| ▲ | chii 6 days ago |
| > they forget people also need money to buy their goods. the goods ought to have become cheaper if the ai/mechanization/industrialization is cheaper than labour. And also when "the rich" have more profit, they now want to spend that profit on things, which spawns new luxury good industries. Of course, the news cycle and the sob stories always revolve around people losing their existing jobs, but there is new jobs around that previously didnt exist. Jobs that people previously never thought was even "a job". Of course, it is up to the individual to search and find their niche, and to produce value to sustain their own existence. The advent of AI is not going to be different. |
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| ▲ | CraigJPerry 6 days ago | parent | next [-] |
| > the goods ought to have become cheaper Counter-factual: https://www.tescoplc.com/investors/reports-results-and-prese... Cost of food up. Number of employees down (despite number of stores going up) Profits up. I'd make an argument here about the desperate need for critical thinking in economics, the typically upside down nature of discourse (topics in economics are often approached with "i must defend what i know" rather than "i must learn what i don't know")... but there's no point. You tellingly said "ought", David Hume warned us about the futility of trying to argue from logic against an ought. |
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| ▲ | card_zero 6 days ago | parent [-] | | I like the phrase "you can't get an ought from an is", but the word "ought" doesn't always carry moral meaning. If an annoying alarm is beeping and I cut off its power, I might say "it ought to have stopped beeping". That's not a moral opinion, it's invoking a model of how the alarm works and the law of conservation of energy. Here the law of supply and demand is being invoked. Hume needn't get involved. | | |
| ▲ | CraigJPerry 6 days ago | parent [-] | | Why does supply and demand get promoted from a useful, widely applicable model to a universally true law? Supply and demand is a model, not a law. | | |
| ▲ | tines 6 days ago | parent [-] | | Conservation of energy is a useful, widely applicable model, not a universally true law, so I think you proved their point. | | |
| ▲ | CraigJPerry 6 days ago | parent [-] | | Conservation of energy is universally true given that you or i cannot travel at the speed of light. Whereas supply and demand is obviously not universal and i'm not just talking about Giffen goods, Veblen goods or the Chivas Regal effect. No i'm talking specifically about ceteris paribus. Application of ceteris paribus is to step away from reality, the more you do it, the further away from reality you've gotten. The model of supply and demand is useful and its utility is only reduced by ceteris paribus. The law of supply and demand is blocked from existing, thanks specifically to ceteris paribus. | | |
| ▲ | rightbyte 5 days ago | parent | next [-] | | I was going to write that supply and demand is like a 'linearization' or some other regression around a point, but looking up "ceteris paribus" I'll have to thank you for forcing a good phrase upon me. :) | |
| ▲ | tines 6 days ago | parent | prev [-] | | If something is universally true then it shouldn’t have to do with whether you or I can travel at the speed of light. But beside that, you’re incorrect. Energy is not conserved in this universe. See e.g. https://www.preposterousuniverse.com/blog/2010/02/22/energy-... for an explanation. |
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| ▲ | piva00 6 days ago | parent | prev | next [-] |
| > And also when "the rich" have more profit, they now want to spend that profit on things, which spawns new luxury good industries. Absurd, they spend a fraction of their wealth on luxury goods (an industry which employs very few people anyway), the rest is on assets, keeping them locked into the financial market. > Of course, the news cycle and the sob stories always revolve around people losing their existing jobs, but there is new jobs around that previously didnt exist. Jobs that people previously never thought was even "a job". > Of course, it is up to the individual to search and find their niche, and to produce value to sustain their own existence. The advent of AI is not going to be different. As in any upheaval of the labour market, there will be people who cannot or won't retrain, becoming detached from society. Those usually end up angry, left to their own devices, and lash out politically by voting on demagogues. In the end the whole of society bears the cost, is that really the best way we found to achieve progress? Leave people behind and blame the individual instead of seeking systemic approaches to solve systemic issues? |
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| ▲ | exceptione 6 days ago | parent | prev | next [-] |
| > And also when "the rich" have more profit, they now want to spend that profit on things, which spawns new luxury good industries. That will be a rounding error. Economic growth comes from a large population that spends and innovates. Wealth concentration buys policy and media, and after that all of sudden the following things happen: tax gap widens, public services deteriorates, innovation halting, etc. Wealth concentration means the pie will shrink, and eventually the rich will have to fear the super rich. And how do you reach growth after a country is sucked dry? |
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| ▲ | spwa4 6 days ago | parent | next [-] | | > Economic growth comes from a large population that spends and innovates. No it doesn't. Economic growth comes from "doing more with more". WHO does that doesn't matter. It matters for inequality and jobs and a lot of things, but not for economic growth. If skynet kills all Americans and builds 5 million nukes, that will be economic growth. | | |
| ▲ | exceptione 6 days ago | parent [-] | | Exactly, doing more with more requires a large population that spends and innovates. It is about allocation. It might sound like a heresy, but the "invisible hand" is for a good part a myth. Resource allocation in the hand of just a few is a) a hand that indeed tries to hide itself
b) a hand that cuts of energy to the rest of its body
c) a dying hand
Economics tries to model certain aspects of human behavior as driven by human's psychology, both on the individual and group level. A trading system of other "beings with a different wiring" might be a curiosity, but isn't strictly part of economics.I would rather have economists in general (not directed at you) think a bit deeper about the unspoken assumptions of their behavioral models, to stop confusing models with laws, and to study humans and groups in a broader sense. |
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| ▲ | intended 6 days ago | parent | prev [-] | | As the OP mentioned, growth is different from fair distribution of resources. |
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| ▲ | mzhaase 6 days ago | parent | prev | next [-] |
| The trickle down effect you mention here is simply not present in the data. Instead, wealth inequality keeps going up. |
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| ▲ | spwa4 6 days ago | parent [-] | | Yes it is. What you're conveniently forgetting is that governments and banks (which are kind-of government, except profits go to private hands) think this is a very, very, very, VERY good thing indeed. Why? Well, what is wealth inequality? It is people and companies (indirectly also people) not spending money. Just keeping it. "For the future". In bank accounts. On the stock market. In government bonds. Under their pillow. This also explains that a very large chunk of "the rich" is in practice people's pensions. This means that governments can create almost unlimited new money, without taxing anything, and know it'll be hoovered up by the wealthy. What happens in practice? Wealthy people and companies will provide goods and services to hoover up that money, but they won't want (any new) goods and services in return. In other words: it is a way for governments to acquire almost unlimited goods and services in return for ... nothing at all. A few updates to a database "to be paid in the future". And if you look at what governments spend money on, it's "everyone", the "public good", in other words: on the poor. In other words: this is a way for the poor to get more stuff now. You want to kill this effect? Expect every government employee, every pensioner, every unemployment benefit receiver, every sick or disabled person and so on to scream bloody murder, because you'll have to seriously cut a LOT of benefits. Or, frankly, if recent history is any indication, to actually just kill you with a 3d printed gun. Of course, because the government is still overspending, and debt servicing is becoming bigger and bigger. New debt is adding less and less spending power to government budgets. In some countries debt servicing is already bigger than the growth in debt (and not just Argentina and Pakistan). You can calculate: if Trump continues like this, the US will cross this critical threshold halfway through his term (assuming 5% interest rate). At that point the US government will lose the ability to trade government debt for goods and services. And last Trump term spending went up and up and up as his term progressed, and so far the same is happening this term. Had we elected a deceased possum instead of Trump, our country would have been fiscally better of than we are now. So you'll see the maga republicans join the democrats in shouting and screaming how evil banks and "the rich" are, in 3 years or less. What's scary is that due to Trump this moment is coming towards us a LOT faster than it was under Biden, despite, of course, Trump getting elected on the promise that he would make the opposite happen. But, as said before, a dead possum would have far outperformed Trump on the fiscal front. | | |
| ▲ | reactordev 6 days ago | parent [-] | | >this is a way for the poor to get more stuff now. Ummm, what? That’s not how inequality works. | | |
| ▲ | spwa4 6 days ago | parent [-] | | Government spending benefits everyone. Which means it effectively doesn't benefit the rich much at all. Hence ... | | |
| ▲ | baq 6 days ago | parent | next [-] | | Government balance sheet deficit is private sector surplus. Thus, government spending benefits primarily companies doing business with the government; there’s a lot of incentive to own a business doing that and this leads to lobbying, corruption, outright fraud and in the limit kleptocracy. | |
| ▲ | reactordev 6 days ago | parent | prev [-] | | Government spending is going to get choked out from the middle class and lower class not having any money. You think the rich pay taxes? | | |
| ▲ | spwa4 6 days ago | parent [-] | | No, I don't (well, somewhere between 5% and 20%, it's not magical). But how it works, fundamentally, the rich exchange goods and services for new debt, in various forms. That also shows why you can't touch the rich with the government: first, where would it get goods and services? And when the government gets goods and services it's for "the public good", which effectively means largely for the poor (especially if you reason the way governments do: the palace for the prime minister is the infrastructure that provides for the poor. So that room is really for the poor too, just like the many side-hustles the prime minister and many government figures have. But even disregarding government excess ... mostly these goods and services acquired really are for the poor). Second, the wealth of the rich is really something like 1%-5% of those new goods and services produced. That's what it fundamentally is, that wealth. If you take that away, the incentive for production falls away. And even that ignores the added difficulty that the richest "rich" in the US, by an extreme amount, are the pension funds, especially in aggregate. Attacking the rich will mean taking pensions from old people. Which leads immediately to the consequence of going after big companies and "the rich": no more (much less) new goods and services. Because nobody's going to replace them, or, if someone does replace them, they become the new rich and you've achieved nothing. AND there's a major, major, MAJOR catch in replacing the rich. The current rich see the social contract roughly like this "if we provide society roughly as-is, we get to be rich". If you replace the current rich with new MAGA rich, for example, they will demand a new social contract which you may VERY much dislike. For example, Microsoft, Google (even Apple, when it comes to computers) see the freedom to develop and run your own programs, as well as free communication over the internet, as an essential part of their "deal" with society. Chinese and Indian computer producers very much do not see things this way (but are largely, not 100%, 99%, forced into allowing it, at least in the US and Europe, by the current US rich). It seems to me unlikely in the extreme that if the US gets a new rich class, replacing these companies, that this will remain so. |
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| ▲ | pydry 6 days ago | parent | prev | next [-] |
| >And also when "the rich" have more profit, they now want to spend that profit on things In general those things that "the rich" buy are scarce assets - stocks, housing, land, etc. all of which keep getting bidded up in price. This does not generate jobs. >spawns new luxury good industries. Trickle down never worked. >Of course, the news cycle and the sob stories always revolve around people losing their existing jobs, but there is new jobs around that previously didnt exist. Jobs that people previously never thought was even "a job". The number of jobs available is politically not technologically determined. AI doesn't automatically destroy jobs in aggregate but this is what the economy is currently programmed to do (via the mechanism of higher interest rates), so this is what companies are chasing with AI. |
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| ▲ | pjmlp 6 days ago | parent | prev [-] |
| One such kind of jobs have leaders like in those mythical Robin Hood stories. Those jobs certainly never go out of fashion, as seen in poorer world regions, where you as well say, people find new jobs all the time. |
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| ▲ | spwa4 6 days ago | parent [-] | | You mean having 10.000 servants for a few rich people, their families and government institutions? Yeah, real fun jobs, those. | | |
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