Why the Massive Wealth of the 1% Could Ruin the Economy(theatlantic.com)
theatlantic.com
Why the Massive Wealth of the 1% Could Ruin the Economy
http://www.theatlantic.com/business/archive/2011/10/why-the-massive-wealth-of-the-1-could-ruin-the-economy/247277/
3 comments
That is the essence of the contradiction. We ultimately don't want jobs, we want the results they create. There is no law written in nature that man must work 9 to 5 to live.
"High-skill workers, given extra income, may choose to increase their leisure and savings rather than work extra hours. Meanwhile, low-skill workers lose their jobs, go on disability, or otherwise drop out of the labor force. Both groups work less than before, so overall output falls."
This seems to neglect the greater revenue or decreased costs the employer also enjoys as a result. "Fewer total hours are worked = a less productive economy" looks transparently wrong.
This seems to neglect the greater revenue or decreased costs the employer also enjoys as a result. "Fewer total hours are worked = a less productive economy" looks transparently wrong.
Is there not a demand side to the equation? So costs are reduced essentially to zero. Who's buying?
Your questions are confusing to me. What's being demanded? Whose costs are reduced "essentially to zero" and why?
Demand = shorthand for the aggregate demand for goods and services across the economy as a whole; this includes everything from massages to nuclear submarines.
costs being reduced = the cost of the production of those goods and services (much of that cost also shows up as demand e.g. the masseuses massage chair, or the nuclear hardened wrenches used to assemble submarines.)
If labor costs are entirely removed from the cost of production ( the cost of production is reduced to the raw materials + power + design of the goods to be produced ), then in conventional economic thinking, the aggregate demand for goods and services will also tend to a minimum.
Since almost no goods will be in demand in this new economy, it's unlikely that there will be any great shift towards employing the labor force that used to do basic assembly in the production of designs for new goods.
So. Quiz time.
What will happen to the millions of human beings who are not employable in this new economy?
Will they:
a. quietly dry up into dust and accept being swept into the dustbin of history?
b. form a chaotic seething, resentful mass of violence and petty crime that will make every effort to continue feeding themselves even if they are no longer economically viable entities?
c. form a peaceful agrarian commune on otherwise useless spare real estate and sell quaint handcrafts to the few lucky humans who happen to be born into the ownership of mines, powerplants and other assets employed by the new economy?
e. all of the above and some other solutions not mentioned as well?
Your answer should be provided by how you live through the next twenty years; this exam is final.
costs being reduced = the cost of the production of those goods and services (much of that cost also shows up as demand e.g. the masseuses massage chair, or the nuclear hardened wrenches used to assemble submarines.)
If labor costs are entirely removed from the cost of production ( the cost of production is reduced to the raw materials + power + design of the goods to be produced ), then in conventional economic thinking, the aggregate demand for goods and services will also tend to a minimum.
Since almost no goods will be in demand in this new economy, it's unlikely that there will be any great shift towards employing the labor force that used to do basic assembly in the production of designs for new goods.
So. Quiz time.
What will happen to the millions of human beings who are not employable in this new economy?
Will they:
a. quietly dry up into dust and accept being swept into the dustbin of history?
b. form a chaotic seething, resentful mass of violence and petty crime that will make every effort to continue feeding themselves even if they are no longer economically viable entities?
c. form a peaceful agrarian commune on otherwise useless spare real estate and sell quaint handcrafts to the few lucky humans who happen to be born into the ownership of mines, powerplants and other assets employed by the new economy?
e. all of the above and some other solutions not mentioned as well?
Your answer should be provided by how you live through the next twenty years; this exam is final.
We could just pay a living wage to everyone -- working or not. Those wishing to earn more would work for the extra pay.
This looks amazingly like the welfare state that so many hate no?
Far more than that -- I'm talking about welfare one can quite comfortably live on. Let's make work a lifestyle choice. If technology allows for that to happen, perhaps even opponents of the welfare state, who are mostly found in the US, will come around. I mean, maybe even they will realize that it makes sense even for the richest person to be only so many times richer than the common folk.
We already basically do this by paying people to provide services (either directly through government, or indirectly) which are essentially unnecessary for production. Or by over-staffing government agencies above what is needed to actually do the work.
This is super common in the middle east. You can make $200-400k/yr doing a make-work bureaucratic job, provided you're a local.
This is super common in the middle east. You can make $200-400k/yr doing a make-work bureaucratic job, provided you're a local.
I think my statement wasn't as nuanced as it could have been; I am in total support of what you are suggesting. The problem is funding it, usually by dipping further into "capital" i.e. a wealth tax which the wealthy are probably reticent to pay; even though it would probably be in their best interest.
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Mostly B. Also, s/millions/billions. Which together is really terrifying.
The elite few who own the world.
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Ford CEO Henry Ford II and United Automobile Workers president Walter Reuther are jointly touring a modern auto plant. Ford jokingly jabs at Reuther: "Walter, how are you going to get these robots to pay UAW dues?" Not missing a beat, Reuther responds: "Henry, how are you going to get them to buy your cars?"