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[Mykl:] This is actually the exact problem in the US at the moment. Money is trickling to the top and not making its way back down. Those at the top are hoarding it, thus keeping it out of, and slowing, the economy. This in turns damages the businesses that they own, because their customers can't afford to spend money that they don't have.
The problem would be largely solved by handing out a bunch of cash to employees, who will use it to go out and spend, stimulating the economy and generating demand (thus improving the outlook of business). It would actually be a win-win, but the cash hoarders can't see beyond having the biggest number in the bank they can (which they'll never spend).
The big thing missed is that due to inflation, hoarding money means losing money. Rather than wonder why businesses aren't hiring people or building up capital right now, Mykl merely suggests that the business give away that money to create a little short term economic activity and something that will be better than the present state of affairs while ignoring that the business has just thrown away its cheapest means to expand and employ more people. Later on in the same thread, we have this gem:
[deimtee:] I think this is actually becoming one of the major problems, especially on the small end of the investment scale. At some point, the economy is producing enough to feed, house, and entertain everyone without requiring anywhere near enough human work to keep everyone employed.
Investing in a new business requires identifying an under-filled need in order to attract customers. It is getting to the point where starting a new business means competing with a giant company, it is just not viable unless you can come up with something that is both truly new and valuable. Not many people can do that, and every time one does there is one less opportunity left. At the same time, big companies are streamlining and using automation and economies of scale to reduce the number of employees.
The solution, of course, was to shrink the labor market, not fix the problems described above.
[khallow:] Deliberately shrinking the labor market won't identify under-filled needs nor create more small and medium sized businesses.
[deimtee:] The labour market is currently over-supplied. This is evidenced by the difficulty young people have in entering it. Raising the retirement age is like eating your seedcorn. By the time those geriatrics are finally knocked off by COVID 2040 or something society is going to hit a wall where no-one knows how to do the jobs. 30 year-olds on unemployment for 10 years are not ideal trainees and no trainers will be around anyway. Early retirement forces the companies to train the next generation now.
Yes we should be massively investing in life-extension, medical research, space, all that stuff. Now what percentage of people do you think can realistically contribute to that sort of endeavor? I would say less than 1% of people have the capability to undertake research at that level.
Notice the insistence on shrinking the labor market even when presented with clear evidence that we need that labor for hard, open-ended problems and to preserve institutional knowledge. In the recent story, Kill the 5-Day Workweek (which was about some business that does 4 day workweeks), we see more examples of this dysfunctional reasoning in action. There's anecdotes about bad bosses, insistence that economies is less rigorous than physics, and lots of fantasizing about all the amazing things you'd do, if your employer was forced to give you one more day off. Let's start with the "bullshit jobs":
[Thexalon:] Counterpoint: A lot of jobs are completely useless and exist for basically bullshit reasons. If you've ever worked in a larger corporation or non-profit, you will have no difficulty identifying a bunch of Wallys or Peter Gibbonses walking around who are accomplishing absolutely nothing but vaguely looking like they might be working. And no, that's not limited to government, because despite what a lot of libertarians seem to think private corporations are not even close to perfect models of efficiency.
To summarize the above link, some clueless idiot doesn't understand a variety of jobs. So those jobs must not have a reason for being and are thus "bullshit jobs". Notice that once the author has failed to understand the purpose of these jobs, he then has to come up with a conspiracy theory for why they exist.
[author David Graeber:] The answer clearly isn't economic: it's moral and political. The ruling class has figured out that a happy and productive population with free time on their hands is a mortal danger (think of what started to happen when this even began to be approximated in the '60s). And, on the other hand, the feeling that work is a moral value in itself, and that anyone not willing to submit themselves to some kind of intense work discipline for most of their waking hours deserves nothing, is extraordinarily convenient for them.
Who here really thinks that Joe Billionaire is going to burn money on that?
Then there's the fantasizing about how shortening the workweek and the amount of work per job won't have any impact on competition from other countries.
[AC1:] A lot of Asian companies still work on Saturday (6 day week ). If going to a 4 day workweek in any way hurts productivity these Asian firms will have an advantage
[AC2:] Ridiculous, and already proven wrong since they are open an extra day already and haven't taken all the business.
"Proven wrong" because those Asian companies haven't eaten entirely our lunch. We still have some left. Funny how half a century of off-shoring can be ignored.
Moving on, it wouldn't be complete without a contribution from the peanut gallery. fustakrakich continues his bid to destroy Western civilization:
[fustakrakich:] Also demand a six hour work day. Make each day a little less tiresome
Here's my take on all this. It's basically a supply and demand problem in the developed world. Due to labor competition from the developing world, developed world labor has lost much of its pricing power. For some reason, most of the above posters think we can get back to higher labor prices by reducing the supply of labor. What's missing from that is that the developing world is still increasing its supply of labor (more from building out trade/transportation infrastructure to populations than from birth rate). Those moves won't actually reduce labor supply as a result.
Instead, let's increase the demand for labor. Rather than rhetorically ruling out the creation of new businesses and such, how about we enable those things to happen. Because plenty of new businesses still happen - indicating the narrative is faulty.
But that would mean acknowledging that protecting labor is less important than nurturing business growth and creation. Who will do that?
(Score: 4, Interesting) by Anonymous Coward on Wednesday June 23 2021, @02:51PM (19 children)
Is this the inflation people were insisting wasn't going to happen as we entered lockdown last year? That v-shaped recovery is looking like it's suffering a supply-side recession after all... the price of lumber alone... And you know the wealthy don't hoard vulgar money, they purchase inflation proof assets.
Tightening the labor market increases wages for the working class and is necessary to sustain a middle class. BlackRock buying property and expecting rental income to fund pensions while the cost of labor is continuously forced down by importation of 3rd world slave labor manufactured products and open-borders immigration is fucking la-la land. The kicker is that AI and automation will obliterate demand for labor - here and in the developed world.
(Score: 0) by Anonymous Coward on Wednesday June 23 2021, @04:59PM
Freudian slip but no prophets lost!
(Score: 0) by Anonymous Coward on Wednesday June 23 2021, @05:32PM (6 children)
Not just lumber. Steel as well. Energy isn't too cheap to meter, either.
Tightening the labour market might increase wages for some in the working class - the ones that get those jobs - but it also encourages outsourcing, and capital investment in automation and other forms of substitution.
BlackRock isn't quite as insane as all that. Follow the logic of your train of thought through: OK, labour costs are down, and the prices of supplies are down owing to outsourcing and importation of ... labour. These people will be living somewhere, right? It mightn't be fancy, but they won't be on the street. BlackRock's plan here is hedged against inflation, but won't completely collapse in the face of deflation either. Remember that housing demand is fairly inelastic. BlackRock will rent places to those who have the means; in a washed-out labour market, the returns might be low but they won't be nil. On the other hand, if the price collapse is broad-based, those low returns will sit pretty nicely when counted with deflation. Conversely, if people genuinely can't make ends meet because labour is washed out AND inflation is high? They will leave to where they can make a living. Emigration is a possibility too. In the USA, which is large enough that the cost of living is nowhere near uniform, there'll be a lot of internal migration, same as there has been for decades. And BlackRock will rent to those footloose arrivals, because ... the demand remains inelastic. The only way they'll lose their shirts is if chunks of presently densely-populated city turn into howling wasteland ghost towns.
Odds seem low.
(Score: 0) by Anonymous Coward on Wednesday June 23 2021, @09:09PM (2 children)
...of an incoming rent-control law that will become necessary when wage growth completely fails to keep pace with the Feds asset bubble. It didn't have to be like that, is the point!
(Score: 0) by Anonymous Coward on Thursday June 24 2021, @01:51AM (1 child)
Rent control?
Seriously, rent control? The policy that keeps returning, and keeps giving the same gifts over and over and over, where buildings get revamped to evade the rent control rules, or go condo, or just never got built in the first place. The policy that has landlords cutting costs to the bone to keep them from just being moneypits, or having the buildings condemned and trashed just to outlast the rent control thing? The policy that has been proven time and again to reduce domicile availability? The perennial failure of urban planning? And on a federal level?
I'm not saying it's impossible. I'm saying I'll believe it when I see it.
(Score: 0) by Anonymous Coward on Thursday June 24 2021, @03:14PM
Everything you said is true and BlackRock have it all to come.
(Score: 4, Insightful) by Runaway1956 on Wednesday June 23 2021, @10:43PM (2 children)
Have you visited Detroit recently? They can't give houses away there. Baltimore is another stop to put on your itinerary.
Abortion is the number one killed of children in the United States.
(Score: 0) by Anonymous Coward on Thursday June 24 2021, @01:54AM
Sure, there are a few zones of urban blight. But I'm going to go out on a limb and guess that they're a teensy bit more selective about their placement than that.
(Score: 2, Interesting) by khallow on Thursday June 24 2021, @02:22AM
(Score: 1) by khallow on Thursday June 24 2021, @01:31AM (10 children)
It does look quite v-shaped [statista.com] though. I grant that the enormous political spending of the past year may turn this into a double dip recession and/or create long term economic stagnation.
My take is that inflation proof assets may be very... inflated... right now. I think the reason that businesses are stocking up on cash, is that they expect better investments in a few months which may or may not include those inflation proof assets.
Unless it doesn't increase wages collectively for the working class. I think the big thing missed here is that such policies collectively produce substantial inefficiencies for the working class as a whole.
We have several centuries of evidence that AI and automation grew demand for labor instead. Maybe there's something wrong with the narrative.
(Score: 1, Insightful) by Anonymous Coward on Thursday June 24 2021, @02:07AM (2 children)
A lot of businesses are stockpiling cash because of problems which are best survived with a lot of liquid assets on hand. Yes, inflation is eating the value, but as things are getting wobbly things like stock buybacks aren't always great because you can't reverse them and sell shares to raise cash without a lot of hoopla - and even then, if people aren't in a buying mood, it might not work to raise a lot of cash in a hurry.
As far as the working class is concerned, I believe it was Thomas Sowell who observed that the real minimum wage is zero. Some utopians are all excited about UBI as a way of changing that, but they seem dreadfully thin on how it will be paid for if you don't believe the MMT fairytale.
(Score: 1, Insightful) by Anonymous Coward on Thursday June 24 2021, @06:32PM (1 child)
You supposed "realists" are so stupid. Economics is a made up system, entirely created by humans. Try flexing your imagination beyond the zero-sum limits.
(Score: 0) by Anonymous Coward on Friday June 25 2021, @09:18PM
This was marked Insightful.
OK, let's see what insight might be gleaned from it. Mods are never wrong.
Bald ad hominem. Moving on.
Not quite. In fact, not at all. Economics is the study of how people can, and do, run things. The modern economy is most certainly a human creation, but it's not a pure abstraction any more than the coffee you drink or the car you drive are pure abstractions. It's a process; a system that emerges from a set of rules and collective decisions. It didn't spring wholly formed from the heads of Smith or Keynes (or Marx or Friedman, for that matter).
So, uh, not so much with the insight, and heavy on the misconceptions so far. But let's keep looking, there's bound to be something.
This is ... an imperatively phrased suggestion, rather than an insight. But maybe inside? The problem is apparently a false apprehension of zero-sum limits. On what, is unspecified. Production? Manifestly not, because it's generally understood that people apply effort to come up with more than they put in - otherwise the effort would be self-defeating. OK, so not production. Development? No, it's pretty much a commonplace that science and technology march on. What else might have been under discussion ...
Money? Maybe this is about the UBI and MMT thing? Well, let's see what we have. Currently, we have an expanding money supply chasing still-struggling production capacities. Raw material commodity prices are rising, while cash flows around. Hm. That smells like inflation. What does MMT say about that? It says that the right thing to do is to withdraw cash from the system by raising taxes, selling bonds, and otherwise keep a damper on the cash supply. OK. But bond prices have an ugly way of pricing inflation in, because the coupon is the fixed part, and taxes adequate to account for the cash dump of UBI are going to have to be spectacular. I mean, we're talking multiple trillions of dollars, annually, to create a UBI approximating even $15/hour per US adult - and that's not even counting what it would take to displace the social welfare network. The average annual tax take would have to be roughly half the GDP, just to balance that huge UBI.
Of course, the UBI would have to be inflation-adjusted, otherwise it would be vulnerable to that, so one couldn't even inflate one's way out of that trap. And this is straight from MMT, not even some watered-down MMR version.
Even if you presume that somehow production will rise, friction-free, to match the gigantic cash dump (not exactly a historically well precedented presumption) and that you somehow keep inflation at bay with your punishingly severe taxes and that you somehow keep industry on side (good luck with that one, again it's not exactly historically supported), you just ended up with what is, in net terms, a gigantic redistribution plan that would make even 1950s Sweden's planners frown and mutter.
So what exact insight are we to gain from this?
(Score: 0) by Anonymous Coward on Thursday June 24 2021, @02:53AM (5 children)
Over-valued or a hedge against inflation though?
Yes, the luddites were wrong but the poverty caused by urbanization and the devaluing of labor is what Engels wrote about. Beyond your point in the journal about institutional knowledge, entire industries are reliant on the continued geopolitical stability that wealth transfer via offshoring is eroding. The big picture is that low skilled labor being imported through immigration is surplus, if not detrimental to current and short-term future social and economic reality.
(Score: 1) by khallow on Thursday June 24 2021, @03:27AM (4 children)
Well, maybe if we really hope, he'll be right for once.
Like the police state industry? We can't have wealth transfer via offshoring erode that.
Except when it's not, of course. Low skilled labor wouldn't be imported, if it really was surplus.
(Score: 1, Insightful) by Anonymous Coward on Thursday June 24 2021, @03:04PM (3 children)
The Condition of the Working Class in England was an observational book.
Unfortunate that some see China as a model to be followed.
Why are we driving down wages in shrinking job sectors? It's as if you want an expansionist welfare state.
(Score: 1) by khallow on Thursday June 24 2021, @11:35PM (2 children)
And if it were remotely accurate, we wouldn't be here now.
Would those sectors be shrinking, if we weren't pumping up the cost of workers?
(Score: 0) by Anonymous Coward on Friday June 25 2021, @01:12AM (1 child)
It was accurate, it is why we're where we are now. [www.bl.uk]
Yes, due to automation. We're going in circles now.
(Score: 1) by khallow on Friday June 25 2021, @01:15PM
Obviously, then the solution is to hire less people so we can complete the destruction, much like turning the nose of a plane straight down results in the best crater.
I find it remarkable how you can continue to push this narrative in the face of little evidence for it. Globally there is massive hiring of people. It's only in places that have supply restrictions on labor that have these automation problems. Maybe we should look to the places that are doing employment better?
(Score: 2, Touché) by fustakrakich on Thursday June 24 2021, @03:20AM
Very funny. The reason they are "stocking up" is because the fed is piling it on faster than they can spend it.
La politica e i criminali sono la stessa cosa..