> Suppose you're on an island where the economy only produces coconuts.

This is why nobody takes economists seriously. What you lose in simplifying down to this model is literally everything. The coconut economy has zero predictive power.

In the real world, distribution effects dramatically affect the functioning of the economy, because workers are also consumers and owners of capital are siphoning off the purchasing power of their customers. Productivity isn’t the question in the modern economy - we’re already massively overproducing just about everything - our problem is both our wealth and production allocations are borderline suicidal.

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gruez 2 hours ago | parent [-]

>This is why nobody takes economists seriously. What you lose in simplifying down to this model is literally everything. The coconut economy has zero predictive power.

A simplified model is needed otherwise rigorous analysis becomes impossible, and people make handwavy arguments about how paying workers more means they can spend more, which means factories, and it's a perpetual growth machine!

>we’re already massively overproducing just about everything

No we're not. If we weren't, we shouldn't have seen the massive inflation near the end of covid. The supply disruptions hit almost immediately, but it wasn't until the stimmy checks hit that inflation went up.

>our problem is both our wealth and production allocations are borderline suicidal.

If you read my previous comments more carefully, you'd note that I'm not arguing against better wages for workers as a whole, only that contrary to what some people claim, they don't pay for themselves.

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roughly an hour ago | parent [-]

> A simplified model is needed otherwise rigorous analysis becomes impossible

If your tools aren’t capable of rigorous analysis of a model that retains enough detail to capture the salient features of the thing they’re trying to model, they’re not the tools for the job.

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gruez an hour ago | parent [-]

What's the "salient feature" that's missing? From all the other replies it sounds like people are still relying on the handwavy argument that "pay workers more -> workers spend more -> you can pay workers more -> repeat", but can't articulate where the actual growth is coming from. If this is true, the communism would have beaten capitalism, because they would be able to exploit this better than any capitalist system, but obviously that didn't happen.

Overall this feels like troll physics[1]. Yes, the idea that having a magnet pull you forward, which itself is pushed forward by you moving forward sounds superficially plausible as well, but it doesn't pencil out in reality. The only difference is that "the economy" is complex enough it's non-trivial to disprove, and people can handwave away any objections.

[1] https://knowyourmeme.com/photos/74256-troll-science-troll-ph...

	▲	roughly an hour ago \| parent [-]
		> What's the "salient feature" that's missing? As it sits, all of the members of your coconut economy are going to be dead of malnutrition or exposure in relatively short order, so maybe address that and then we can work our way up to the flaws in the economic theory that drove the greatest wealth expansion and boom in consumer spending the world has ever seen.