The Cancer in Free Market Theory

[Touma]

I think the only solution is to start killing off unskilled workers.

 

[NightHawkeye]

I think the only solution is to start killing off unskilled workers.

LOL

On the one hand fascism - the master race ... Heil Hitler! Totalitarianism. Kill off the unskilled.

On the other communism - the worker's paradise ... socialist motherland. Totalitarianism. Kill off the educated who can't be re-indoctrinated.


Looks a lot like a false dichotomy to me.


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[MachZer0]

That doesn't justify it continuing to be that way. Or if it would, you would have to maintain that nobility and divine right of kings is justified too.

Presuming that there is something that can be done in the first place. Which is a straw man, I was talking about a person *subsisting*, not a person who can afford to save.

And if the fact that there's a theoretical possibility to escape one's current position makes a system acceptable, I take it you have nothing against gulags. It is, after all, theoretically possible to escape from one.

Now there's a leap in logic. Comparing learning a skill to trying to escape from a gulag might be one for the record books

 

[Umaro]

As already mentioned, the job market is not a "zero-sum" game: Zero–sum game - Wikipedia, the free encyclopedia

In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which a participant's gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero. Thus cutting a cake, where taking a larger piece reduces the amount of cake available for others, is a zero-sum game if all participants value each unit of cake equally (see marginal utility). In contrast, non-zero-sum describes a situation in which the interacting parties' aggregate gains and losses are either less than or more than zero. A zero-sum game is also called a strictly competitive game.
​

Skilled workers expand the availability of resources ... improve efficiency ... allow populations to grow ... allow people to live better than ever before ... allow people to have more leisure time than ever before ...

The non-zero sum game only comes into effect if you're still in the system. Automation and productivity gains remove workers from the system without lowering the supply the demand is for. If 100 people want hamburgers and it takes 10 people to serve them, going to 100 people with 5 servers doesn't balance out. Not only have you removed 5 customers worth of demand from the system, but you've also stacked the deck in favor of demand. Before you needed 10 people to justify hiring 1 more person, but now you need to do it for every 20 people. It takes much more demand per job created, thus the excess workers are not balanced out. Demand may increase some from the slightly lower prices, but a hamburger going from $5 to $4 is not going to double your customer count.

It's evident when you look at that study from UC Berkeley about Wal-mart. If you look at the numbers reversed, the average customer would only see savings of ~$1.30 a month if the worker's wage dropped from $12 to $8. Compare that to the loss of $640 per month in the worker's pocket, and it's clear that the lower prices that come from increased competition in workers are not enough to offset the difference by way of increased demand.

And yet the population does stop growing ... as evidenced in the birth rates of industrialized nations.

Which appears to be a much better solution than the periodic famines evidenced in less advanced cultures.

Problem is that also drops demand, you're back to the same place you were with displaced workers.

 

[NightHawkeye]

The non-zero sum game only comes into effect if you're still in the system.

You are. All of us are. The productivity improvements result in more "stuff" for everyone.

Got a computer? Congratulations, you're in the system.

Got a cell-phone? Congratulations, you're in the system.

Got an automobile? Congratulations, you're in the system.

Automation and productivity gains remove workers from the system ...

Wrong ... though it will remove workers from jobs which automation can do alone.

... without lowering the supply the demand is for.

Incorrect. If the workers are out of work and out of money, then the demand will necessarily drop. If all the workers go overseas, then demand will necessarily drop.

If 100 people want hamburgers and it takes 10 people to serve them, going to 100 people with 5 servers doesn't balance out. Not only have you removed 5 customers worth of demand from the system, but you've also stacked the deck in favor of demand. Before you needed 10 people to justify hiring 1 more person, but now you need to do it for every 20 people. It takes much more demand per job created, thus the excess workers are not balanced out. Demand may increase some from the slightly lower prices, but a hamburger going from $5 to $4 is not going to double your customer count.

The result of productivity improvements is more "stuff" for everyone ... and better "stuff" for everyone: more food, more houses, more cellphones, more high-definition televisions, more automobiles, more fuel, etc.

So ... how's life Umaro? Got a house? Got a car? Got a cell-phone?

Thank productivity improvements if you've got all three. My guess is that you've got a lot more besides.



Now, if I may wax philosophical a little: Life is tough sometimes.

In the old days a lot of people died before reaching old age. They often had little or no control over the adversities they were beset with. In good times though, some of the more industrious ants would store up supplies because they knew that future adversity was coming ... even if they didn't know exactly when.

Workers today also have choices to make. They can take advantage of free time, go out to the beach and bake in the sun ... or they can educate themselves and their children - improving their skills as it were. They can load up on stuff ... or they can save a little - invest, if you will - for future adversity.

It's evident when you look at that study from UC Berkeley about Wal-mart. If you look at the numbers reversed, the average customer would only see savings of ~$1.30 a month if the worker's wage dropped from $12 to $8. Compare that to the loss of $640 per month in the worker's pocket, and it's clear that the lower prices that come from increased competition in workers are not enough to offset the difference by way of increased demand.

Now, you've opened the discussion to buying stuff produced by workers in China; workers employed by a totalitarian regime which pays them little. I'm guessing those workers might not like their options very much either.

The end result is that most consumer electronics comes from overseas where the stuff can be produced inexpensively. Those jobs are gone. I watched 'em go. I work in the electronics industry. It's been sad to see. I had to modify and adapt my own career plans accordingly.

Problem is that also drops demand, you're back to the same place you were with displaced workers.

Yes. Adversity happens. Complain ... or deal with it. Your choice. What ya gonna do?

 

[rambot]

It's always been that way. One can choose to remain uskilled and possibly poor one's entire life, but the motivated worker will do what's necessary to move up

That is catagorically false. IT hasn't ALWAYS been that way. Remember: For the better part of human existence survival has NOT meant "moving up"; survival was figuring out what you do, do it well, then never ever ever change (150 years ago, did a lumberjack pull up shop and try to become a doctor?)

 

[rambot]

You are. All of us are. The productivity improvements result in more "stuff" for everyone.

Got a computer? Congratulations, you're in the system.

Got a cell-phone? Congratulations, you're in the system.

Got an automobile? Congratulations, you're in the system.


Wrong ... though it will remove workers from jobs which automation can do alone.


Incorrect. If the workers are out of work and out of money, then the demand will necessarily drop. If all the workers go overseas, then demand will necessarily drop.


The result of productivity improvements is more "stuff" for everyone ... and better "stuff" for everyone: more food, more houses, more cellphones, more high-definition televisions, more automobiles, more fuel, etc.

So ... how's life Umaro? Got a house? Got a car? Got a cell-phone?

Thank productivity improvements if you've got all three. My guess is that you've got a lot more besides.



Now, if I may wax philosophical a little: Life is tough sometimes.

In the old days a lot of people died before reaching old age. They often had little or no control over the adversities they were beset with. In good times though, some of the more industrious ants would store up supplies because they knew that future adversity was coming ... even if they didn't know exactly when.

Workers today also have choices to make. They can take advantage of free time, go out to the beach and bake in the sun ... or they can educate themselves and their children - improving their skills as it were. They can load up on stuff ... or they can save a little - invest, if you will - for future adversity.



Now, you've opened the discussion to buying stuff produced by workers in China; workers employed by a totalitarian regime which pays them little. I'm guessing those workers might not like their options very much either.

The end result is that most consumer electronics comes from overseas where the stuff can be produced inexpensively. Those jobs are gone. I watched 'em go. I work in the electronics industry. It's been sad to see. I had to modify and adapt my own career plans accordingly.


Yes. Adversity happens. Complain ... or deal with it. Your choice. What ya gonna do?

As a Christian, i don't personally think it's a GREAT thing that we have a system that is "great" because we can get "more stuff". It's also distressing that our system NECESSITATES that we continue to pursue more stuff. That is something FAR less than a stewardly" spending ethos.

 

[MachZer0]

That is catagorically false. IT hasn't ALWAYS been that way. Remember: For the better part of human existence survival has NOT meant "moving up"; survival was figuring out what you do, do it well, then never ever ever change (150 years ago, did a lumberjack pull up shop and try to become a doctor?)

He did if he was motivated, so your point fails

 

[lordbt]

Before I start, I want to specify that I only wish to discuss Free Market theory, not government involvement.

The theory of free market supply and demand works in many instances in the economy. If you make hammers and people buy them, the market balances itself out. If too few hammers are made prices go up and competitors enter the market, which puts more hammers out and brings the price back down. If too many hammers are made, the factories cannot cover the cost of production and some close down, lowering the number of hammers and boosting the price. Thus not only does supply dictate the price, but price keeps the supply in check.

But when it comes to unskilled labor, it doesn't abide by the same rules. If there are too many unskilled or unemployed skilled workers, the price will be pushed down. Like everything else the price is determined by supply and demand. However, it is immune from the other side of the balancing practice. Unskilled laborers don't stop being produced, and never will. If there's too many hammers then hammers stop getting made. If there are too many workers, workers still keep getting added. With technology lowering the number of needed workers, and outsourcing increasing the supply, it has simply made the process faster. Even with 13 million surplus workers, more are added each year.

I feel it is a cancer in the theory, in that it doesn't function within the system. It's much like a tumor that continues to grow when other body cells shut off. Pointing to it claiming supply and demand works is like pointing to the tumor saying cells are supposed to divide. It's only half of the story, and eventually it breaks the system.

The cancer is not in the theory, the cancer is in the individual that lacks any marketable skill. There is no virtue, umaro, in being worthless. And that is essentially what you are if you are classified as an unskilled worker.

It is incumbent upon every human being to acquire the minimum skills necessary to sustain their own lives. A person unwilling to do that really has no recourse but to rely upon the generosity of his neighbors. You may do well in such circumstances, or you may do poorly. But when a person has abandoned his personal responsibilities, and has left his survival solely in the hands of others, he really has no right to complain about his condition. He certainly cant do as you have done here and always do, which is blame the system.

 

[jpcedotal]

It is incumbent upon every human being to acquire the minimum skills necessary to sustain their own lives

man, that is the trump card. This is where liberalism fails so soundly, because all that is required from these people (and there are a lot of them) is their vote. What do these folks get for this vote? Just enough money to to make it month to month with big tax refunds every year as a bonus as long as they have more kids who will grow up and vote democrat. Democrats do not want these folks to do anything, but reproduce and vote.

THAT is what modern day slavery looks like...

So when Newt used the word" job" with these folks, it was just about the most offensive thing that could have been said...because this is the only true way out of that lifestyle.

 

[NightHawkeye]

... Democrats do not want these folks to do anything, but reproduce and vote.

THAT is what modern day slavery looks like...

So when Newt used the word" job" with these folks, it was just about the most offensive thing that could have been said...because this is the only true way out of that lifestyle.

"Democrat plantation", according to Pastor C. L. Bryant.

Runaway Slave Movie - Trailer #2 with special message from CL Bryant - YouTube

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[bricklayer]

Free markets produce the most for the most; however, it also produces inequalies that prove intolerable to many people.

 

[Umaro]

You are. All of us are. The productivity improvements result in more "stuff" for everyone.

Got a computer? Congratulations, you're in the system.

Got a cell-phone? Congratulations, you're in the system.

Got an automobile? Congratulations, you're in the system.

Only people who have a job are within the non-zero-sum system. By definition they are not receiving a portion of the generated wealth. Even if due to productivity the total wealth increases, they will not share in it. It's like a chess board. While it may be true any pawn can become a queen, if you're the 10th pawn you don't get a slot in the game to try. While the board may expand to hold more slots over time, if the pawn count grows faster than the square count the system will not correct itself.

Incorrect. If the workers are out of work and out of money, then the demand will necessarily drop. If all the workers go overseas, then demand will necessarily drop.

Yes, that is how I'm saying the cancer will destroy the system. As automation puts more people out of work, which drives down the wages of those at the low end, demand will continue to drop, further spurring layoffs and cost cutting measures, further dropping demand.

The result of productivity improvements is more "stuff" for everyone ... and better "stuff" for everyone: more food, more houses, more cellphones, more high-definition televisions, more automobiles, more fuel, etc.

The result is more "stuff for people who are still employed. If there are 100 jobs and 120 people, increased productivity only means more stuff for the 100, and if the productivity comes at the cost of a jobs, then there's only more stuff for 90/120 people, and the low end of the 90 still employed will see their wages fall.

Workers today also have choices to make. They can take advantage of free time, go out to the beach and bake in the sun ... or they can educate themselves and their children - improving their skills as it were. They can load up on stuff ... or they can save a little - invest, if you will - for future adversity.

That assumes there are always enough jobs. In theory, which is what we are discussing, there is a point where equilibrium is reached and supply matches demand. If enough skilled jobs are meeting demand without needing to hire extra workers, then learning a skill does not change anything, you'll merely have skilled people either unemployed or working in unskilled jobs still contributing to the cancer.

The cancer is not in the theory, the cancer is in the individual that lacks any marketable skill. There is no virtue, umaro, in being worthless. And that is essentially what you are if you are classified as an unskilled worker.

It is incumbent upon every human being to acquire the minimum skills necessary to sustain their own lives. A person unwilling to do that really has no recourse but to rely upon the generosity of his neighbors. You may do well in such circumstances, or you may do poorly. But when a person has abandoned his personal responsibilities, and has left his survival solely in the hands of others, he really has no right to complain about his condition. He certainly cant do as you have done here and always do, which is blame the system.

Like Nighthawk, you're assuming that there will always be enough openings in skilled jobs, when it is very possible, and virtually an inevitability as production increases that eventually all demands for skilled labor will be met, with workers still remaining unemployed. Learning a skill and beating someone out for the job will help an individual, but the system remains unchanged.