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Full Employment

locusmag.com

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Re: Full Employment

#41

Post by skybrian »

Andys wrote: post #30
skybrian wrote: post #20

Earlier quoted context omitted.

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?

You do need a certain amount of spending, but that's M*V, not V. More money means less of it needs to circulate to cover spending on food. (If amount spent on food is fixed.)

But this is based on a very simple model that doesn't take inequality into account at all.

Re: Full Employment

#42

Post by lcam84 »

lcam84 wrote: post #40

How many pollution do we need to make to "relocate every coastal city in the world kilometers inland"? The notion that the objective for the human race it's to be employed is one of the two main reasons that we are destroying the planet.

It's not IA that eleminated our jobs, it was our parents. We need to be gratefull for what they have done and stop this full employment bullshit.

Re: Full Employment

#43

Post by zumachase »

smallnamespace wrote: post #37
zumachase wrote: post #32

Earlier quoted context omitted.

Yes this is all very true, but he makes the case explicitly for money velocity to increase. He’s not suggested printing money for savers or rent seekers, he’s suggested printing money for the express purpose of consumption: I have been automated and thus can not afford basic staples without basic income. This is inflationary not matter how you slice it.

It’s inflationary, but the wealth inequality, unemployment/underemployment, and recession we have are all deflationary forces, e.g. CPI inflation is well below historical trends since 2008. The argument is we have room to nudge inflation back to normal while also helping people.

You’ve moved the goalposts. OP claims that it’s not inflationary. You’re claiming it’s inflationary but that it’s beneficial. I’m only taking issue with the former.

Re: Full Employment

#44

Post by zumachase »

Unsimplified wrote: post #38
zumachase wrote: post #27

Earlier quoted context omitted.

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…

Incorrect. The use of discarded product by non-market flows has no effect on market price.

You’re putting the cart before the horse: price came first, then the product was discarded.

The risk that these potatoes might be dumped into the market pushed prices down. If you magically take this risk away, it doesn’t matter by which mechanism, that threat goes away and price responds.

If I’m another potato farmer and all of a sudden all those extra potatoes are teleported somewhere else, I will in all likelihood raise my prices.

Even the most progressive theorists would not debate this. It’s basic aggregate supply and demand.

Re: Full Employment

#45

Post by refurb »

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.

Jobs became “worse”? Wages were up the quarter or 2 before Covid.

Re: Full Employment

#46

Post by zumachase »

js8 wrote: post #39
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…

> I had to stop reading after this. This is not how inflation works and it borders on the preposterous to surmise that CBs can monetize deficits without creating inflation because there is excess supply in one market. I think the government doesn't have to run deficits, it can always tax the money back out of the economy. (The only problem is nobody likes that, for some reason. People seem to prefer inflation to taxa…

We’re not talking about the Treasury. We’re talking about Central Banks who lack the power to tax (directly at least).

> People seem to prefer inflation to taxation.

That’s because they’re not the same thing, not at all.

Re: Full Employment

#47

Post by ianleeclark »

zumachase wrote: post #44
Unsimplified wrote: post #38

Earlier quoted context omitted.

Incorrect. The use of discarded product by non-market flows has no effect on market price.

You’re putting the cart before the horse: price came first, then the product was discarded. The risk that these potatoes might be dumped into the market pushed prices down. If you magically take this risk away, it doesn’t matter by which mechanism, that threat goes away and price responds. If I’m another potato farmer and all of a sudden all those extra potatoes are teleported somewhere else, I will in all likelihood…

> It’s basic aggregate supply and demand.

Okay, so then we have absolutely no idea in which way the demand curve will curve then. If the demand curve can be any polynomial, then we have no clue if this will happen or not.

Re: Full Employment

#48

Post by skybrian »

zumachase wrote: post #32
skybrian wrote: post #20

Earlier quoted context omitted.

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…

Yes this is all very true, but he makes the case explicitly for money velocity to increase. He’s not suggested printing money for savers or rent seekers, he’s suggested printing money for the express purpose of consumption: I have been automated and thus can not afford basic staples without basic income. This is inflationary not matter how you slice it.

Well that depends. If it's preserving spending power (you were laid off) then it wouldn't be a spending increase. The supply was already there.

Inflation is an average of price increases. You get price increases when supply can't expand as fast as demand while keeping the price of inputs the same. This depends on whether there are supply bottlenecks and what the nature of those bottlenecks are. There have been some supply bottlenecks due to deliberate closures, but mostly temporary.

In a recession, the assumption is that there is extra capacity already, particularly for labor.

Re: Full Employment

#49

Post by zumachase »

bob33212 wrote: post #8
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…

Say that 100k truckers making 50k a year lost their jobs to self driving trucks, which cost 10k year. If the government paid those people 40k a year the demand and purchasing power for food would not change for those 100k people.

Yes, it would absolutely. Purchasing power is (roughly) the ratio of production divided by the money supply. If supply of money goes down, purchasing power goes up and vice versa.

In your example, these truckers have stopped producing goods (services in this case). That means that production has gone down. If the supply of money remains fixed, there is more money chasing fewer goods and services. This drives prices up.

Said another way: if those truckers had less money (or no money) then they wouldn’t be competing with other buyers for goods, and prices would fall (purchasing power increases).

This is an extremely simplistic analogy and ignores other forces such as velocity and trade balances, but illustrates the point.

Re: Full Employment

#50

Post by 082349872349872 »

eru wrote: post #13
redis_mlc wrote: post #10

1) I tried to read the article, but it's badly structured and edited. 2) The SF Bay Area has never had a ventilator shortage. In fact, we gave away 500 in March/April to other states because we have too many. 3) The article mixes up various timelines into an incoherent wall of text - General AI, corona pandemic and global warming effects all have different timelines. 4) The USA is run by oligarchs who have a policy o…

> 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?

What's really quite low? Ours hit 3,4% in May due to the virus, but June just came out at 3,2%...
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