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Full Employment

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Re: Full Employment

#21

Post by woah »

kortilla wrote: post #17
jusssi wrote: post #7

Earlier quoted context omitted.

> All of these people who would otherwise have less/no money are now spending that printed money to purchase goods like food, thus driving inflation higher. This assumes those goods are a scarce resource, so that increased consumption eventually leads to shortage. I can't quote sources, but my understanding is that we have enough food to feed everyone ATM, and any remaining hunger is just a failure of the economy to…

The problem is that all consumption levels stay the same but the production costs surge because a bunch of people aren’t working to help produce supplies. The only way inflation doesn’t occur is if all of the unemployed people were doing useless things that nobody wanted in normal times, which is not how most of the worlds markets function.

How many people do you need to grow potatoes?

Re: Full Employment

#22

Post by function_seven »

bob33212 wrote: post #19
function_seven wrote: post #11

Earlier quoted context omitted.

Sure, but the robot truck owners are also getting 40K additional per year, no? Or if they're not completely capturing the marginal difference between a human driver and a robot driver, someone elsewhere is, right? Maybe the 40K labor savings is actually offset by a 37K a year replacement to the labor force, who also now enjoy lower prices on all shipped goods. (Assuming there is still real competition in shipping)

The 40k goes to the profits of the shipping companies, which goes to the dividends of the stock owners, who are generally spending the dividends on investing in more stock. In theory shipping prices would go down immediately, but in the real world it could take years for competitors to force the industry to lower costs by the full 40k.

I'm a bit out of my depth here (I always am when it comes to macroeconomics or monetary theory).

Let's say that the equity holders of the various shipping companies keep the $40k savings all for themselves, and use those profits to buy more stock. Isn't that still going to drive inflation? The price of shares will continue to rise solely due to more money chasing them. And every buyer of stock is giving money to a seller of stock on the other side, who will then do what with that money? If it's capitalizing a new company, then the money will be spent into the economy. If it's buying existing shares, then the seller will now have cash to spend.

Either way, the money is still an active participant in the money supply. Meanwhile the government is creating new money each year to offset the salary losses of the displaced truckers. What used to be a 40K transfer from employer to employee is now a $40k diversion to other uses at the employer's end, and $40k of brand new money on the employee's end.

Re: Full Employment

#23

Post by eru »

climwe wrote: post #15
eru wrote: post #13

Earlier quoted context omitted.

> 4) The USA is run by oligarchs who have a policy of discarding workers, so that completely undermines the article - the unemployed will not be working on moving cities inland, they will just be forgotten and destitute. What's your evidence for that? Unemployment was really quite low in the last decade up until a few months ago, with presumably the same 'oligarchs' already in power?

Unemployment was lower but jobs became worse. If there was no increase in federal minimum wage in a decade, you can see why employment went up in that exact same decade. It's not good enough to just point to one statistic and cancel out a deeply complex claim like that one.

> Unemployment was lower but jobs became worse.

How do we know that?

> If there was no increase in federal minimum wage in a decade, you can see why employment went up in that exact same decade.

That's great news, if true. It suggest a very actionable strategy to keep unemployment in check.

(Though, of course, looking around the globe, even the absence of a minimum wage law doesn't make all other unemployment problems magically vanish.)

> It's not good enough to just point to one statistic and cancel out a deeply complex claim like that one.

Indeed. This was just to point out that the claim would have to be backed by quite a bit of evidence, because the surface facts about unemployment need quite a bit of explaining away first.

There was no evidence at all provided in the comment I replied to. So this was an invitation to bring some evidence.

I have no opinion on 'oligarchs', only on hypothetical 'oligarchs who have a policy of discarding workers'.

Re: Full Employment

#24

Post by climwe »

zumachase wrote: post #16
jusssi wrote: post #7

Earlier quoted context omitted.

> All of these people who would otherwise have less/no money are now spending that printed money to purchase goods like food, thus driving inflation higher. This assumes those goods are a scarce resource, so that increased consumption eventually leads to shortage. I can't quote sources, but my understanding is that we have enough food to feed everyone ATM, and any remaining hunger is just a failure of the economy to…

These goods are scarce in the economic sense, even if you think they are “cheap”. They are not free to produce. We do have enough food to feed the world, but that would mean your food gets more expensive as other people consume what would otherwise contribute to downward supply pressure.

If there is excess food and it is given to people who would not otherwise buy food, there would be no negative effect on prices or the economy in general. Maybe examples of these types of people don't exist in America all that much but they certainly do in the rest of the world.

Your argument only makes sense if the excess food is given to people who can afford it and just want to eat for free.

Re: Full Employment

#25

Post by zumachase »

wz1000 wrote: post #12
zumachase wrote: post #4

> Should that day come to pass, the money-issuer – the central bank – can procure all that idle labor, without creating inflation. If the private sector doesn’t want labor, then there’s no bidding war between companies and a federal jobs program or a universal basic income, so creating money to buy people’s labor won’t drive up the price of that labor. I had to stop reading after this. This is not how inflation works…

You're missing the point. There is no inflation taking the no automation stage as a baseline. I.e. the scenario is workers spending $X of their employer granted salaries on goods they produce vs spending $X of basic job salaries that machines produce

No, I’m not. You’re making a very simple argument of an extremely complex issue. That only holds up in a world of unlimited resource. As long as energy and raw materials are finite, the above does not hold.

More importantly, you’re conflating two things: we needn’t necessarily print money. Let’s presume your comment were correct. Nonetheless, in the absence of such monetary policy, consumption would plummet and deflation would reign. Thus, it is still inflationary.

Re: Full Employment

#26

Post by vages »

eru wrote: post #2

Compare https://en.wikipedia.org/wiki/Economic_impacts_of_climate_ch... Wikipedia quotes studies that put the estimated aggregate impact at losing about 0% to 20% of world GDP. That's comparable eg to moving from NYC to a place with average US GDP per capita. That's certainly a lot, but perhaps not a world shattering impact. (Edit: the studies quoted on that Wikipedia page are quite old by now. It would be useful to…

Assuming that continued economic growth takes place (a safe assumption; the so-called third world countries are growing at a fast pace), the net economic result could still be positive.

Here's a quote from Nick Bostrom from the Wikipedia article:

> Even the Stern Review on the Economics of Climate Change, a report prepared for the British Government which has been criticized by some as overly pessimistic, estimates that under the assumption of business-as-usual with regard to emissions, global warming will reduce welfare by an amount equivalent to a permanent reduction in per capita consumption of between 5 and 20%. In absolute terms, this would be a huge harm. Yet over the course of the twentieth century, world GDP grew by some 3,700%, and per capita world GDP rose by some 860%. It seems safe to say that (absent a radical overhaul of our best current scientific models of the Earth’s climate system) whatever negative economic effects global warming will have, they will be completely swamped by other factors that will influence economic growth rates in this century.

Re: Full Employment

#27

Post by zumachase »

climwe wrote: post #24
zumachase wrote: post #16

Earlier quoted context omitted.

These goods are scarce in the economic sense, even if you think they are “cheap”. They are not free to produce. We do have enough food to feed the world, but that would mean your food gets more expensive as other people consume what would otherwise contribute to downward supply pressure.

If there is excess food and it is given to people who would not otherwise buy food, there would be no negative effect on prices or the economy in general. Maybe examples of these types of people don't exist in America all that much but they certainly do in the rest of the world. Your argument only makes sense if the excess food is given to people who can afford it and just want to eat for free.

I’m sorry, that’s just not how economics works. A market with excess supply necessarily has lower prices than one that is balanced, ceteris paribus.

Idaho potatoes were mentioned above. They are only being thrown away because the market does not want them. The mechanism by which this happens is price: prices drop low enough that it’s cheaper to throw away (we saw negative oil prices recently). One explanation is that other farmers saw this supply glut and raced to slash their prices. If we took all those excess potatoes and gave them away, then absent this excess supply, those other farmers would not have done this and prices would have remained steady or not gone down as much. Thus the artificial increase in quantity demanded is necessarily inflationary.

Re: Full Employment

#28

Post by js8 »

It's always refreshing to read someone who really gets that economy is not about money, but rather about what is being produced. The title reminded me of the famous Kalecki essay, Political Aspects of Full Employment, which actually explains deeper why this is not so easy to do as Cory Doctorow imagines (if you hadn't read it, I really recommend it, it's one of the best works on economics ever).

Here I think is the crux of the problem. In our (western civilization) societies, everyone wants to be a manager or a scrum master or at least a programmer, have a nice white collar job in the home office. Not many people want to do actual manual jobs, like painting or plumbing, even though these would actually be needed a lot. If we truly payed blue collar guys a market rate, no white collar jobs would exist, because what is the price for risking your health?

I think we are plagued by a very similar problem that plagued any human civilization before us. We have a system sustained by a psychopathic upper class, where clueless middle class, which wants to keep their white collar jobs, knows only one thing for sure - they do not want to become blue collar losers.

And the only innovation of the system we figured out was that we can make the middle class really big, thanks to productivity of technology. But unfortunately, that means we are actually underutilizing the possible technological advances. By relegating the maintenance of the technology to lower classes, we are limiting its potential, in order to preserve the middle class social status.

Re: Full Employment

#29

Post by [deleted] »

eru wrote: post #23
climwe wrote: post #15

Earlier quoted context omitted.

Unemployment was lower but jobs became worse. If there was no increase in federal minimum wage in a decade, you can see why employment went up in that exact same decade. It's not good enough to just point to one statistic and cancel out a deeply complex claim like that one.

> Unemployment was lower but jobs became worse. How do we know that? > If there was no increase in federal minimum wage in a decade, you can see why employment went up in that exact same decade. That's great news, if true. It suggest a very actionable strategy to keep unemployment in check. (Though, of course, looking around the globe, even the absence of a minimum wage law doesn't make all other unemployment problem…

[deleted]

Re: Full Employment

#30

Post by Andys »

skybrian wrote: post #20
zumachase wrote: post #4

> Should that day come to pass, the money-issuer – the central bank – can procure all that idle labor, without creating inflation. If the private sector doesn’t want labor, then there’s no bidding war between companies and a federal jobs program or a universal basic income, so creating money to buy people’s labor won’t drive up the price of that labor. I had to stop reading after this. This is not how inflation works…

While I don't agree with Doctorow's argument at all, I would say that inflation is misunderstood more than it's understood. For example, there is a naive belief that inflation is proportional to the money supply. This seems to be a garbled version of monetarism, which is no longer how central banks think about it, but even monetarism is more complicated than that. Monetarist theory is based on MV = PQ, where M is the…

But isn't the need to buy food to eat a certain guaranteed base level of velocity?
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