whatever does. Hell, it can also provide support while they go back into education if that's necessary.
That's what welfare does. Without the systemic subsidy for business.
Actually, that's my tending to respond to you. If you're bringing up the long-term unemployed, well, that's complicated. You'd need to encourage them to seek more education, but we actually have something of an education glut today. They need the *right* education. It would also help if we could reduce the cost of labor enough to encourage more production inside the USA. Modify regulations so they can go into business for themselves easier.
FFS.
Wages have been systemically undermined, such that most workers have seen no real increase in wages for the better part of forty years. Something like half of society is dependent, to some degree, on welfare. The consequent lack of disposable income means nobody can afford to buy much stuff, which means business can't sell anything.
And you think driving wages lower to make labour cheaper is some sort of solution !?
Businesses aren't going to employ more people out of the goodness of their hearts because wages get lower. They're going to employ more people because demand increases to a point where they HAVE to so as to have sufficient production capacity to meet that demand.
You have the complexity that you want *EVERY* job to pay enough to support a family of 4-5. That means all jobs have
You've created a tautological ex nihilo scenario to suit your personal belief system, that has no resemblance to reality.
All money is spent into existence. All money has corresponding debt. Governments do not need to tax before they can spend. Taxation controls inflation by removing money from the economy.
No. Employers are demand too and there's not enough of them either. You only consider certain demand not all demand. The demand model of an economy is inherently flawed because it deliberately excludes employers, a huge category of demand.
How's that ?
Here's how I see it. In the US, a few years back our overheated real estate market created a massive recession for the entire world. Here was an attempt to create massive consumer demand for US real estate and it failed badly.
The product wasn't real estate. It was credit.
My view is that we have considerable evidence that consumers just can't consume much more than they are right now.
Yes. Because they're broke. They're broke because they've suffered decades of policies aimed at suppressing their incomes and are additionally suffering from the debt load taken on to maintain the increase in living standards they had grown to expect from the previous thirty years of progress.
Focusing on consumer demand is a terrible strategy because it does nothing to improve the earning power of those consumers. There's only so much a consumer can consume, even when borrowing everything they can borrow.
The mind-bogglingly issuing of credit over the last few decades and consequent crushing debt load was done to mask wage stagnation. If wages had increased in line with productivity, people wouldn't have needed to borrow to consume because they would have had the real disposable income to consume.
Focusing on consumer demand is the only way to fix the problem because the economy relies on it to function. Ideally, consumer demand is increased through higher real wages and increased productivity, leading to greater disposable incomes.
Similarly, attempts to increase the standard of living of workers while making their labor less valuable to employers are an ongoing disaster. The contradiction inherently insures it will not work.
Yes ? That's the point I've been (repeatedly) making ?
Then stop enabling that. Your policies are the cause here.
No they're not. "My" policies - jobs guarantees, full employment as a policy goal, strong workers rights, strong financial sector regulation, extensive public infrastructure and services, high progressive taxes to control wealth distribution and inflation, liveable welfare, etc, etc - haven't seen light of day since the early '70s. They are the kinds of policies that defined post-WW2 USA - "capitalism's golden age".
The Thatcherites and Reaganites - neoliberals - completely and utterly own today's worldwide economic armageddon. They have been running the world since the mid '70s. They are the ones who have been "attempting to increase the standard of living of workers while making their labor less valuable to employers".
Rich people can get wealthier anywhere in the world. Middle and lower-class people can only get wealthier where they live. And the primary means by which those people get wealthier is by labor.
Yes ? Again, the point I've been making repeatedly ?
Employment is trade. You have to have something to offer in order to get wages in exchange. The employer is the important part of the economy, not a consumer. The demand of employers is so much more open ended than the demand of people who are capped by their limited earning power.
*sigh*
People's "earning power" is limited by what their employers pay, which is a function of their bargaining power with said employer (the "trade"). Since the developed world has pursued thirty-odd years of policy aimed at undermining workers' bargaining power so as to suppress wages, their earning power has been gutted. This is visible in the wage vs profit share of GDP - the former has declined and the latter significantly increased.
The consumer is the critical part of the economy. With nobody to consume business's output, there is nothing for business to do, no point for it to operate.
My argument is that before anything can be consumed it has to exist. You are arguing against causality, do you realize that? You are arguing that consumption is what drives production, I am arguing that ability to consume relies on your ability to produce.
And you are wrong because you are making the implicit assumption that ALL supply requires SOMEONE ELSE to produce it, when it does not. Natural resources do not require production. They are simply there.
If you cannot produce anything you will not be able to consume anything, because nobody will trade with you.
Yes I can. I can consume the things I find and make myself.
If you want to scale this up to a country, any country that has all the resources it needs to meet its own needs has no need for trade with external parties.
- nonsense. What good is oil if it's not extracted? What good is coal if it's not extracted?
You can burn them both for warmth and light.
if you found a lump of gold and gold is valuable to people it is the same thing as if you produced a lump of gold.
No it is not. That's like saying if I win a million dollars in the lottery it is the same as if I worked for fifty years to save a million dollars.
Which part of somebody has to FIND that gold before it can be used is not clear to you exactly?
Which part of NOBODY PRODUCING that gold I found is not clear to you ?
It staggers me you write example after example of how demand drives production, yet state the opposite is true. Though not as much as the cognitive dissonance in arguing that people getting money for nothing is bad when it's welfare, but good when it's a gold nugget in a stream.
Uh no, it doesn't work that way. That 250 units was already spent. You buy a $1,250 tractor: $300 to pay steelworker wages, $250 to pay oilworker wages, $150 to pay administrative (executive, management) wages, $200 to pay machinist wages (power tool manufacture/maintenance), $100 to pay builder's wages (people actually manufacturing your product), $250 to pay taxes.
Yes it does. If the money exists it can be removed through taxation. It doesn't matter where that money is distributed throughout the economy.
Well, first effect: instead of the consumer having $1,250 to spend, the consumer now has $1,000 to spend. That means $250 of product he was buying can't be bought by the consumer; this theoretically scales production down, eliminating jobs.
You still haven't covered where the first $1,000 came from.
There's a third effect: by means of the first effect, the consumer's salary is lowered. Say the consumer makes $45,000 and pays 11% in taxes; that consumer takes home $40k. So we raise taxes on thy consumer, and now he pays 33%; in this case, his take-home salary is $30k--as I said, less to spend. So now the consumer cries about lower income, and some consumers cannot afford the cost of living, and starve.
You have provided no reason why taxes are raised. So the rest of your "example" is just a non-sequitur.
Now, if the government *creates* money to spend, that's different.
Your example has made absurd assumption that the Government does not tax to remove money from the money supply, therefore runaway inflation. So it is just another non-sequitur.
Your arguments are ludicrous. You assert that 1,000 goods are made and sold for $1,000 one year, and then the next year those 1,000 goods are made and sold for $2,000, and that this is not inflation.
- The only 'demand' that Apple saw for iPads was Steve Job's idea that iPads would sell. There was no product like an iPad in the market and Jobs thought that people would want to buy it.
YES. THAT'S THE WHOLE POINT. APPLE MADE THE IPAD BECAUSE THEY EXPECTED TO SELL IT.
Your argument is that Apple made the iPad *without* expecting to sell it. That production drives consumption.
Until you produce something of value you cannot expect others to trade with you.
Yes ?
This has nothing to do with demand driving production. You do not produce something for trade unless you expect someone else to trade for it.
A billionaire can buy a 500,000,000 yacht because he already satisfied demand of millions of people for some product [...]
The logic behind this is circular.
Consumption is a function of supply.
Supply does not have to come from production. Natural resources, for example.
I don't know and I don't care how, but people would buy infinite number of yachts for $1.
No they wouldn't. For example, there are people who don't have a dollar to spare.
People are buying much less valuable things for much more than $1 today. People are paying hundreds of dollars for MODELS of yachts.
Not even vaguely relevant.
- all consumption that you are not producing yourself has to be produced by somebody and by something, you may want to question what you know about the reality of the world, life and Universe in general.
*sigh*
To use an example you will surely understand, if I find a lump of gold on the side of the road, I have produced nothing, yet I can consume based on what people will give me for it.
The thing you don't get is that employment is a trade.
Now there's some irony.
Well, guess what? Jobs are just like warehouses of goods. If the demand for those jobs isn't there, the jobs aren't there.
Er, yes ? That's kind of the point I've been making over and over again ? The economy is driven by demand and we don't have enough of it because the middle- and lower-classes are being systemically and deliberately impoverished. No demand, no need for production. No need for production, no jobs. No jobs, no money, no demand. Return to step 1 and continue to circle the drain.
I find it telling how the parties talking about how economies are about the consumers conveniently forget that employers are consumers of labor. This is a transparent ideological excuse to screw over someone you don't like.
I have no idea what you're on about.
I am well aware that employers are consumers of labour, it's a fairly key part of my point that Governments of the last thirty-odd years - at the behest of business - have engineered a massive labour surplus, because that surplus is the thing that has facilitated decades of wage stagnation. Scarce labour does not experience wage stagnation because scarce labour has bargaining power in that employment "trade" you mentioned above. That is why professionals have no seen as bad a wage stagnation, because they have retained some bargaining power. It is the same bargaining power business seeks to undermine through "skilled immigration", and why it is always lobbying for more.
Your position is that the reduction in bargaining power of labour is not only unavoidable, but that it is desirable.
I'm not sure who you think is going to get "screwed over" through increased employment, increased real incomes, increased demand, increased productivity and increased living standards. It's true that the handful of people at the top who have been making out like bandits for the last few decades at the cost of everyone else might find their rate of improvement slows down a bit, but that's not "screwing over" in any sense of the term I'm familiar with.
Where do you think money for those things comes from? Trees? It comes from profits. When you have razor thin profit margins, that's the sort of things which gets lost.
No, those things are implicitly included in the "economy running on a razor-thin profit but still producing excess of everything it needs".
Walmart had a profit margin of a bit over 3% of revenue in the recent past. California has a sales tax of 7.5% which would apply to almost all Walmart revenue in that state. That's more than double the profits of Walmart right there. And California is notorious for squandering the money it gets. If you look at the map at the bottom of this article [taxfoundation.org] you see a lot of states with combined state and local sales tax over 6% (including all ten of the most populous states in the US). And many of those states have a similar reputation for screwing the pooch whenever they get their hands on money.
You are blindly arguing ideology (basically, "anything Government does is inherently bad").
I think this is like saying its unclear whether the American people should be supporting gravity. The American people don't have a choice. They can't choose for those billions of people to vanish. They can't choose for those billions of people to magically have the same wealth and standard of living as US citizens currently enjoy. This disparity of wealth and cost of labor exists whether you support it or not. It's not policy choice, it's reality.
Interacting with "those billions of people" - whether to do it at all, and how, is a policy choice. The American Government - representing the will of the American people - decides what is and is not allowed across its borders - real or virtual - from goods, through people, to money. (In reality the American Government doesn't represent the will of the people, it represents the
The first iPad did not have any market until people started buying.
Did Apple make it without expecting to sell it ? Of course not. They were answering demand.
Businesses that produce without consumption of their products or services do not stay in business - no demand, production is pointless.
Demand is always there, demand is infinite.
You have contradicted your earlier statement that demand is a function of supply.
There is infinite demand for yachts out there at $1 price.
No there’s not, because not everyone wants or can afford a yacht, even for a dollar.
We have more than one type of tooth paste in the stores because there is demand for it the moment it is introduced and if the demand is not there, that particular product stops being produced and instead a different product is offered.
You keep explaining how the production of things is driven by demand for them
Economy is production, without production you can consume absolutely nothing that other people produce.
Ah. I think I see the problem. You are assuming that all consumption needs to be someone else’s production. It does not.
I know where money comes from. It's issued by a central bank; in modern American society (and many others), money is created largely by debt.
Most money today is created by private banks. This is a huge part of the problem.
All money is "created by debt" and has been for thousands of years.
Your examples bear no resemblance to reality, but this in particular sticks out:
Scenario two: Government creates money. In this case, the government creates inflation: you go from 1,000 unit goods and 1,000 units money to 1,000 unit goods and 1,250 units money.
Point 1: Where did that 1,000 units of money come from ?
Point 2: The Government can easily tax away the extra 250 units. No inflation. This is one of the primary purposes of tax - to control inflation (which is why we have so much of it - because the world has been run by clueless (/malevolent) "oh noes, TAXES" types for the last few decades).
I am describing how the money system actually works. You are describing how you think it should work to match your ideology.
People started companies, built products, invented services and they did so in HOPE that they could TRADE with others for what the others produce, and that's not a 4000 year old idea, that's today.
Trade is a lot older than 4,000 years. 4,000 (ish) years is about how long our current concept of money has been around.
Without production nobody trades, nobody exchanges anything. If literally there are 2 people on the planet and one fishes and the other one grows wheat, all you can do is trade fish for wheat. There is nothing else that is produced.
If the guy with fish doesn't want any wheat, the guy with wheat won't grow any more than he needs himself. Or, he might, but it would be a pretty stupid thing to do because he's just wasting his time and effort.
If a third person appears and sees your whet/fish trade, he may come up with a new product, for example tomatoes to cultivate and grow to exchange for your wheat and fish.
Your argument is a begging the question fallacy. What if nobody wants tomatoes ? You need to examine your assumptions rather than trying to turn everything into an irrelevant anti-Government goldbug rant.
The economy is demand driven. No demand, no need for production.
Production without demand ? Complete waste of time and resources. No sane person does it (for long).
Consumption is a trivial consequence of production. I can point at every business that was started with an idea for a product or a service, somebody put up their savings as investment and before the first sale ever took place money and time was spent to build the product or service.
Yes, yes, but then what ? Did they just sit in their warehouse full of goods cackling ?
Of course not. They sold it, at which point they were given money (or if you want to go back four-odd thousand years before money existed, other goods) in exchange, which they then used to fund more production.
Without the consumption - the demand - the whole thing falls apart, because without consumption, production is just a waste of time (and resources).
Just look at your own sentence - "started with an idea for a product or a service" - the key motivator is belief in DEMAND for a product or service that doesn't already exist.
Apple didn't make the first iPod without expecting people to buy it. Henry Ford didn't build the first cars expecting only the rich to buy them (hence the reason he paid his employees enough to afford them).
Without somebody doing all of that there is nothing to consume at all.
Yes there is. All the raw resources that went into the production. It's just that people have to do it (whatever "it" is) themselves rather than someone else doing it for them.
Yes, these things are done with the idea that once you provide them people would buy and the business makes money, but ability to consume comes from ability to produce.
No it does not. If nobody was building cars, people would walk. If nobody was making clothes, they would walk around naked.
Production only arises to satisfies demand - for quicker transport, better clothes, easier food. But production without anybody to consume is no different to - to use an analogy specifically for a goldbug like you - to taking a boat full of gold bars and dumping them into the deepest ocean trench you can find.
Economies are demand driven. Our ability to consume is inherent. Literally, without it, we die.
This paints the picture much better. Hourly compensation increase 1948 - 1973: ~100%. 1973-present: ~10%.
So you're technically right with the claim wages have risen ~20% since 1967. You're just ignoring how much faster it was the twenty years before that and how slow it is in comparison to productivity increases and the income increases of the top few percent.
Even after decades of median wage stagnation in the face enormous productivity increases, a significant shift in GDP share to capital, increasing income and wealth gaps, you're *still* arguing the problem is workers are asking for too much.
Is regulation the magic sauce for making sure you don't starve because you forget to ask for a paycheck?
No, restoring lost bargaining power to labour is the best way of making people wealthier.
Somewhat lower wages is still better than no wages when it comes to generating revenue, wouldn't you think?
Why would employers not hire more people in the face of growing demand ?
Here's what's missing: leisure time and spending, risk taking, insurance, research and development, and business expansion.
Here's what's missing. Any evidence - heck, even some vaguely coherent reasoning - for that claim.
But I'm sure that government will continue to take and squander much more than that razor thin profit margin as is their due.
You are blindly arguing ideology.
It's a nice story except that it isn't true. The labor regulations haven't changed much; benefits and unemployment regulations haven't changed much; minimum wage is still around; and health care has actually been expanded. What has changed?
Lots of things have changed. Union membership has collapsed, immigration - particularly "skilled" immigration - has gone through the roof. Minimum wage has decreased in real terms.
Basically, the bargaining power of labour has been systemically destroyed for decades (again, common problem across most of the western world to some degree).
Well, nothing really. It's just part of the ongoing half century of economic shift to the developing world and growing wage parity between developed and developing worlds.
Which is policy choice. It's unclear why you think the American people should be supporting it. Their Government's responsibility is to them, not the rest of the world.
In other words, those darn Reagans and Thatchers didn't ban the billions of people who are eating your lunch, labor competition-wise.
Yes. Treason, you might say, by putting the desires of a handful of wealthy elites over the prosperity of citizens.
It is happening now, not in the 1950s. Now is the time of increasing real wages, creation of a global large and financially secure middle, relatively high social mobility, etc. What happened in the developed world then is now happening everywhere. But I guess all those people are kind of hard to see from whatever podunk country you're from.
Real wages in the western world have been stagnant or increasing slowly for decades. Most of their middle classes - the ones who weren't nearly wiped out in the GFC - are sitting on paper wealth with massive debt burderns behind it.
If you take all the money from the wealthy, then you only have poor people left.
Untrue.
Government doesn't create an economy or jobs, it just spends other people's money to the poor house.
Public spending does create an economy and jobs. The obvious example is large-scale infrastructure spending. Then there's something like public education, which acts as a multiplier by producing an educated and literate society.
Looking around the world, every nation that thinks they can take the wealthy's money and hand it out is poor.
Indeed. The USA, Australia, New Zealand, the UK, Germany, France, Norway, Sweden... Complete basket cases, the lot of them.
Your statement is literally the opposite of reality. Are you a Libertarian ?
Slashdot Mirror
In the short term a jobs guarantee and decent minimum wage are better solutions.
However, in a few generations we will have a world in which 1/2 to 3/4 of people are literally unemployable because there is nothing they can do a robot can't do faster, better and more efficiently. At which point the choices are going to be a "UBI" set at a level high enough to approximate a solid working-to-middle-class lifestyle (single income being enough to support a family, buy a house, take a holiday once a year, etc), or - the neoliberalists' preference - a return to a feudalism-esque system of serfs reliant on their UBI to barely survive overseen by a handful of incomprehensibly wealthy elites. Or a honkin' great big war.
Also, taxes don't fund expenses. Taxes are there to control inflation, address income and wealth inequalities and incentivise behaviour. Thirty years of mismanaged taxation (ie: always reducing it) is why inflation and wealth/income inequalities are through the roof. Money inevitably flows upwards.
This is tax "minimization" or tax "avoidance". All people are supposed to practice it, and it's through this mechanism that you can set public policy through tax policy, ex. solar rebates.
No, that is not the "mechanism that you can set public policy through tax policy" at all, and no, "all people" are not "supposed to practice it".
The "mechanism you can set public policy" *is* tax. That's the reason it exists.
"Tax avoidance" inevitably involves schemes of varying complexity to move money around, obfuscate its origin or destination, and otherwise make your financial dealings opaque enough so that it's not worth examining them. It's the nudge-nudge, wink-wink way of describing tax evasion.
Competition isn't competition when the player deliberately plays bad? I don't agree.
Right. So you’re the kind of guy who would argue there should be no laws against, say, fraud ? Or theft ? You know, "deliberately playing bad" ?
And I've never said that I want to drive down US living standards.
You keep arguing for things that will cause it and against things that will improve it.
No, for two reasons. First, cheaper is an important category of better.
Buying some stolen speakers out of the back of someone’s truck is a lot cheaper than buying them in the store, but it is not “better”.
Second, China in particular is doing a much better job here than the US is, including a much better job of taking advantage of US R&D.
That’s because China doesn’t care about things like pollution or safety.
They can always sell to markets that aren't as screwed up like China or India. These demand problems don't exist there. There may be a huge oversupply of employees in those markets, but it's getting sopped up. Meanwhile developed world countries like the US seem to try to make people useless.
LOL. Actually, genuinely, LOL.
China ? You're serious ? The free-market zealot is idolising *China* ?
Labour in China is “sopped up” by Government employing people (either directly or by proxy) and paid for through massive credit creation. China has tariffs and other regulations on immigration and foreign investment out the wazoo. They manipulate their currency with abandon. They build entire empty cities, for fuck's sake. All that stuff you’ve been arguing for the last few days is “delusional”, they are doing as hard and fast as is humanly possibly (ultimately too hard and too fast - it's probably going to screw them, but it'll be interesting to watch and see if they get away with it).
And I note once again, the ridiculous ideological bias against employers rears its ugly head in your words. You keep harping on how lower wages hampers consumption and hence, economic progress, but you continue to completely ignore that this goes both ways. Increasing the cost of employees to employers also reduces demand for labor and cause all that stuff.
There is no bias against employers and I have not ignored “that it goes both ways”. You either don’t understand what’s being said, or you are too far down your ideological rabbit hole to comprehend anything different.
You could drop the cost of labour to zero tomorrow and it would likely have a negligible effect on unemployment (in the short term, anyway - it would send it through the roof in the long term). Businesses aren’t going to start employing people “just because it’s cheaper”. They’re only going to employ people when the demand for their products or services increases beyond the ability of the existing employees to meet it. The economy is driven by demand. No demand, no need for production. No need for production, no need to hire employees.
If you genuinely think that simply reducing the cost of employees to business will cause them to hire more people, please explain why.
The obvious actual reason is that capital doesn't have to compete with several billion people.
*sigh*
Workers wages aren’t lower simply because they have to compete with other people. They are lower because those other people are systemically cheaper, because they have lower standards of living.
There is no reason CEOs and their ilk are inherently excluded from that, *except* through the protections they get from policy. Ie: it’s a choice.
No, I was speaking of wealth. It sounds like the problem here is that you are zero-sum thinking in a situation where it doesn't apply. In your scenario, you grew the real wealth of your poor by a factor of five, but that wasn't good enough because you also grew the wea
Were it not for those protections, then the wages of lowest paid probably would be bumping up against zero. Already huge swathes of the population are dependent on welfare for survival because they cannot earn enough to survive on themselves due to a) wage suppression and b) structurally-imposed unemployment.
I mean to edit this to say:
In fact, arguably wages are already bumping up against zero. Huge swathes of the population are dependent on welfare for survival because they cannot earn enough to survive on themselves due to a) wage suppression and b) structurally-imposed unemployment.
The US doesn't compete in the global labor market, yet you feel the need to reduce access to cheap labor through immigration, apply tariffs to equalize costs of foreign-manufactured goods, and employ idle labor in useful work. But the US doesn't compete in the global labor market and hence, doesn't have a reason for these measures which are all purely protectionist measures for a global labor market.
The US does not compete in the global labour market in the sense that it is selling cheaper labour (like, say, China, or India). It can’t sell cheaper labour because it is an advanced country and the costs of maintaining that lifestyle are too high. Unless of course you want to drive down US living standards to the level of China or India (and there are plenty of people who seem to think that’s a good idea - for everyone except themselves, of course).
I would have thought this meaning was obvious from the second part where I said “it’s not trying to make a cheaper mousetrap, it’s trying to make a better mousetrap”. I suppose I could have been more explicit and said ““it’s not trying to make a cheaper mousetrap through reducing input costs, it’s trying to make a better mousetrap”. Would that have helped ?
And here you are again, only ever looking at one side of the equation. The obvious rebuttal is that employers always have attempted to reduce costs through lowering wages.
How is that a rebuttal when I’ve been talking about it throughout this entire discussion ? Of course employers have always attempted to reduce costs through lowering wages. The point I keep making is that allowing them to do it is a policy choice.
The reason they've failed to reach zero is because employers have to compete to get the labor they need to profit. The more employers looking for employees, the better the deal for workers. That's the supply-demand dynamic that you keep ignoring.
Ignoring ? Supply and demand is at the bloody core of everything I’ve written !
The reasons employers haven’t reached zero salaries are because some small protections still exist for workers (mainly the minimum wage, but unions still have some small pockets of presence). Note that businesses are constantly agitating to remove or reduce these protections. We - the entire western world - have an enormous glut of available workers. Were it not for those protections, then the wages of lowest paid probably would be bumping up against zero. Already huge swathes of the population are dependent on welfare for survival because they cannot earn enough to survive on themselves due to a) wage suppression and b) structurally-imposed unemployment.
You write “the more employers looking for employees, the better the deal for workers” as if “employing people” is what businesses are there to do. They are not. Businesses are there to produce stuff and sell it. Having to employ people is simply an inconvenient consequence of producing stuff to sell. They only produce stuff if there is someone on the other side of the equation to consume that stuff. There is a demand shortage because most people are broke. With this stagnating or declining demand, there is no reason for employers to produce more (because why would you produce more than you can sell?), since employers have no need to produce more, they have no need to hire more employees (why would you hire employees if you had nothing for them to do?), since they have no reason to hire more employees, and there is a huge oversupply of employees in the market, there is no competition between employers and therefore, “the deal” is most certainly not getting any better for employees.
If you still think I am not accounting for some aspect of “supply and demand”, then be more specific about what it is and I will try to explain it differently.
The obvious question here is what changed between the first two d
By definition and ideological bias.
Let me put it another way.
How is it that I am only considering "certain demand" ? How is it that "employers are excluded" ?
Credit doesn't consume in itself, it just makes it a bit easier.
Yes it does. That's where speculation and bubbles come from.
And it's worth noting that a lot of people were just find with that credit being used to build a lot of houses and other things. That physical activity generates a lot of economic activity while pure credit would not.
I'm sure the people making a motza out of flipping houses because they were lucking enough to get in early were very happy with it, but it's mostly unproductive activity.
I agree. I just think it is policies you favor which do that.
To reiterate, the policies I favour have barely even been discussed, let alone implemented, for about forty years. They were in place from the end of WW2 to the early '70s. They ended about where that fairly well known divergence between productivity and real wages happens.
It's supply and demand for labor. You cripple the demand and then the price of labor, namely, wages and other benefits goes down.Another effect is that if you force employers and employees to vastly overpay for low value benefits (like weak return pensions or greatly overpriced health care), then you shrink the actual benefit that workers get from working.
The shrinking of the benefit workers get from working is the result of the race-to-the-bottom policymaking endemic to supply-side neoliberalism.
The number one economic fallacy is that we compare our world to some unattainable goal rather than the alternative choices we could have made. No choice of the past fifty years would allow the US to maintain its relative standard of living and compete on the global labor market at the wage differentials that existed in 1965.
The choice to undermine labour absolutely did. It is the foundation on which subsequent growth in inequality and the economic malaise that has come with it was built.
The US doesn't compete in the global labour market. The idea that it could is absurd. The US is an advanced economy that competes on the global product and service market. It's not trying to make a cheaper mousetrap, it's trying to make a better mousetrap.
And whenever this falsehood rears its head, I point out this graph [voxeu.org] (see figure 1). It shows the wealthiest indeed increasing their wealth over the recent period 1988-2008. But it also shows two thirds of humanity getting substantial increases in their wealth as well. Just because your policies help the wealthy in your country more than they help you, doesn't mean that others in the world aren't becoming better off through no fault of you.
Neither the graph, nor your statement, do anything to refute the point.
Here's a simple example.
Let's say at the beginning, the poor have a dollar and the wealthy have ten dollars.
Thanks to productivity increases, after fifty years the poor now have 5 dollars but the wealthy have a hundred dollars.
That's an upwards transfer of wealth. Because the growth in wealth is a result of everyone's productivity increases. If it had been an even transfer of wealth, the poor would have ten dollars and the wealthy would have a hundred dollars. Ie: their growth rates would have been the same.
This is what happend for the first couple of decades after WW2 (in actual fact it was even better - incomes for the working and middle classes grew _faster_ than incomes for the upper classes).
Name another good or service, for which people pay money, which you can increase the supply by a factor of five to ten without having the price fall through the floor and stay there.
Begging the question fallacy.
Despite your vigorous and reality-free assertion, wages didn't collapse in the US or the rest of the developed world (except for some particularly dysfunctional count
The problem is that you're re-writing it, then responding to 'real world' issues in your re-write, without giving me the opportunity to chime in with my thoughts on your re-write. Ask for clarification.
I'm basing it on your previous description, which is the BIG as a universal payment set at subsistence levels.
Is that not what your proposed BIG is ?
Correct. I'm willing to accept those on low-paying jobs being, at least partially, dependent upon the payment because of my principles - basically that working should be better than not working, and that generally means you have to wean people off welfare, not cut it off. While there are indeed those that would use it as a hammock, not a net, you tweak the amounts such that they're at an acceptable number.
Setting the bar for a (full time) low-paying job high enough that people prefer it over (subsistence) welfare satisfies the same principle without providing a crutch for business.
On the other hand, which is better - completely dependent upon your employer for your income, or half and half?
False dichotomy.
Can't just up and move? Tell my whole bloody family that. Except for grandmother, we're all states away from where we first started. I've lived in 8 states and 5 countries.
And you think this is something people should have to experience as a matter of course when they find themselves unemployed ?
Also, as more people move to the cheaper areas, they'll need services and such, which will increase the numbers of jobs available.
As I said earlier, a kind of ghettoisation.
Dude, I lived that life. That being said, if your social support structures are that important, they can probably kick in some help. $500/month should be enough to cover the basics even in expensive areas even if you end up sleeping in the living room of your social support network for a bit.
As I said above that live is something you think should happen to people as a matter of course ?
Social structures are a lot more than money. Your Grandma might have barely enough to pay for her food and live in a tiny one bedroom apartment, but she can watch your baby while you go looking for work (or working). Your sister is a shoulder to cry on after months of trying to find work but not succeeding. Etc.
Your worldview seems to be that people are just irrelevant cogs in a machine that exists solely to make more stuff.
Then it acting as unemployment so they have time to seek a new job before losing their house or whatever does. Hell, it can also provide support while they go back into education if that's necessary.
That's what welfare does. Without the systemic subsidy for business.
Actually, that's my tending to respond to you. If you're bringing up the long-term unemployed, well, that's complicated. You'd need to encourage them to seek more education, but we actually have something of an education glut today. They need the *right* education. It would also help if we could reduce the cost of labor enough to encourage more production inside the USA. Modify regulations so they can go into business for themselves easier.
FFS.
Wages have been systemically undermined, such that most workers have seen no real increase in wages for the better part of forty years. Something like half of society is dependent, to some degree, on welfare. The consequent lack of disposable income means nobody can afford to buy much stuff, which means business can't sell anything.
And you think driving wages lower to make labour cheaper is some sort of solution !?
Businesses aren't going to employ more people out of the goodness of their hearts because wages get lower. They're going to employ more people because demand increases to a point where they HAVE to so as to have sufficient production capacity to meet that demand.
You have the complexity that you want *EVERY* job to pay enough to support a family of 4-5. That means all jobs have
I have provided cause and effect.
LOL.
You've created a tautological ex nihilo scenario to suit your personal belief system, that has no resemblance to reality.
All money is spent into existence.
All money has corresponding debt.
Governments do not need to tax before they can spend.
Taxation controls inflation by removing money from the economy.
These are facts. It is how the system works.
No. Employers are demand too and there's not enough of them either. You only consider certain demand not all demand. The demand model of an economy is inherently flawed because it deliberately excludes employers, a huge category of demand.
How's that ?
Here's how I see it. In the US, a few years back our overheated real estate market created a massive recession for the entire world. Here was an attempt to create massive consumer demand for US real estate and it failed badly.
The product wasn't real estate. It was credit.
My view is that we have considerable evidence that consumers just can't consume much more than they are right now.
Yes. Because they're broke. They're broke because they've suffered decades of policies aimed at suppressing their incomes and are additionally suffering from the debt load taken on to maintain the increase in living standards they had grown to expect from the previous thirty years of progress.
Focusing on consumer demand is a terrible strategy because it does nothing to improve the earning power of those consumers. There's only so much a consumer can consume, even when borrowing everything they can borrow.
The mind-bogglingly issuing of credit over the last few decades and consequent crushing debt load was done to mask wage stagnation. If wages had increased in line with productivity, people wouldn't have needed to borrow to consume because they would have had the real disposable income to consume.
Focusing on consumer demand is the only way to fix the problem because the economy relies on it to function. Ideally, consumer demand is increased through higher real wages and increased productivity, leading to greater disposable incomes.
Similarly, attempts to increase the standard of living of workers while making their labor less valuable to employers are an ongoing disaster. The contradiction inherently insures it will not work.
Yes ? That's the point I've been (repeatedly) making ?
Then stop enabling that. Your policies are the cause here.
No they're not. "My" policies - jobs guarantees, full employment as a policy goal, strong workers rights, strong financial sector regulation, extensive public infrastructure and services, high progressive taxes to control wealth distribution and inflation, liveable welfare, etc, etc - haven't seen light of day since the early '70s. They are the kinds of policies that defined post-WW2 USA - "capitalism's golden age".
The Thatcherites and Reaganites - neoliberals - completely and utterly own today's worldwide economic armageddon. They have been running the world since the mid '70s. They are the ones who have been "attempting to increase the standard of living of workers while making their labor less valuable to employers".
Rich people can get wealthier anywhere in the world. Middle and lower-class people can only get wealthier where they live. And the primary means by which those people get wealthier is by labor.
Yes ? Again, the point I've been making repeatedly ?
Employment is trade. You have to have something to offer in order to get wages in exchange. The employer is the important part of the economy, not a consumer. The demand of employers is so much more open ended than the demand of people who are capped by their limited earning power.
*sigh*
People's "earning power" is limited by what their employers pay, which is a function of their bargaining power with said employer (the "trade"). Since the developed world has pursued thirty-odd years of policy aimed at undermining workers' bargaining power so as to suppress wages, their earning power has been gutted. This is visible in the wage vs profit share of GDP - the former has declined and the latter significantly increased.
The consumer is the critical part of the economy. With nobody to consume business's output, there is nothing for business to do, no point for it to operate.
Consider what would happy if every
Abbott was a good politician.
Indeed.
But he was a deplorable PM and Minister of [whatever]. A coward, a bully and a thug.
My argument is that before anything can be consumed it has to exist. You are arguing against causality, do you realize that? You are arguing that consumption is what drives production, I am arguing that ability to consume relies on your ability to produce.
And you are wrong because you are making the implicit assumption that ALL supply requires SOMEONE ELSE to produce it, when it does not. Natural resources do not require production. They are simply there.
If you cannot produce anything you will not be able to consume anything, because nobody will trade with you.
Yes I can. I can consume the things I find and make myself.
If you want to scale this up to a country, any country that has all the resources it needs to meet its own needs has no need for trade with external parties.
- nonsense. What good is oil if it's not extracted? What good is coal if it's not extracted?
You can burn them both for warmth and light.
if you found a lump of gold and gold is valuable to people it is the same thing as if you produced a lump of gold.
No it is not. That's like saying if I win a million dollars in the lottery it is the same as if I worked for fifty years to save a million dollars.
Which part of somebody has to FIND that gold before it can be used is not clear to you exactly?
Which part of NOBODY PRODUCING that gold I found is not clear to you ?
It staggers me you write example after example of how demand drives production, yet state the opposite is true. Though not as much as the cognitive dissonance in arguing that people getting money for nothing is bad when it's welfare, but good when it's a gold nugget in a stream.
Uh no, it doesn't work that way. That 250 units was already spent. You buy a $1,250 tractor: $300 to pay steelworker wages, $250 to pay oilworker wages, $150 to pay administrative (executive, management) wages, $200 to pay machinist wages (power tool manufacture/maintenance), $100 to pay builder's wages (people actually manufacturing your product), $250 to pay taxes.
Yes it does. If the money exists it can be removed through taxation. It doesn't matter where that money is distributed throughout the economy.
Well, first effect: instead of the consumer having $1,250 to spend, the consumer now has $1,000 to spend. That means $250 of product he was buying can't be bought by the consumer; this theoretically scales production down, eliminating jobs.
You still haven't covered where the first $1,000 came from.
There's a third effect: by means of the first effect, the consumer's salary is lowered. Say the consumer makes $45,000 and pays 11% in taxes; that consumer takes home $40k. So we raise taxes on thy consumer, and now he pays 33%; in this case, his take-home salary is $30k--as I said, less to spend. So now the consumer cries about lower income, and some consumers cannot afford the cost of living, and starve.
You have provided no reason why taxes are raised. So the rest of your "example" is just a non-sequitur.
Now, if the government *creates* money to spend, that's different.
Your example has made absurd assumption that the Government does not tax to remove money from the money supply, therefore runaway inflation. So it is just another non-sequitur.
Your arguments are ludicrous. You assert that 1,000 goods are made and sold for $1,000 one year, and then the next year those 1,000 goods are made and sold for $2,000, and that this is not inflation.
You are arguing fallacies.
Clearly the discussion is pointless.
- The only 'demand' that Apple saw for iPads was Steve Job's idea that iPads would sell. There was no product like an iPad in the market and Jobs thought that people would want to buy it.
YES. THAT'S THE WHOLE POINT. APPLE MADE THE IPAD BECAUSE THEY EXPECTED TO SELL IT.
Your argument is that Apple made the iPad *without* expecting to sell it. That production drives consumption.
Until you produce something of value you cannot expect others to trade with you.
Yes ?
This has nothing to do with demand driving production. You do not produce something for trade unless you expect someone else to trade for it.
A billionaire can buy a 500,000,000 yacht because he already satisfied demand of millions of people for some product [...]
The logic behind this is circular.
Consumption is a function of supply.
Supply does not have to come from production. Natural resources, for example.
I don't know and I don't care how, but people would buy infinite number of yachts for $1.
No they wouldn't. For example, there are people who don't have a dollar to spare.
People are buying much less valuable things for much more than $1 today. People are paying hundreds of dollars for MODELS of yachts.
Not even vaguely relevant.
- all consumption that you are not producing yourself has to be produced by somebody and by something, you may want to question what you know about the reality of the world, life and Universe in general.
*sigh*
To use an example you will surely understand, if I find a lump of gold on the side of the road, I have produced nothing, yet I can consume based on what people will give me for it.
Not all supply must be produced.
The thing you don't get is that employment is a trade.
Now there's some irony.
Well, guess what? Jobs are just like warehouses of goods. If the demand for those jobs isn't there, the jobs aren't there.
Er, yes ? That's kind of the point I've been making over and over again ? The economy is driven by demand and we don't have enough of it because the middle- and lower-classes are being systemically and deliberately impoverished. No demand, no need for production. No need for production, no jobs. No jobs, no money, no demand. Return to step 1 and continue to circle the drain.
I find it telling how the parties talking about how economies are about the consumers conveniently forget that employers are consumers of labor. This is a transparent ideological excuse to screw over someone you don't like.
I have no idea what you're on about.
I am well aware that employers are consumers of labour, it's a fairly key part of my point that Governments of the last thirty-odd years - at the behest of business - have engineered a massive labour surplus, because that surplus is the thing that has facilitated decades of wage stagnation. Scarce labour does not experience wage stagnation because scarce labour has bargaining power in that employment "trade" you mentioned above. That is why professionals have no seen as bad a wage stagnation, because they have retained some bargaining power. It is the same bargaining power business seeks to undermine through "skilled immigration", and why it is always lobbying for more.
Your position is that the reduction in bargaining power of labour is not only unavoidable, but that it is desirable.
I'm not sure who you think is going to get "screwed over" through increased employment, increased real incomes, increased demand, increased productivity and increased living standards. It's true that the handful of people at the top who have been making out like bandits for the last few decades at the cost of everyone else might find their rate of improvement slows down a bit, but that's not "screwing over" in any sense of the term I'm familiar with.
Where do you think money for those things comes from? Trees? It comes from profits. When you have razor thin profit margins, that's the sort of things which gets lost.
No, those things are implicitly included in the "economy running on a razor-thin profit but still producing excess of everything it needs".
Walmart had a profit margin of a bit over 3% of revenue in the recent past. California has a sales tax of 7.5% which would apply to almost all Walmart revenue in that state. That's more than double the profits of Walmart right there. And California is notorious for squandering the money it gets. If you look at the map at the bottom of this article [taxfoundation.org] you see a lot of states with combined state and local sales tax over 6% (including all ten of the most populous states in the US). And many of those states have a similar reputation for screwing the pooch whenever they get their hands on money.
You are blindly arguing ideology (basically, "anything Government does is inherently bad").
I think this is like saying its unclear whether the American people should be supporting gravity. The American people don't have a choice. They can't choose for those billions of people to vanish. They can't choose for those billions of people to magically have the same wealth and standard of living as US citizens currently enjoy. This disparity of wealth and cost of labor exists whether you support it or not. It's not policy choice, it's reality.
Interacting with "those billions of people" - whether to do it at all, and how, is a policy choice. The American Government - representing the will of the American people - decides what is and is not allowed across its borders - real or virtual - from goods, through people, to money. (In reality the American Government doesn't represent the will of the people, it represents the
The first iPad did not have any market until people started buying.
Did Apple make it without expecting to sell it ? Of course not. They were answering demand.
Businesses that produce without consumption of their products or services do not stay in business - no demand, production is pointless.
Demand is always there, demand is infinite.
You have contradicted your earlier statement that demand is a function of supply.
There is infinite demand for yachts out there at $1 price.
No there’s not, because not everyone wants or can afford a yacht, even for a dollar.
We have more than one type of tooth paste in the stores because there is demand for it the moment it is introduced and if the demand is not there, that particular product stops being produced and instead a different product is offered.
You keep explaining how the production of things is driven by demand for them
Economy is production, without production you can consume absolutely nothing that other people produce.
Ah. I think I see the problem. You are assuming that all consumption needs to be someone else’s production. It does not.
Question your assumptions.
I know where money comes from. It's issued by a central bank; in modern American society (and many others), money is created largely by debt.
Most money today is created by private banks. This is a huge part of the problem.
All money is "created by debt" and has been for thousands of years.
Your examples bear no resemblance to reality, but this in particular sticks out:
Scenario two: Government creates money. In this case, the government creates inflation: you go from 1,000 unit goods and 1,000 units money to 1,000 unit goods and 1,250 units money.
Point 1: Where did that 1,000 units of money come from ?
Point 2: The Government can easily tax away the extra 250 units. No inflation. This is one of the primary purposes of tax - to control inflation (which is why we have so much of it - because the world has been run by clueless (/malevolent) "oh noes, TAXES" types for the last few decades).
I am describing how the money system actually works. You are describing how you think it should work to match your ideology.
However, they show wage growth of 234%. That's ten times the real (inflation-adjusted) growth.
What is the 234% number you are referring to here ?
People started companies, built products, invented services and they did so in HOPE that they could TRADE with others for what the others produce, and that's not a 4000 year old idea, that's today.
Trade is a lot older than 4,000 years. 4,000 (ish) years is about how long our current concept of money has been around.
Without production nobody trades, nobody exchanges anything. If literally there are 2 people on the planet and one fishes and the other one grows wheat, all you can do is trade fish for wheat. There is nothing else that is produced.
If the guy with fish doesn't want any wheat, the guy with wheat won't grow any more than he needs himself. Or, he might, but it would be a pretty stupid thing to do because he's just wasting his time and effort.
If a third person appears and sees your whet/fish trade, he may come up with a new product, for example tomatoes to cultivate and grow to exchange for your wheat and fish.
Your argument is a begging the question fallacy. What if nobody wants tomatoes ? You need to examine your assumptions rather than trying to turn everything into an irrelevant anti-Government goldbug rant.
The economy is demand driven. No demand, no need for production.
Production without demand ? Complete waste of time and resources. No sane person does it (for long).
Don't know, don't care. Never spent any time thinking about it.
Feels good, man.
Consumption is a trivial consequence of production. I can point at every business that was started with an idea for a product or a service, somebody put up their savings as investment and before the first sale ever took place money and time was spent to build the product or service.
Yes, yes, but then what ? Did they just sit in their warehouse full of goods cackling ?
Of course not. They sold it, at which point they were given money (or if you want to go back four-odd thousand years before money existed, other goods) in exchange, which they then used to fund more production.
Without the consumption - the demand - the whole thing falls apart, because without consumption, production is just a waste of time (and resources).
Just look at your own sentence - "started with an idea for a product or a service" - the key motivator is belief in DEMAND for a product or service that doesn't already exist.
Apple didn't make the first iPod without expecting people to buy it. Henry Ford didn't build the first cars expecting only the rich to buy them (hence the reason he paid his employees enough to afford them).
Without somebody doing all of that there is nothing to consume at all.
Yes there is. All the raw resources that went into the production. It's just that people have to do it (whatever "it" is) themselves rather than someone else doing it for them.
Yes, these things are done with the idea that once you provide them people would buy and the business makes money, but ability to consume comes from ability to produce.
No it does not. If nobody was building cars, people would walk. If nobody was making clothes, they would walk around naked.
Production only arises to satisfies demand - for quicker transport, better clothes, easier food. But production without anybody to consume is no different to - to use an analogy specifically for a goldbug like you - to taking a boat full of gold bars and dumping them into the deepest ocean trench you can find.
Economies are demand driven. Our ability to consume is inherent. Literally, without it, we die.
They're using inflation-adjusted ("real") wages.
He says posting a graph that starts in 1984.
This paints the picture much better. Hourly compensation increase 1948 - 1973: ~100%. 1973-present: ~10%.
So you're technically right with the claim wages have risen ~20% since 1967. You're just ignoring how much faster it was the twenty years before that and how slow it is in comparison to productivity increases and the income increases of the top few percent.
Lying with statistics at its finest.
Why would that happen?
Because of people like you.
Even after decades of median wage stagnation in the face enormous productivity increases, a significant shift in GDP share to capital, increasing income and wealth gaps, you're *still* arguing the problem is workers are asking for too much.
Is regulation the magic sauce for making sure you don't starve because you forget to ask for a paycheck?
No, restoring lost bargaining power to labour is the best way of making people wealthier.
Somewhat lower wages is still better than no wages when it comes to generating revenue, wouldn't you think?
Why would employers not hire more people in the face of growing demand ?
Here's what's missing: leisure time and spending, risk taking, insurance, research and development, and business expansion.
Here's what's missing. Any evidence - heck, even some vaguely coherent reasoning - for that claim.
But I'm sure that government will continue to take and squander much more than that razor thin profit margin as is their due.
You are blindly arguing ideology.
It's a nice story except that it isn't true. The labor regulations haven't changed much; benefits and unemployment regulations haven't changed much; minimum wage is still around; and health care has actually been expanded. What has changed?
Lots of things have changed. Union membership has collapsed, immigration - particularly "skilled" immigration - has gone through the roof. Minimum wage has decreased in real terms.
Basically, the bargaining power of labour has been systemically destroyed for decades (again, common problem across most of the western world to some degree).
Well, nothing really. It's just part of the ongoing half century of economic shift to the developing world and growing wage parity between developed and developing worlds.
Which is policy choice. It's unclear why you think the American people should be supporting it. Their Government's responsibility is to them, not the rest of the world.
In other words, those darn Reagans and Thatchers didn't ban the billions of people who are eating your lunch, labor competition-wise.
Yes. Treason, you might say, by putting the desires of a handful of wealthy elites over the prosperity of citizens.
It is happening now, not in the 1950s. Now is the time of increasing real wages, creation of a global large and financially secure middle, relatively high social mobility, etc. What happened in the developed world then is now happening everywhere. But I guess all those people are kind of hard to see from whatever podunk country you're from.
Real wages in the western world have been stagnant or increasing slowly for decades. Most of their middle classes - the ones who weren't nearly wiped out in the GFC - are sitting on paper wealth with massive debt burderns behind it.
Keep punishing that straw man. You know he loves it !
If you take all the money from the wealthy, then you only have poor people left.
Untrue.
Government doesn't create an economy or jobs, it just spends other people's money to the poor house.
Public spending does create an economy and jobs. The obvious example is large-scale infrastructure spending.
Then there's something like public education, which acts as a multiplier by producing an educated and literate society.
Looking around the world, every nation that thinks they can take the wealthy's money and hand it out is poor.
Indeed. The USA, Australia, New Zealand, the UK, Germany, France, Norway, Sweden... Complete basket cases, the lot of them.
Your statement is literally the opposite of reality. Are you a Libertarian ?