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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: 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?