More money in the hands of the consumer increases demand...

[Econ4every1]

How do you grow an economy while being inefficient please enlighten me

You talk about efficiency as if it is a tenant of a religion.

In any large organization or country there is inefficiency, Verizon, Comcast, AT&T, VCE (my company, the fastest company in history to the 2 billion dollar mark), and (insert country of your choice here).....They have all had inefficiencies and yet they've all grown at one point. One can be more efficient than another leading to certain advantages, but this idea that there is a line that delineates inefficiency and efficiency is silly, there is only more efficient and less efficient relative to some arbitrary metric. The fact is that the better things are (economically) the more inefficiency creeps in because the costs of efficiency aren't justified. It is the rate of diminishing returns. Think about gas mileage, if gas was still $1.00 we wouldn't have the Prius.

That happens yes, but then what do we see? The majority of workers find better Jobs. Compare today with people 100 years ago.

That's not happening any more. For the first time in our history young adults are not doing as well as their parents. 36% of those 18-31 are still living with parents. Living with your parents "increases efficiency", but when I asked at what cost, this is what I was talking about.

As far as 100 years ago, we were largely an agrarian society with most people employed in agriculture and since then 99% of those workers have been displaced. Now it's true they have found other jobs because the machines that took their place could only do one job. But automation is getting better. Machine will over the next 10 years be able to do more and more of the jobs we do, better than we do them at lower cost. You won't have to wait long, I promise. 5-7 years and the game will be totally different.

Also, with advanced technology and liberal market societies we see a correlation with higher levels of income mobility. Its funny to listen to you hit majOr misconceptions. Here's a story "an economist went to a country and asked the leaders why are all the people using shovels and no tractors, and the president said because using shovels gives them jobs" this is basically what I'm hearing you argue.

This is one of the boards I frequent most, you are a relative newcomer, because if you weren't you'd know that those that are arguing against you advocate no such thing, it's just that we recognize a paradigm shift is on it's way and we need to learn how to reinvent ourselves as a society. Now, I'm not Chicken Little, I'm not saying the sky is falling. Like all changes there will be positives and negatives, and they won't happen overnight. The real question is, will the producers who increasingly use automation be willing to share their increased profits with a society that finds it more and more difficult to find work?

The only way the economy could grow is if it's production expands. This has nothing to do with income inequality.

I'm biting my lip as the temptation to say something snarky is almost too much to resist, but I'll simply say yes, obviously.

As far as inequality you're right, but not the point I was making. The point is, efficiency is great, but if the majority of people are less well off for it, then we need to think carefully about how we operate as a society.

Coming from the "economist who is against efficiency" hahaha

*sigh*

 

[Libertie76]

Yes, as economies grow, it is normally accompanied by new technology. But you said this: "How do you grow an economy while being inefficient please enlighten me". So either you are badly confusing your terms, or you are moving the goalposts.

You also said this: "Using resources efficiently in an economy would lead to economic growth", which also isn't true. It is completely possible to increase efficiency (and productivity) while the economy contracts. Efficiency leads to higher profit margins, not necessarily greater output. It doesn't mean that there is greater demand for your product.



Please explain what "ppf" means, first. And just make your posts clearer, in general.

Production doesn't have to be efficient for growth to occur. If you aren't using 100% of your available labor, there is room for production to increase, whether it's efficient or not.

I asked how, saying I'm wrong just to say I'm wrong does not cut it. Please tell me how you can increase production without efficiently using resources.

Ppf=production possibility frontier

You will not see an outward shift of the ppf while remaining inefficient, Idk how you are trying to debate this

 

[Libertie76]

There are all kinds of ifs, ands, and buts about that statement. "Allocating resources more efficiently" says nothing about the amount of resources allocated, or who they get allocated to. And please show me where anybody on this thread is making this into a partisan issue.

By focusing on the "demand side monetary policy" is a complete opposite of reaganomics, that's what I was referring to.

If you allocate resources in the most efficient manner you'll reduce oc, thus being able to free up other resources for more beneficial things, such as creating new capital and better markets through the substitution effect of increased production.

 

[Econ4every1]

By focusing on the "demand side monetary policy" is a complete opposite of reaganomics, that's what I was referring to.

If you allocate resources in the most efficient manner you'll reduce oc, thus being able to free up other resources for more beneficial things, such as creating new capital and better markets through the substitution effect of increased production.

This isn't economics, this is treating the market like a religion. There are so many variables that you are glossing over. There are so many consequences to the things you advocate that you are either unwilling or unable to consider.

 

[Libertie76]

You talk about efficiency as if it is a tenant of a religion.

In any large organization or country there is inefficiency, Verizon, Comcast, AT&T, VCE (my company, the fastest company in history to the 2 billion dollar mark), and (insert country of your choice here).....They have all had inefficiencies and yet they've all grown at one point. One can be more efficient than another leading to certain advantages, but this idea that there is a line that delineates inefficiency and efficiency is silly, there is only more efficient and less efficient relative to some arbitrary metric. The fact is that the better things are (economically) the more inefficiency creeps in because the costs of efficiency aren't justified. It is the rate of diminishing returns. Think about gas mileage, if gas was still $1.00 we wouldn't have the Prius.



That's not happening any more. For the first time in our history young adults are not doing as well as their parents. 36% of those 18-31 are still living with parents. Living with your parents "increases efficiency", but when I asked at what cost, this is what I was talking about.

As far as 100 years ago, we were largely an agrarian society with most people employed in agriculture and since then 99% of those workers have been displaced. Now it's true they have found other jobs because the machines that took their place could only do one job. But automation is getting better. Machine will over the next 10 years be able to do more and more of the jobs we do, better than we do them at lower cost. You won't have to wait long, I promise. 5-7 years and the game will be totally different.



This is one of the boards I frequent most, you are a relative newcomer, because if you weren't you'd know that those that are arguing against you advocate no such thing, it's just that we recognize a paradigm shift is on it's way and we need to learn how to reinvent ourselves as a society. Now, I'm not Chicken Little, I'm not saying the sky is falling. Like all changes there will be positives and negatives, and they won't happen overnight. The real question is, will the producers who increasingly use automation be willing to share their increased profits with a society that finds it more and more difficult to find work?



I'm biting my lip as the temptation to say something snarky is almost too much to resist, but I'll simply say yes, obviously.

As far as inequality you're right, but not the point I was making. The point is, efficiency is great, but if the majority of people are less well off for it, then we need to think carefully about how we operate as a society.



*sigh*

We're not talking about inefficiencies in micro business practices, we're talking economic growth. Such as, the law of diminishing returns is an inefficient practice AFTER a certain point. However, if the most efficient way for society to allocate scarcity is met you'll see an outward expansion on the societal PPF.

I'm terms of wealth gaps this is due to economic strains emmited by governmental policy, through things like dead weight loss associated with taxes, price floors ahs ceilings. Not allowing the markets to adjust to equilibrium causes more scarcity are things that cause wealth gaps. I would like to see your data on the smallest generational income mobility in history.

You act like technology will not grow the economy and create more valuable jobs. 90% were farmers, how many today have knowledge based jobs because of technology?
I agree we are in a downward slope, due to monetary policy not because we've become more efficient

 

[Libertie76]

This isn't economics, this is treating the market like a religion. There are so many variables that you are glossing over. There are so many consequences to the things you advocate that you are either unwilling or unable to consider.

Like... what? And how does anything I say differ from my original post

 

[JohnfrmClevelan]

I asked how, saying I'm wrong just to say I'm wrong does not cut it. Please tell me how you can increase production without efficiently using resources.

Ppf=production possibility frontier

You will not see an outward shift of the ppf while remaining inefficient, Idk how you are trying to debate this

We aren't constrained by a fixed supply of resources. In this country, at least, we enjoy a relative abundance of just about everything. And if you are not so constrained, you don't have to increase efficiency in order to grow. Like I said before.

For example, if agriculture is your industry, and you have land that has not yet been farmed along with some unemployed labor, you simply need to increase your acreage in order to increase your output. No increase in efficiency is necessary. What you do need though, in order to make the effort worthwhile, is some promise of future demand for your products.

What you are arguing is chalkboard stuff. It's just not applicable to the real world.

By focusing on the "demand side monetary policy" is a complete opposite of reaganomics, that's what I was referring to.

That's your take on it. It's incorrect, though. (I think you also misunderstand Reaganomics.)

If you allocate resources in the most efficient manner you'll reduce oc, thus being able to free up other resources for more beneficial things, such as creating new capital and better markets through the substitution effect of increased production.

What resources do we need to free up? Are we running short of something?

Two of the big results of over 40 years of increased productivity and increased efficiency are a) a low demand for American labor, and b) a shift in income share from the lower 80-90% to the rich. Has the economy grown? Sure! Do we have a lot of neat stuff? You bet! Is everybody better off?

No, not really.

 

[Libertie76]

We aren't constrained by a fixed supply of resources. In this country, at least, we enjoy a relative abundance of just about everything. And if you are not so constrained, you don't have to increase efficiency in order to grow. Like I said before.

For example, if agriculture is your industry, and you have land that has not yet been farmed along with some unemployed labor, you simply need to increase your acreage in order to increase your output. No increase in efficiency is necessary. What you do need though, in order to make the effort worthwhile, is some promise of future demand for your products.

What you are arguing is chalkboard stuff. It's just not applicable to the real world.



That's your take on it. It's incorrect, though. (I think you also misunderstand Reaganomics.)



What resources do we need to free up? Are we running short of something?

Two of the big results of over 40 years of increased productivity and increased efficiency are a) a low demand for American labor, and b) a shift in income share from the lower 80-90% to the rich. Has the economy grown? Sure! Do we have a lot of neat stuff? You bet! Is everybody better off?

No, not really.

1. Or you could maximize output of ur farm by being more efficient causing production to expand

2. What point am I misunderstanding about reaganomics, explain ur statements don't just throw it out there

3. So yes the economy has grown with efficiency, which was what we were talking about, we weren't talking about well being in terms of income or access to scarcity we are talking about economic expansion

 

[JohnfrmClevelan]

1. Or you could maximize output of ur farm by being more efficient causing production to expand

Sure you could. But you said earlier that you could not grow an economy without increasing efficiency. I just proved you wrong.

2. What point am I misunderstanding about reaganomics, explain ur statements don't just throw it out there

Reagan's success with the economy wasn't about supply side bs. Reagan not only lowered taxes, he also deficit spent like a madman, which increases aggregate demand. Reagan thought he was bankrupting the country (in order to kill Social Security), but he was actually goosing the economy with increased demand.

3. So yes the economy has grown with efficiency, which was what we were talking about, we weren't talking about well being in terms of income or access to scarcity we are talking about economic expansion

You stated that efficiency was necessary for growth. That's what we were talking about. Correlation does not equal causation.

Increased productivity is only necessary for growth when you are using 100% of your labor, and/or 100% of some other necessary resource. The Industrial Revolution is a good example - before that, most people worked on the farm, just so we had enough food. It took increases in productivity just to free up some labor for industry, and that was great, because there was still a sufficient demand for labor. Without the increase in productivity, the economy would not have grown much, because labor was a limiting factor.

Fast forward to today. 2% of our labor force works in Ag, and they still produce a surplus of food. Productivity is super high, plus we also have automation and cheap foreign labor lowering the demand for American workers. Almost every jump forward in technology destroys more jobs than it creates, which also erodes the consumer base. Efficiency isn't growing the economy at all, it's just shifting more of the income from poor to rich.

 

[Libertie76]

Sure you could. But you said earlier that you could not grow an economy without increasing efficiency. I just proved you wrong.



Reagan's success with the economy wasn't about supply side bs. Reagan not only lowered taxes, he also deficit spent like a madman, which increases aggregate demand. Reagan thought he was bankrupting the country (in order to kill Social Security), but he was actually goosing the economy with increased demand.



You stated that efficiency was necessary for growth. That's what we were talking about. Correlation does not equal causation.

Increased productivity is only necessary for growth when you are using 100% of your labor, and/or 100% of some other necessary resource. The Industrial Revolution is a good example - before that, most people worked on the farm, just so we had enough food. It took increases in productivity just to free up some labor for industry, and that was great, because there was still a sufficient demand for labor. Without the increase in productivity, the economy would not have grown much, because labor was a limiting factor.

Fast forward to today. 2% of our labor force works in Ag, and they still produce a surplus of food. Productivity is super high, plus we also have automation and cheap foreign labor lowering the demand for American workers. Almost every jump forward in technology destroys more jobs than it creates, which also erodes the consumer base. Efficiency isn't growing the economy at all, it's just shifting more of the income from poor to rich.

Buying more land is allocating scarcity in a more efficient manner, using capital to privatize land for production

Reagan's theories were based on supply right?

Efficiency in economics is needed to Grow an economy there's no debate in this Idk why you are trying to debate this.

The increase in production was due to a technological revolution, and the market system allOcated resources efficiently causing massive economic growth.

If we have a surplus of food the market is not being efficient. You say efficiency and technology creates more job loss then new jobs, you're wrong about this. The fact that we have a high unemployment rate is due to the fact that governmental policy has screwed our economic growth by limiting access to resources. If you limit access to resources you aren't being as efficient in economic growth as you could be. Efficiency in resource allocation along with technology will cause economic growth, technology is the major factor of economic growth, but you need to be efficient so the economy can focus on future resources rather then present. The USA can do this with unemployment because we are still one of the most efficient economies of the world.

 

[Econ4every1]

Buying more land is allocating scarcity in a more efficient manner, using capital to privatize land for production

Here is my problem with the way you use the term scarcity. The definition is;

The state of being scarce or in short supply; shortage.

But the way you're using it, salt water is scarce, yet 2/3'rds of the planet is covered in it. Technically, anything that isn't infinite is scarce. But the allocation of scarcity and it's effects depend on how scarce something is. So saying the allocation of sea water is "the efficient manner of allocating scarcity" is a non-sequitur. I would call it, "the allocation of an incredibly abundant resource.

Reagan's theories were based on supply right?

You have to ask? What he said he advocated and what he did are totally different. Much of his tax cuts were repealed before he left office, and as a percentage of GDP he was the second highest spender of any president since 1980.

Efficiency in economics is needed to Grow an economy there's no debate in this Idk why you are trying to debate this.

I'm not sure why you keep repeating the same things as if saying it again will make it clear to those that disagree with you. First, that statement is meaningless because efficiency is not a "thing", it is a descriptor. It is an ideal state that will never be achieved. We can only be more or less efficient compared to some arbitrary measure. Second, there are states where we can be less efficient and grow as an economy, unless you are simply defining all growth as increased efficiency.

Case in point, China's workers are much less efficient that American workers, yet their economy is about the same size. You can do more with less (maximize efficiency), or you can do less with more (leverage raw numbers). On a micro economic scale, efficiency is always best, but on a macro scale it introduces interesting social, fiscal and societal demands.

What if, 10 years from now automation made us 100 times more efficient. So for every 100 workers today only 1 would be needed to supply the demand for ALL goods. If there are 100 million people capable of work, than 1 million of them won't have work. You can't see the problem with that? Now again, I'm not suggesting that we should choose a path of decreased efficiency (as in your shovel example). Just that we are aware that increased efficiency has unintended consequences and we better start thinking about how our country will look in 20-50 years or capitalism will be a victim of it's own success.

The increase in production was due to a technological revolution, and the market system allOcated resources efficiently causing massive economic growth.

Do you know the most significant single invention in the last 500 years?

If we have a surplus of food the market is not being efficient. You say efficiency and technology creates more job loss then new jobs, you're wrong about this. The fact that we have a high unemployment rate is due to the fact that governmental policy has screwed our economic growth by limiting access to resources.

Yet, you haven't told anyone what resources those are. You speak in idealistic, vagaries. As JohnFC has said, you're ideas look great to you on paper, but they don't work in the real world.....

“In theory, theory and practice are the same. In practice, they are not.” - Albert Einstein

If you limit access to resources you aren't being as efficient in economic growth as you could be.

Not all resources are scarce, reasonably speaking.

Efficiency in resource allocation along with technology will cause economic growth, technology is the major factor of economic growth, but you need to be efficient so the economy can focus on future resources rather then present. The USA can do this with unemployment because we are still one of the most efficient economies of the world.

Again the adherence to scarcity, efficiency and resource allocation as if they were tenants of a religion. And you're wrong, people make irrational choices. It is possible that culturally we could value something that we consider necessary and spends much of our efficiency. Take religion.....Is practicing a religion efficient or inefficient?? What if praying for 8 hours a day was commanded by the religion, would that be inefficient to you? What about vacation? Is taking a vacation inefficient? How about the 40 hour work week, should we bump that up to 60 hours? Or down to 20?

Your adherence to your ideas about resource allocation and efficiency don't take into account why we do things in the first place, as if efficiency is a goal, and end unto itself. It's not.

 

[imagep]

...

Efficiency in economics is needed to Grow an economy there's no debate in this Idk why you are trying to debate this. ...

Because your statement is only true if we are already at maximum capacity. When was the last time we were at maximum capacity? WW2?

I don't understand why you keep making this statement that clearly isn't correct at this particular point in time. I pointed out in a post last night that you and another poster keep making economic assumptions which are based upon the assumption that our resources are already being fully utilized.

 

[Libertie76]

Here is my problem with the way you use the term scarcity. The definition is;

The state of being scarce or in short supply; shortage.

But the way you're using it, salt water is scarce, yet 2/3'rds of the planet is covered in it. Technically, anything that isn't infinite is scarce. But the allocation of scarcity and it's effects depend on how scarce something is. So saying the allocation of sea water is "the efficient manner of allocating scarcity" is a non-sequitur. I would call it, "the allocation of an incredibly abundant resource.



You have to ask? What he said he advocated and what he did are totally different. Much of his tax cuts were repealed before he left office, and as a percentage of GDP he was the second highest spender of any president since 1980.



I'm not sure why you keep repeating the same things as if saying it again will make it clear to those that disagree with you. First, that statement is meaningless because efficiency is not a "thing", it is a descriptor. It is an ideal state that will never be achieved. We can only be more or less efficient compared to some arbitrary measure. Second, there are states where we can be less efficient and grow as an economy, unless you are simply defining all growth as increased efficiency.

Case in point, China's workers are much less efficient that American workers, yet their economy is about the same size. You can do more with less (maximize efficiency), or you can do less with more (leverage raw numbers). On a micro economic scale, efficiency is always best, but on a macro scale it introduces interesting social, fiscal and societal demands.

What if, 10 years from now automation made us 100 times more efficient. So for every 100 workers today only 1 would be needed to supply the demand for ALL goods. If there are 100 million people capable of work, than 1 million of them won't have work. You can't see the problem with that? Now again, I'm not suggesting that we should choose a path of decreased efficiency (as in your shovel example). Just that we are aware that increased efficiency has unintended consequences and we better start thinking about how our country will look in 20-50 years or capitalism will be a victim of it's own success.



Do you know the most significant single invention in the last 500 years?



Yet, you haven't told anyone what resources those are. You speak in idealistic, vagaries. As JohnFC has said, you're ideas look great to you on paper, but they don't work in the real world.....

“In theory, theory and practice are the same. In practice, they are not.” - Albert Einstein



Not all resources are scarce, reasonably speaking.



Again the adherence to scarcity, efficiency and resource allocation as if they were tenants of a religion. And you're wrong, people make irrational choices. It is possible that culturally we could value something that we consider necessary and spends much of our efficiency. Take religion.....Is practicing a religion efficient or inefficient?? What if praying for 8 hours a day was commanded by the religion, would that be inefficient to you? What about vacation? Is taking a vacation inefficient? How about the 40 hour work week, should we bump that up to 60 hours? Or down to 20?

Your adherence to your ideas about resource allocation and efficiency don't take into account why we do things in the first place, as if efficiency is a goal, and end unto itself. It's not.

1. Nice tirade on scarcity, it has nothing to do with what im saying, everything is scarce in one manner or another economic growth comes from efficiently allocating those resources. No matter how abundant they are

2. Told you, it's partisan, you're trying to debunk Reagan when I'm not even talking about weather I agree with his Policies or not I'm literally talking about the reasons for economic growth

3. We have to be efficient, meaning reduce as much waste as possible, again this is not debatable. You still have not proven adding more waste will grow an economy so please stop with your pseudo points

4. There currency is also around 7-1 last time I checked, and they had huge economic growth BY becoming more efficient then they were previously

5. Very debatable, the answer is not relevant what so ever

6. Tell me which resource is not scarce

7. In a purely economical sense it is wasteful, vacations and religion effecting labor

 

[ludin]

Sure you could. But you said earlier that you could not grow an economy without increasing efficiency. I just proved you wrong.

sure anyone can grow an economy the difference that needs to be looked at is the growth stable or is it going to create a bubble that ends up sinking the economy.
in most cases governments create bubbles that cause more harm than good in the long run.

Reagan's success with the economy wasn't about supply side bs. Reagan not only lowered taxes, he also deficit spent like a madman, which increases aggregate demand. Reagan thought he was bankrupting the country (in order to kill Social Security), but he was actually goosing the economy with increased demand.

Where do you get your information from?

The massive spending ended the cold war. The USSR couldn't compete with the massive spending and forced the USSR's hand to the table.
Soviet Union Foreign Minister Alexander Bessmertnykh has been quoted crediting President Reagan's defense buildup for the accelerated collapse of the Soviet Union

You stated that efficiency was necessary for growth. That's what we were talking about. Correlation does not equal causation.

in a way correct you efficient in anything however again the question is the growth stable economic activity or a bubble that will pop.

Increased productivity is only necessary for growth when you are using 100% of your labor, and/or 100% of some other necessary resource. The Industrial Revolution is a good example - before that, most people worked on the farm, just so we had enough food. It took increases in productivity just to free up some labor for industry, and that was great, because there was still a sufficient demand for labor. Without the increase in productivity, the economy would not have grown much, because labor was a limiting factor.

Yet you can't be productive 100% of the time there will always be overhead that interferes and gets in the way.

Fast forward to today. 2% of our labor force works in Ag, and they still produce a surplus of food. Productivity is super high, plus we also have automation and cheap foreign labor lowering the demand for American workers. Almost every jump forward in technology destroys more jobs than it creates, which also erodes the consumer base. Efficiency isn't growing the economy at all, it's just shifting more of the income from poor to rich.

Well there is plenty of work for poor people to work on farms, but that is hard work and well people anymore just want a check and not have to do anything.
while automation and technology has made some jobs gone it has created other jobs.

 

[imagep]

...

The massive spending ended the cold war. The USSR couldn't compete with the massive spending and forced the USSR's hand to the table.
Soviet Union Foreign Minister Alexander Bessmertnykh has been quoted crediting President Reagan's defense buildup for the accelerated collapse of the Soviet Union

Sure. And the massive spending that we did for WW2 won WW2, and also got the US out of the Great Depression. It doesn't particularly matter what the motivation for the spending is, the economic results are still true.

in a way correct you efficient in anything however again the question is the growth stable economic activity or a bubble that will pop.

Did Reagan's spending result in a bubble that popped?

Well there is plenty of work for poor people to work on farms, but that is hard work and well people anymore just want a check and not have to do anything.
while automation and technology has made some jobs gone it has created other jobs.

If that was true, then we would have a shortage of farmworkers. So do we have a shortage of labor on farms? (I dunno)

 

[ludin]

Sure. And the massive spending that we did for WW2 won WW2, and also got the US out of the Great Depression. It doesn't particularly matter what the motivation for the spending is, the economic results are still true.

not was I was referring to. I was correcting a misconception of fact by the poster.

Did Reagan's spending result in a bubble that popped?

other than the savings and loan scandal that occurred not sure if there as any other bubble in the economy. the last bubble during that era was the 90's and the .com bubble that occurred.

If that was true, then we would have a shortage of farmworkers. So do we have a shortage of labor on farms? (I dunno)

people complain about jobs, but a job on a farm is a job. the thing is it is hard work and not easy. there is a reason that farmers hire illegal labor.
they are cheap and want to work. I don't agree with it. people here could use the jobs. the problem is they want to sit back and collect a 6 figure salary.

say hey I need 50 people to help work a farm you won't have to many signups.

 

[Lakryte]

We went over this before. You think that money's value is determined in the same way a commodity's value is determined, and I think that money's value is determined based primarily on what it can buy. What you are calling a "demand for money" is a by-product of normal trade.

Demand for televisions is also a by-product of normal trade. Really, demand for everything is a by-product of trade. The value of all goods is determined primarily on "What it can buy." A nice TV can buy about $1000. A pack of gum can buy $1.29. The terms "buy" and "sell" are really just interchangeable terms described the action of exchange. What is really going on is exchange--exchanging a TV for dollars, and exchanging dollars for a TV. What each item can "buy" is determined by the supply and demand of the items involved in the exchange.

This is simply incorrect - plus, your assumptions are unrealistic. You use the same faulty assumption that monetarists always make: that the supply of money increases immediately, and is immediately applied to a static supply of some product. In reality, everybody isn't spending all of their new money on gas, they aren't spending it all at once, and the supply of gas (not to mention other products) isn't static. Nobody needs $800 worth of gas all at once.

In a far more realistic scenario, that new money is spread out over time, and it is spread out over lots of different products (as well as paying down debt, etc.). So if you want to raise the price of your gas, go ahead, I'll just keep my prices steady and enjoy the increased profits based on increased volume (and your erstwhile customers). As will everybody on down the supply chain, unless and until there happens to be a true shortage of something. Best Buy didn't run out of televisions, grocery stores didn't run out of food, gas stations didn't run out of gas, etc. More products were sold, more services were rendered, and more stuff was produced to meet the new demand. There was no spike in prices. In fact, I remember TVs going on sale in order to attract those refund checks, just like prices go down at Christmastime and tax refund time.

Supply doesn't have to be static, nor is that an assumption. If the money is spread out among various items at different times, the effect on prices will merely be diluted and harder to see to the point of impossibility. And if money is spread so far across time and industries that it has no measurable effect on prices, it is equally absurd to believe it will have an effect on production. If the government creates $100 of new money in an economy with an already existing 1 trillion dollars, only a fool would say a noticeable increase in prices would result, even if the supply of goods were totally static. But no noticeable increase in production could possibly result either.

 

[Lakryte]

You are making the assumption that an increase in money supply has to result in inflation. that's not a good assumption.

I am not making that assumption. Prices could decline, but still be higher than they otherwise would have been. And if the increase in the money supply is tiny, so too will be the effect on prices.

An increase in the money supply would only cause inflation if there was some factor which would prevent production from expanding to meet demand.

Inflation is caused by an inadequate amount of production to meet demand.

I suspect that your version of economics, is based upon the assumption that all resources are fully utilized at all times. This is not the case, particularly in a weak economy.

You are correct that not all resources are fully utilized at all times. You are incorrect that the mere creation of new money and subsequent spending of it in turn creates more real aggregate demand and further economic growth. It merely redistributes resources, often in a very inefficient way.

Look at it this way. Say you have a barter economy with no money. Each individual produces either bread, clothes, huts, or berries. They exchange these goods with each other to get their desired quantity of each. How do you increase aggregate demand in this economy?

 

[Econ4every1]

1. Nice tirade on scarcity, it has nothing to do with what im saying, everything is scarce in one manner or another economic growth comes from efficiently allocating those resources. No matter how abundant they are

2. Told you, it's partisan, you're trying to debunk Reagan when I'm not even talking about weather I agree with his Policies or not I'm literally talking about the reasons for economic growth

3. We have to be efficient, meaning reduce as much waste as possible, again this is not debatable. You still have not proven adding more waste will grow an economy so please stop with your pseudo points

4. There currency is also around 7-1 last time I checked, and they had huge economic growth BY becoming more efficient than they were previously

5. Very debatable, the answer is not relevant what so ever

6. Tell me which resource is not scarce

7. In a purely economical sense it is wasteful, vacations and religion effecting labor

We'll do it your way.

1. Calling everything scarce is like calling everything cold. I mean, everything is cold relative to something that is hotter, but what does it mean to say that the sun is cold? is that information useful?
To call something scarce to to imply it is in short supply, but not everything is at the same state of shortage. Calling seawater scarce is the functional equivalent of calling the sun cold, it's meaningless.

2. It's not partisan, it's a fact.

3. Calling something undebatable, does not make it undebatable. How about tackling my example? If efficiency were to rise 100% in 10 years relative to today and it took 1 worker of 2025 to do the work of 100 people due to advances in automation you believe that those 1 million people that were displaced and the roughly 5 million net new people that have entered the workforce will all be able to find new jobs?

4. Their currency has to be lower or demand for their products would crater. If I concede they have become more efficient, I'd ask, at what cost? Look at the human and environmental repercussions of their "success". This is my point. You believe in efficiency as if it were handed to you as a commandment. Growing the economy is not on the top of my priority list if it has a substantial environmental and human toll.
Now if you'd like to admit you don't care about these things, fine, or are you trying to say that the market will fix these problems on its own?

5. You're right, It is debatable, but your wrong about it being irrelevant. How can you say that increased automation displacing workers is irrelevant?

6. Sure, but before I do, define "scarce".

7. In a purely economic sense? Is there something else? Because so far, the economic sense seems all you're concerned with.

 

[Libertie76]

We'll do it your way.

1. Calling everything scarce is like calling everything cold. I mean, everything is cold relative to something that is hotter, but what does it mean to say that the sun is cold? is that information useful?
To call something scarce to to imply it is in short supply, but not everything is at the same state of shortage. Calling seawater scarce is the functional equivalent of calling the sun cold, it's meaningless.

2. It's not partisan, it's a fact.

3. Calling something undebatable, does not make it undebatable. How about tackling my example? If efficiency were to rise 100% in 10 years relative to today and it took 1 worker of 2025 to do the work of 100 people due to advances in automation you believe that those 1 million people that were displaced and the roughly 5 million net new people that have entered the workforce will all be able to find new jobs?

4. Their currency has to be lower or demand for their products would crater. If I concede they have become more efficient, I'd ask, at what cost? Look at the human and environmental repercussions of their "success". This is my point. You believe in efficiency as if it were handed to you as a commandment. Growing the economy is not on the top of my priority list if it has a substantial environmental and human toll.
Now if you'd like to admit you don't care about these things, fine, or are you trying to say that the market will fix these problems on its own?

5. You're right, It is debatable, but your wrong about it being irrelevant. How can you say that increased automation displacing workers is irrelevant?

6. Sure, but before I do, define "scarce".

7. In a purely economic sense? Is there something else? Because so far, the economic sense seems all you're concerned with.

1. Tell me one resource that doesn't have a limit to supply

2. ...

3. Yes because we see huge economic advancements

4. The debate we are discussing is not about problems, or issues. The literal first quote you quoted was that you have to have efficiency and technology to Grow an economy. If you want to talk about economic inequality or social problems associated with the economy we can. But that's not the current debate

5. Because people will find better Jobs. This has happened through history. Technology advances so does the workforce so does efficiency, and you'll see economic growth

6. Scarce? Something that has limited use, and a limit to supply of

7. In this debate it is because we are talking about economic growth not social problems

 

[JohnfrmClevelan]

Demand for televisions is also a by-product of normal trade. Really, demand for everything is a by-product of trade. The value of all goods is determined primarily on "What it can buy." A nice TV can buy about $1000. A pack of gum can buy $1.29. The terms "buy" and "sell" are really just interchangeable terms described the action of exchange. What is really going on is exchange--exchanging a TV for dollars, and exchanging dollars for a TV. What each item can "buy" is determined by the supply and demand of the items involved in the exchange.

OK, look at it this way - what you are really exchanging is your labor for those items. You make $50/hour, so the TV is worth 20 hours of your labor. Money is merely the medium of exchange.

Where you err here is making money a commodity. You treat it like you would treat oranges, which is a mistake. Oranges have value unto themselves. If you got paid in oranges, your pay would be affected by the supply/demand of oranges, and when you went to buy the TV, the price of the TV would also be affected by the supply/demand of oranges. But dollars do not work that way. There is no supply/demand of dollars, because the way our system is set up, dollars are supplied so there is never a shortage of dollars. They can be created (and destroyed) by simple transactions, like using your credit card. So you don't get changes in value based on shortages or surpluses of dollars. They are pretty neutral in that regard. So when I said the value of the dollar is a by-product of trade, I meant that the value of the dollar is based on how much you value your labor, and how much you value what you are going to buy, not how much you value dollars themselves.

Supply doesn't have to be static, nor is that an assumption. If the money is spread out among various items at different times, the effect on prices will merely be diluted and harder to see to the point of impossibility. And if money is spread so far across time and industries that it has no measurable effect on prices, it is equally absurd to believe it will have an effect on production. If the government creates $100 of new money in an economy with an already existing 1 trillion dollars, only a fool would say a noticeable increase in prices would result, even if the supply of goods were totally static. But no noticeable increase in production could possibly result either.

And here we have yet another unproveable, undebateable assumption in Austrian economics: more money = higher prices. I can point to data (or really, the lack of correlating data) that shows how prices do not go up with new money. The Austrian rebuttal? "Oh, it's there. You just can't see it." Invisible data.

As for production, you know it goes up, because we can (and do) measure that sort of thing.

 

[JohnfrmClevelan]

You are correct that not all resources are fully utilized at all times. You are incorrect that the mere creation of new money and subsequent spending of it in turn creates more real aggregate demand and further economic growth. It merely redistributes resources, often in a very inefficient way.

This (incorrectly) assumes a fixed amount of resources.

Look at it this way. Say you have a barter economy with no money. Each individual produces either bread, clothes, huts, or berries. They exchange these goods with each other to get their desired quantity of each. How do you increase aggregate demand in this economy?

You force or induce them to work harder. You want two loaves of bread/day instead of one? Pick more berries, and hopefully the breadmaker will want to bake more bread in exchange. Or, you threaten them with your spear.

You could also introduce another item - bananas. I've got some bananas, and I'd like to trade them for various items.

 

[Lakryte]

OK, look at it this way - what you are really exchanging is your labor for those items. You make $50/hour, so the TV is worth 20 hours of your labor. Money is merely the medium of exchange.

I completely agree.

Where you err here is making money a commodity. You treat it like you would treat oranges, which is a mistake. Oranges have value unto themselves. If you got paid in oranges, your pay would be affected by the supply/demand of oranges, and when you went to buy the TV, the price of the TV would also be affected by the supply/demand of oranges. But dollars do not work that way. There is no supply/demand of dollars, because the way our system is set up, dollars are supplied so there is never a shortage of dollars. They can be created (and destroyed) by simple transactions, like using your credit card. So you don't get changes in value based on shortages or surpluses of dollars. They are pretty neutral in that regard. So when I said the value of the dollar is a by-product of trade, I meant that the value of the dollar is based on how much you value your labor, and how much you value what you are going to buy, not how much you value dollars themselves.

There is no intrinsic value to oranges either. There is no intrinsic value to anything--value is entirely subjective. Supply and demand exists whether or not shortages or surpluses ever exist, invalidating your argument. If it were possible to instantly change the supply of oranges, as it is with dollars, then their price would merely change as a result.

When a man exchanges a TV for $1000, he is valuing the TV at $1000. Likewise, when a man exchanges his $1000 for a TV, he is valuing that $1000 at 1 TV. That is a logical necessity of the exchange taking place to begin with. The price of the dollar is measured by the array of all things that it can buy--in other words, it's purchasing power. And that purchasing power changes depending on both the supply and demand not only of the goods exchanged for dollars, but of dollars themselves.

This is not theoretical mumbo jumbo, and is easily demonstrated in the real world. The currency of the Weimar Republic lost nearly all of it's value precisely because of a massive increase in the supply of that currency. The dollar has relatively high value because so many people in the world demand dollars and hold cash holdings of dollars to engage in international trade.

And here we have yet another unproveable, undebateable assumption in Austrian economics: more money = higher prices. I can point to data (or really, the lack of correlating data) that shows how prices do not go up with new money. The Austrian rebuttal? "Oh, it's there. You just can't see it." Invisible data.

As for production, you know it goes up, because we can (and do) measure that sort of thing.

That is not an assumption of Austrian economics. More money means a greater supply of money, decreasing the price of money. But the ultimate price of goods is determined by the supply and demand for that good and the supply and demand for the money exchanged for it--four primary factors, not merely the supply of money. If the other three factors are putting downward pressure on prices (such as lower demand for goods, higher demand for money, and higher supply of goods--or any combination of the three) in excess of the influence of an increase in the supply of money, prices will not increase. An increase in the money supply will cause prices to rise ceteris paribus, just as an increase in the supply of goods will cause prices to fall ceteris paribus. Another shorthand way of saying this is that an increase in the supply of money will cause upward pressure on prices wherever that money ends up circulating. But if stronger downward pressures (like a massive increase in the supply of goods) then prices may very well decrease, though it is known they would have been even lower had the upward pressure been removed entirely.

 

[JohnfrmClevelan]

Buying more land is allocating scarcity in a more efficient manner, using capital to privatize land for production

I'm not going to use your silly Austrian definitions. Scarcity should mean what it means in plain English. Austrians have altered definitions of words just to suit their circular arguments.

Reagan's theories were based on supply right?

Look up "starve the beast." Reagan was under the influence of an Austrian quack at the time who thought it would be a good idea to run up such a large deficit that we would have to abolish the social programs that they didn't like. So he did everything he could to grow the deficit - he cut taxes, and he increased spending. And because he was against social spending, and because he was a hawk, he chose to spend that money on defense. Happily, they were wrong about just about everything.

Efficiency in economics is needed to Grow an economy there's no debate in this Idk why you are trying to debate this.

Because it's very debateable, and because we are on a debate site. Also because you threw it out there like it's a given. Also because I hate it when ideologues change the definitions of words to suit their ideologies.

The increase in production was due to a technological revolution, and the market system allOcated resources efficiently causing massive economic growth.

Because there was a true shortage - labor. But certain conditions have to be met before your blanket statement becomes true.

If we have a surplus of food the market is not being efficient. You say efficiency and technology creates more job loss then new jobs, you're wrong about this. The fact that we have a high unemployment rate is due to the fact that governmental policy has screwed our economic growth by limiting access to resources. If you limit access to resources you aren't being as efficient in economic growth as you could be. Efficiency in resource allocation along with technology will cause economic growth, technology is the major factor of economic growth, but you need to be efficient so the economy can focus on future resources rather then present. The USA can do this with unemployment because we are still one of the most efficient economies of the world.

Now you're just talking religion. Gub'ment bad, I know, I know. Heard it before.

 

[Econ4every1]

1. Tell me one resource that doesn't have a limit to supply

2. ...

3. Yes because we see huge economic advancements

4. The debate we are discussing is not about problems, or issues. The literal first quote you quoted was that you have to have efficiency and technology to Grow an economy. If you want to talk about economic inequality or social problems associated with the economy we can. But that's not the current debate

5. Because people will find better Jobs. This has happened through history. Technology advances so does the workforce so does efficiency, and you'll see economic growth

6. Scarce? Something that has limited use, and a limit to supply of

7. In this debate it is because we are talking about economic growth not social problems

1. Look argue with the definition. It means shortage.

2. :shrug:

3. So let's say the economy grows 3% per year for the next ten years, if the top 10% ingests 97% of all wealth created in that time, would you call that a success?\

4. You might be on to something if you stop and read what you said carefully.....You can't separate social problems and issues from the question of growth and efficiency. After all, who are we doing this for if not the people in the economy that we're trying to grow!!

5. The combine (farm implement) displaced millions of farm workers, but there were lots of other jobs that machines couldn't do.
The answer to the most significant invention in the last 500 years is the steam engine. It was able to do physical labor much more efficiently than people and animals. This freed people up to pursue more intellectually driven occupations (and the economy grew). What is AI? Where steam engines displaced physical labor, AI will displace intellectual labor. What's left? Creativity? Between Labor, intellect and creativity, creativity is the trait that we have as a specie in the least abundance. I suspect that as automation, AI, robots whatever you want to call it displace human workers, those that aren't the owners of production or very creative will have difficulty finding work.
Using the past as an indication of the future is generally a good idea, but now you're going to have to look beyond what you think you know, toss you're intuition out the window because we are on the cusp of a paradigm shift as significant as the steam engine. You're going to have to innovate in you're thinking when it comes to AI, because it will (and already is) doing the jobs of millions of people.

The steam engine was invented in the early 1700's, but it was Watt in 1765 (1) who revolutionized it. By 1800 (2) the steam engine was in wide use. and really allowed world populations to grow

View attachment 67180313

6. By that definition EVERYTHING is scarce and is therefore a meaningless definition when discussing economics.

7. Again, you cannot decouple the two.