SoylentNews is people
SoylentNews
In 1930, a year into the Great Depression, John Maynard Keynes sat down to write about the economic possibilities of his grandchildren. Despite widespread gloom as the global economic order fell to its knees, the British economist remained upbeat, saying that the ‘prevailing world depression … blind[s] us to what is going on under the surface’. In his essay, he predicted that in 100 years’ time, ie 2030, society would have advanced so far that we would barely need to work. The main problem confronting countries such as Britain and the United States would be boredom, and people might need to ration out work in ‘three-hour shifts or a 15-hour week [to] put off the problem’. At first glance, Keynes seems to have done a woeful job of predicting the future. In 1930, the average worker in the US, the UK, Australia and Japan spent 45 to 48 hours at work. Today, that is still up around 38 hours.
Keynes has a legendary stature as one of the fathers of modern economics – responsible for much of how we think about monetary and fiscal policy. He is also famous for his quip at economists who deal only in long-term predictions: ‘In the long run, we are all dead.’ And his 15-hour working week prediction might have been more on the mark than it first appears.
If we wanted to produce as much as Keynes’s countrymen did in the 1930s, we wouldn’t need everyone to work even 15 hours per week. If you adjust for increases in labour productivity, it could be done in seven or eight hours, 10 in Japan (see graph below). These increases in productivity come from a century of automation and technological advances: allowing us to produce more stuff with less labour. In this sense, modern developed countries have way overshot Keynes prediction – we need to work only half the hours he predicted to match his lifestyle.
The progress over the past 90 years is not only apparent when considering workplace efficiency, but also when taking into account how much leisure time we enjoy. First consider retirement: a deal with yourself to work hard while you’re young and enjoy leisure time when you’re older. In 1930, most people never reached retirement age, simply labouring until they died. Today, people live well past retirement, living a third of their life work-free. If you take the work we do while we’re young and spread it across a total adult lifetime, it works out to less than 25 hours per week. There’s a second factor that boosts the amount of leisure time we enjoy: a reduction in housework. The ubiquity of washing machines, vacuum cleaners and microwave ovens means that the average US household does almost 30 hours less housework per week than in the 1930s. This 30 hours isn’t all converted into pure leisure. Indeed, some of it has been converted into regular work, as more women – who shoulder the major share of unpaid domestic labour – have moved into the paid labour force. The important thing is that, thanks to progress in productivity and efficiency, we all have more control over how we spend our time.
So if today’s advanced economies have reached (or even exceeded) the point of productivity that Keynes predicted, why are 30- to 40-hour weeks still standard in the workplace? And why doesn’t it feel like much has changed? This is a question about both human nature – our ever-increasing expectations of a good life – as well as how work is structured across societies.
(Score: 3, Insightful) by slinches on Tuesday October 29 2019, @07:35PM (22 children)
That's not the problem. It's that paying everyone more for the same amount of work doesn't result in better outcomes. Prices will just increase to match and we are back in the same position of needing to work as much as before to afford the same quality of life. The reason for that is that the value of a dollar is tied to how much total value is created. UBI and reduced work week proponents miss this point. They think giving poorer people money to spend will boost demand and spur economic growth. It won't. Money can be printed and given out, but it essentially just redefines the value of a dollar to be that much lower because it doesn't increase the total value created by those the printed money is given to.
(Score: 3, Insightful) by Jay on Tuesday October 29 2019, @08:32PM (11 children)
That is definitely half of the problem. But 50% of the wealth in the US being tied up in the pockets of 4 people is also a giant problem. That's not getting taxed a few times a day as that money runs from employee to fast food joint to employee to gas station to truck driver, etc. The amount and velocity of money in the economy is the economy, and when you drain half the money out, that's an economic problem.
I agree that there are some issues with the value of money being tied to the value produced by the labor, but addressing those won't make a difference if the value to the economy is mitigated by the hoarding at the top.
(Score: 3, Funny) by slinches on Tuesday October 29 2019, @09:34PM (9 children)
The rich don't hoard money, though. They invest it. Investing means that that money is out in the economy circulating and being used to create more value and wealth. So while Bezos, Gates, Buffett, Zuck, et. al. may have their names attached to it, that money isn't just sitting in some vault hidden away. It's out making others wealthier, making new products that improve people's lives and increase productivity while those elite also get richer in turn for providing the capital necessary to make it happen. The same goes for all of those mega-corps.
I don't really know how to solve the problem of accumulated economic influence, but it would help if we actually enforced the monopoly and anti-competitive practices laws and stopped bailing out companies that take on excessive risks. Letting big corporations die when they fail will go a long way, making room for smaller competitors to come in a fill that role.
(Score: 3, Insightful) by Anonymous Coward on Tuesday October 29 2019, @10:27PM (3 children)
Ah yes, the old trickle down theory. The overwhelmingly vast majority of human activity does not require extra investment. All the money reinvesting is really just making the piles of money bigger for the super rich while not doing overly much for actual human benefit.
One day you'll get it, once something forces you out of the status quo perspective.
(Score: 2) by slinches on Tuesday October 29 2019, @10:46PM (2 children)
[Citation Needed]
To build anything new requires time and resources, which are an investment. That may take the form of wages or a capital loan to purchase raw materials, manufacturing space and machines. And that holds true across every scale from someone knitting their own sweater to commercial aircraft.
(Score: 2, Insightful) by Anonymous Coward on Wednesday October 30 2019, @02:22AM (1 child)
"To build anything new..."
As I said, the majority does not require new investment. New businesses are the minority, and very often are not the result of venture capitalists.
Keep telling yourself those silly stories that keep your worldview from collapsing while selling your soul to those who would trade it to the valet to get their car first.
(Score: 2) by slinches on Wednesday October 30 2019, @04:58PM
By anything new, I mean every unit of product created and every instance of a service provided. You create something new (i.e. did not exist in that form before) every time you take some bread, meat and cheese and make a sandwich. That takes investment in the form of the source materials and your time to assemble it. Now that doesn't necessarily mean that you should need a loan to stock your fridge, but when you scale it to the size of a restaurant, loans may allow you to expand to a new location where you otherwise couldn't.
(Score: 2) by mhajicek on Tuesday October 29 2019, @10:55PM (2 children)
Investing in gold, currency exchange, or real estate does not create value.
The spacelike surfaces of time foliations can have a cusp at the surface of discontinuity. - P. Hajicek
(Score: 2) by slinches on Tuesday October 29 2019, @11:36PM (1 child)
Agreed, commodities and currency are not an investment in the same sense as what I was talking about. Real estate can be (e.g. building new housing, renovating or subdividing property can increase value), but isn't always (e.g. just buying up existing properties and renting them out).
I would also put trading stocks into that non-value added pool, whereas purchasing new stock issued by a company is about creating value.
(Score: 2, Insightful) by Anonymous Coward on Wednesday October 30 2019, @02:32AM
AC from above, you just made my case for me. We all have some inherent beliefs that we accept because that is what we were taught. The idea that we need super rich individuals who can fund amazing ventures is a statistically irrelevant tale pushed to maintain the modern version of aristocracy.
A large amount of modern technology was funded by governments, AKA "the people." I'm not advocating abolishing private wealth, but it must be reigned in before we drive the general population to tear society down. I think a few less yachts and private jets is a small price to pay for societal stability.
(Score: 2) by legont on Wednesday October 30 2019, @02:15AM
Not anymore. The rich stopped investing simply because they know there is nobody to buy their product.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2) by Bot on Wednesday October 30 2019, @10:38AM
>The rich don't hoard money, though.
1. get rich
2. enter the circle of rich people at your level
3. they expect you to spend as much as they do to prove your status
4. spend and get more money
5. goto 2
>They invest it. Investing means that that money is out in the economy circulating and being used to create more value and wealth.
This is oversimplification. It happens but some other things happen. They invest money because they are the product of the banking system. More money means more debt. Less money usable as reserve FOR THE PRIVATE means less sense of safety means less consumption. Quantitative easing and reserve banking means the money they print is as good as the money made by "creating more value with your work". Banks, the same ones that don't give you a penny unless you have a guarantee, invest in enterprises even at a loss for decades (see amazon) because they thrive on disruption causing debt causing acquisition of actual assets, not on getting pieces of paper or flooding people with them.
Account abandoned.
(Score: 1) by khallow on Wednesday October 30 2019, @02:05AM
That's nonsense. First, you're ignoring future income, the primary wealth of people who owe money. Second, slightly less than 50% of the wealth of the US by your measure is tied up in the pockets of zero people - that is, because a lot of people owe money and hence, are considered for some really shallow reasons to have negative wealth, then even a man without a penny to their name "ties up" a lot of peoples' wealth.
And of course, "tied up" has no meaning since those four people are investing that wealth instead of tying it up.
(Score: 5, Insightful) by Thexalon on Tuesday October 29 2019, @09:16PM (6 children)
I know that's the conservative talking point, but it just has never worked out that way.
I'm pretty sure you're starting from the assumption that the price of a good reflects the cost of producing it. That's only somewhat true, though: Prices also reflect market position (fewer sellers=higher prices, fewer buyers=lower prices), psychology (e.g. $4.99 rather than $5.00), game theory (e.g. raising prices at 4:45 PM on Friday, seeing if your competitors follow suit before Monday, and changing them back if they didn't), brand power (e.g. "McDonalds") and a bunch of other factors.
Businesses are universally trying to use the non-cost factors to maximize prices for their products, and that's where the big profits come from. To use an example, consider the iPhone X, which Apple sells for $999 but costs Apple under $300 to make. The remaining $700 or so goes towards shareholders, salaries for Tim Cook and other top brass, and some of it gets diverted towards R&D of the next product. If the costs of making an iPhone doubled to $600 because wages went up, you're just assuming that Apple would keep their profit margins the same and charge $1300 for the same phone they're currently selling for $1000, even though most of the cost of that phone is basically just numbers they made up because they thought it sounded good to their customers. If I had to guess, there's a psychological barrier for a lot of customers considering a 3-figure price versus a 4-figure price, one that will convince more middle-class customers to have to think much more about whether said iPhone is actually worth what Apple is charging for it.
You can also get an idea of how little the real cost of a product matters by comparing similar products. For instance, Coca-Cola 2-liter is $1.99, while a generic cola 2-liter is $0.67, so either approximately 2/3 of the cost of a 2-liter of Coke is the words "Coca-Cola" stamped on the sides, or they're spending far more on R&D than we thought. And a Coca-Cola 2-liter is $1.99, while a 1-liter of the exact same product is $1.49, and even if we're figuring that the cost of packaging isn't nothing we'd still expect the cost to be closer to $1.00.
TLDR: When your prices are basically BS to begin with, they're unaffected by employee wages.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by slinches on Tuesday October 29 2019, @10:02PM (5 children)
You're getting lost in the weeds. It doesn't matter what the prices and margins are for specific products. It's not a matter of cost of goods reflecting the cost of production. It's a matter of collective wealth generation. You have to move the needle on that to make meaningful improvements in quality of life.
(Score: 5, Insightful) by Thexalon on Wednesday October 30 2019, @01:12AM (4 children)
That argument doesn't work either.
Let's look at just the US for argument's sake. The US produces approximately $19 trillion worth of stuff. To keep everybody fed, clothed, housed, and healthy costs no more than about $6 trillion. That leaves $13 trillion for everything else, but instead of spending it on useful stuff like infrastructure and scientific research, we're collectively spending a lot of it on things like military aircraft we don't really need and don't work well, on really big yachts and private jets that only help their owners' futile attempts to deal with insecurities about their genitals, and making numbers in a database somewhere go up. And we're starving and freezing our own citizens to accomplish this.
And if you're going to say "Well, we need the big yachts and private jets and mansions and such to motivate the leaders in our society", I just have to counter: Do you really think the main reason that, say, Jamie Dimon bothers to go to work in the morning is to get a bigger private jet? And do you really think that society is made substantially better if Jamie Dimon is the one going to work versus somebody else taking a turn running JP Morgan? Sure, Dimon might be a smart guy, but I doubt he's irreplaceable. And yes, that also goes for entrepreneurs you probably like such as Elon Musk: Musk wasn't and still isn't even close to the only person working on electric vehicles or private space flight.
Or, if your argument is that we need really rich people around so they can decide to, say, start building private spaceships, why is it we've decided that these really rich guys are the ones that should be calling the shots on these kinds of projects? Why aren't we, say, putting our trust in organizations that answer to the public, are stock full of engineers enthusiastic about trying to make it happen, and cost less because we're not paying the head honcho a gajillion dollars?
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0) by Anonymous Coward on Wednesday October 30 2019, @02:27AM
Yes.
But I agree with the rest of your analysis. :-)
(Score: 2) by slinches on Wednesday October 30 2019, @04:42PM (2 children)
The current capitalist global economy has evolved to its current state. It's not about needing rich people to make decisions or yachts to motivate them, it's that rich people have made enough profitable decisions to become rich and they are free to choose how they spend or invest most of that profit. A consequence of giving people the freedom to use the profits of their labor how they see fit, which is a core principle of capitalism, is that they can end up buying luxuries rather than feeding the poor or funding infrastructure and education. That's where government and taxes come in. That's supposed to be the portion that is siphoned off to fund all of those collective programs that benefit everyone instead of just the individual. Currently, the US takes in ~$6 trillion in tax revenues (federal, state and local combined), so we should have enough to go around. If you don't like how that's being distributed, then lobby the government and vote for representatives to change that. If that's not enough for you, then you are arguing for a command economy. Although, those haven't historically worked out well for the poor either.
(Score: 2) by Thexalon on Wednesday October 30 2019, @09:07PM (1 child)
1. For over half of the rich people around right now, the profitable decision they made was being born to rich parents. It wasn't the profits of their own labor at all, it was the profits of great-great-granddad's labor.
2. You seem to be engaging in the Is-ought Fallacy [txstate.edu], where you assume that because things are this way, they ought to be this way.
Sure, I can (and did) vote for someone other than who's currently in office as my representative. And I can and sometimes do lobby the government. But I can't write $2800 checks to said representative, and thus my opinion doesn't matter. My own congressman is actually on the record saying that he doesn't care in the slightest what his constituents think (he gets enough votes to be reelected because of gerrymandering, incumbency, and party loyalty).
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Funny) by slinches on Wednesday October 30 2019, @10:40PM
1. The ones who don't continue to make profitable decisions don't stay rich long.
2. Defending the existing system is not inherently an is-ought fallacy. I understand there are weaknesses in our current system and we should work to minimize those. I just don't think there's a fundamentally better system out there (short of the world being made up of fundamentally better people). Though, I would change my mind if one is eventually developed.
This is why I don't have much faith that the government would make any better decisions about how to use the profits of our collective labor. As far as I can tell, it would just change who gets to buy the yachts.
(Score: 2) by c0lo on Tuesday October 29 2019, @10:36PM (2 children)
Define 'value' and 'value creation'. Otherwise your argumentation is begging the question.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by slinches on Tuesday October 29 2019, @11:13PM (1 child)
Value is the useful purpose of a thing. Value creation is the process of investing a combination of time, skill, raw materials and ingenuity into something with more value than the sum of the parts. That can be anything from growing vegetables in your own garden to running an a commercial airline.
(Score: 2) by c0lo on Wednesday October 30 2019, @12:46AM
While I can agree with your (attempt of a**) definition, I think you'll find the actual correlation between value under that meaning and the "value of the dollar" is weak/tenuous.
Substituting your definition of value in the "value of the dollar", lets the latter in contradiction with the actual reality.
Even more so if one would consider the case of "creation value for the dollar" (WTF could this even mean? "The Mind Simply Reels.")
**
a proper definition requires "genus proximum" and "differentia specifica"
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford