I no longer believe in capitalism. At all.

[Jaguar]

I really do believe consumption taxes when done properly can be more progressive and more socially beneficial towards the poor and middle class than income taxes. I don't know why you automatically hate them.

Status Quo Bias coupled with populism. Any change in any direction must necessarily "hurt the poor most." Inflation hurts the poor most, because of the rising prices, but also, deflation hurts the poor most because of the unemployment. Therefore, the correct amount of inflation is the precise amount we currently have.

[kentonio]

As for this part: it doesn't change the demand. It changes the supply, as indicated by me adding a second supply curve. The annotation I put on the graph doesn't change anything about how much people want consumer goods. It just changes how ably the consumer goods industries can provide them. They have a harder time doing so, because rich people are too busy spending their resources on Porsches instead.

I see your point about how reduced equity investment might make it harder for those consumer goods industries to borrow etc, but I think the point I'm stuck on is why the increased spending from the workers etc doesn't negate that in the longer term due to the increased demand.

[Jaguar]

I see your point about how reduced equity investment might make it harder for those consumer goods industries to borrow etc, but I think the point I'm stuck on is why the increased spending from the workers etc doesn't negate that in the longer term due to the increased demand.

This sort of argument applies equally to workers in all industries. We're just talking about the tradeoff between employing people in the production of one thing vs employing them in the production of another.

[kentonio]

But unless I'm missing something there is no implicit fall in the demand of the other consumer goods, the only hit to that industry was that wealth is being taken out of equity and actually consumed, no?

[kentonio]

Thanks for being patient btw, I realize it must be annoying talking about this stuff to a layman.

[Kidlicious]

I see your point about how reduced equity investment might make it harder for those consumer goods industries to borrow etc, but I think the point I'm stuck on is why the increased spending from the workers etc doesn't negate that in the longer term due to the increased demand.

You should google interest rates.

[Jaguar]

But unless I'm missing something there is no implicit fall in the demand of the other consumer goods, the only hit to that industry was that wealth is being taken out of equity and actually consumed, no?

You're right to point out a missing piece of the puzzle. You saw an expansion of demand when more people bought Porsches, but no corresponding loss of demand elsewhere, only a loss of supply.

In truth, there is a corresponding reduction of demand elsewhere. And that's in demand for the stuff that the equity/capital markets would have purchased with the money had it not been taken away. For example, Apple might have built a new store. And building a new Apple store is every bit as valid for "demand" purposes as building a mansion. Construction workers are paid either way.

The most obvious comparison of business demand vs consumer demand would be the Ford Escape. It's a compact crossover frequently used by taxi companies (a business investment) and also frequently purchased by consumers. But it doesn't really matter to Ford what you plan on using it for, does it? It employs auto workers either way.

[kentonio]

Thanks man, it's late here so I'll have to leave it there, but it's been really interesting.

[Jaguar]

You're welcome.

[Aeson]

This sort of argument applies equally to workers in all industries. We're just talking about the tradeoff between employing people in the production of one thing vs employing them in the production of another.

There is a difference in distribution of cost of production. Some industries the workforce captures more (and thus non-labor captures less) of the value of the product than others, and there are large variations in the skill and number of employees as well. Until world-wide employment (and absurdly low wage employment) are less prevalent, generally we'd be better off by moving demand towards goods and services which are less labor-efficient (in numbers of workers and/or wages) wherever it doesn't increase non-labor inputs or result in inferior products.

(Though I still think consumption taxes and favoring saving over luxury spending is the way to go. But even in regards to the luxuries, consumption taxes could be tailored to promote a demand for consumption which requires relatively more and/or higher value labor than it's alternatives if we wanted to.)

[Jaguar]

I'm glad you agree with me about saving over luxury spending. However, I'm very disturbed by this.

Until world-wide employment (and absurdly low wage employment) are less prevalent, generally we'd be better off by moving demand towards goods and services which are less labor-efficient (in numbers of workers and/or wages) wherever it doesn't increase non-labor inputs or result in inferior products.

Just to make sure I am reading this correctly: you would prefer to find ways to take more work to do the same stuff, rather than less work?

[Aeson]

I'm glad you agree with me about saving over luxury spending.

I forget if you're HC's twin or not. If so, I've probably supported such a position (including the consumption taxes) since before you were born. (Damn I'm getting old.)

Though there probably are minor points we'd quibble about in regards to how to enact them.

Just to make sure I am reading this correctly: you would prefer to find ways to take more work to do the same stuff, rather than less work?

Not "work". Machines do work, and non-labor inputs at least partially represent work already done. My statement is only addressing labor. Not necessarily "the same stuff" (though in some cases, even that). Certainly not just "work for work's sake" as you seem to be driving at.

(Though there may be some cases where even that, or something that many people would call that, would be beneficial. For instance, a redistribution scheme to unemployed that doesn't intend to promote sitting around and living off the dole. Even if the work was inefficient from an immediate economic perspective, like paying workers to dig an irrigation canal instead of using heavy machinery to do so, it could still be helping to instill a work ethic in the "employees" rather than promoting the welfare culture that most of our redistribution schemes seem to. We could also be conserving limited resources like fuel by replacing it with less limited resources such as welfare recipient's time. While their time is valuable to them, I don't think that paying them to spend their time how they please is a benefit to society. Obviously we wouldn't want to take first world office workers to do this specific task as it would interfere with their job search and they aren't suited to the work, but using general laborers from developing nations who are out of work and collecting welfare would make a lot of sense.

In other cases we might be creating new markets or higher value items, and it may not even be "work for work's sake" in many cases. Say, investing the "redistribution" money into building tree farms on marginal grasslands. This has an ecological benefit by reducing erosion and otherwise improving the watershed. Then as you have more wood, you can buy equipment for unemployed workers so they can go into carpentry. While this has some economic impacts ... mainly on cheap crap like Ikea that in a perfect world would not exist ... it's far better than just handing the people cash and building dependency with it.)

But that's not what I was saying either. What I am saying is that we are better off if we move demand towards favoring industry where the workforce captures a higher percentage of the value of their product, so long as there isn't decreased quality or increased non-labor inputs (relative to price) to offset the gains made that way.

For example, the local food issue. A worker in Mexico using a specific amount non-labor inputs produces tomatoes to ship to the US. The same worker is allowed to migrate to the US where they use the same non-labor inputs to produce the same amount of tomatoes. The tomato in the second case will cost more due to increased land and labor costs. There will be a slight decrease in energy costs which is of course completely covered up by land and labor. Mostly labor costs. This means that most of the price difference will be due to the increased affluence of the working class in regards to the consumer who is choosing to buy local. There will be a greater variety of tomatoes that can fit the bill, and thus more choice for consumers. The consumer would be saying that they find the product more valuable, so this is essentially a pure win for the working class. The consumer is still getting their money's worth. The land owner in the US is better off, the land owner in Mexico is worse off. In absolute terms, this favors using US land. It's higher value land (from a price perspective) and so not using it represents a larger loss to the economy. In relative terms it's probably still in favor of using the US land, since the land in Mexico is probably owned by some descendants of a hacienda who are still rather wealthy, and the land will probably still be rented out to local workers for local production, improving the local economy for everyone but the owners. Whereas in the US the land probably wouldn't be used at all, since we are paying plenty of people not to use their land already. The worker is vastly better off in the US though.

We are better off by increasing labor costs and the price of tomatoes in this regard when the demand is actually there to support doing so. Essentially we are moving wealth to where it represents increased utility without needing any redistribution method other than a change of consumer demand. As a side benefit, we are moving demand (and business) into avenues which are more at odds with patently absurd immigration restrictions and farm subsidies, increasing the likelihood that we can someday get rid of them.

In cases where the worker would be using more sprays, fertilizers, and other non-labor inputs (and creating more environmental impact) in the low wage market then it is even a more clear cut win for the immigrating worker and local production. In such cases there is no intelligent and non-monstrous argument against moving production to the US. This is actually the most common case when comparing imports from developing markets to local food sources. Currently most local food sources only grow what's in season, so they aren't putting a more resources into it.

In cases where the local production would need more non-labor inputs than the alternative it becomes less clear cut. Then we're left with trying to decide whether the better distribution of wealth (and undermining of stupid laws) is worth the cost of the increased inputs. Though sometimes even the increased inputs quickly pay for themselves by decreasing other inputs and risk, such as is the case with greenhouses/high-tunnels and many vegetable and non-orchard fruit crops already.

[Aeson]

I'm glad you agree with me about saving over luxury spending.

I forget if you're HC's twin or not. If so, I've probably supported such a position (including the consumption taxes) since before you were born. (Damn I'm getting old.)

Though there probably are minor points we'd quibble about in regards to how to enact them.

Just to make sure I am reading this correctly: you would prefer to find ways to take more work to do the same stuff, rather than less work?

Not "work". Machines do work, and non-labor inputs at least partially represent work already done. My statement is only addressing labor. Not necessarily "the same stuff" (though in some cases, even that). Certainly not just "work for work's sake" as you seem to be driving at.

(Though there may be some cases where even that, or something that many people would call that, would be beneficial. For instance, a redistribution scheme to unemployed that doesn't intend to promote sitting around and living off the dole. Even if the work was inefficient from an immediate economic perspective, like paying workers to dig an irrigation canal instead of using heavy machinery to do so, it could still be helping to instill a work ethic in the "employees" rather than promoting the welfare culture that most of our redistribution schemes seem to. We could also be conserving limited resources like fuel by replacing it with less limited resources such as welfare recipient's time. While their time is valuable to them, I don't think that paying them to spend their time how they please is a benefit to society. Obviously we wouldn't want to take first world office workers to do this specific task as it would interfere with their job search and they aren't suited to the work, but using general laborers from developing nations who are out of work and collecting welfare would make a lot of sense.

In other cases we might be creating new markets or higher value items, and it may not even be "work for work's sake" in many cases. Say, investing the "redistribution" money into building tree farms on marginal grasslands. This has an ecological benefit by reducing erosion and otherwise improving the watershed. Then as you have more wood, you can buy equipment for unemployed workers so they can go into carpentry. While this has some economic impacts ... mainly on cheap crap like Ikea that in a perfect world would not exist ... it's far better than just handing the people cash and building dependency with it.)

But that's not what I was saying either. What I am saying is that we are better off if we move demand towards favoring industry where the workforce captures a higher percentage of the value of their product, so long as there isn't decreased quality or increased non-labor inputs (relative to price) to offset the gains made that way.

For example, the local food issue. A worker in Mexico using a specific amount non-labor inputs produces tomatoes to ship to the US. The same worker is allowed to migrate to the US where they use the same non-labor inputs to produce the same amount of tomatoes. The tomato in the second case will cost more due to increased land and labor costs. There will be a slight decrease in energy costs which is of course completely covered up by land and labor. Mostly labor costs. This means that most of the price difference will be due to the increased affluence of the working class in regards to the consumer who is choosing to buy local. There will be a greater variety of tomatoes that can fit the bill, and thus more choice for consumers. The consumer would be saying that they find the product more valuable, so this is essentially a pure win for the working class. The consumer is still getting their money's worth. The land owner in the US is better off, the land owner in Mexico is worse off. In absolute terms, this favors using US land. It's higher value land (from a price perspective) and so not using it represents a larger loss to the economy. In relative terms it's probably still in favor of using the US land, since the land in Mexico is probably owned by some descendants of a hacienda who are still rather wealthy, and the land will probably still be rented out to local workers for local production, improving the local economy for everyone but the owners. Whereas in the US the land probably wouldn't be used at all, since we are paying plenty of people not to use their land already. The worker is vastly better off in the US though.

We are better off by increasing labor costs and the price of tomatoes in this regard when the demand is actually there to support doing so. Essentially we are moving wealth to where it represents increased utility without needing any redistribution method other than a change of consumer demand. As a side benefit, we are moving demand (and business) into avenues which are more at odds with patently absurd immigration restrictions and farm subsidies, increasing the likelihood that we can someday get rid of them.

In cases where the worker would be using more sprays, fertilizers, and other non-labor inputs (and creating more environmental impact) in the low wage market then it is even a more clear cut win for the immigrating worker and local production. In such cases there is no intelligent and non-monstrous argument against moving production to the US. This is actually the most common case when comparing imports from developing markets to local food sources. Currently most local food sources only grow what's in season, so they aren't putting a more resources into it.

In cases where the local production would need more non-labor inputs than the alternative it becomes less clear cut. Then we're left with trying to decide whether the better distribution of wealth (and undermining of stupid laws) is worth the cost of the increased inputs. Though sometimes even the increased inputs quickly pay for themselves by decreasing other inputs and risk, such as is the case with greenhouses/high-tunnels and many vegetable and non-orchard fruit crops already.

[Hauldren Collider]

I forget if you're HC's twin or not.

No. Jaguar and Kuciwalker are roommates. My twin brother does not post here.

Kuci, and indirectly, Jaguar, are two of my main sources of knowledge on econ topics. The third is my dad. So there tends to be substantial agreement between us.

[Ben Kenobi]

HC is Kuci Jr.