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One of the key concepts for thinking like an economist is noticing where and how things are economically equivalent, or literally fungible. Trade (like outsou

• Paul_S 11y ago
  Can you really imagine a 18th century France style revolution in the west today? Try! I can't. Why is that? People haven't changed in 200 years yet it's completely unimaginable.
  • tmorton 11y ago
    I think restricting this to "the west" begs the question. We conventionally define "the west" to be the relatively stable, relatively democratic countries of the US and Western Europe. We exclude various countries simply because they haven't been stable. But even in "the west", you don't need to go back very far to find revolutions driven (in part) by economic issues. Hitler couldn't have seized power without Germany's rough experiences in the great depression.
  • jerf 11y ago
    I'd say it's a combination of A: a long period of relative stability and B: in the west, everyone is freakishly wealthy by historical standards and has a lot to lose, thus, you lack a base of desperate people with nothing to lose. (Chatter about "wealth inequality" in the West can sometimes cover over the fact that by historical standards, we have basically cured poverty as much as we can, modulo some fiddling around the edges of incarceration vs. institutionalization vs. homelessness at the fringes. Doesn't mean it's not bad or not a problem, but it does pay to contextualize it historically every so often, to stay grounded.) On the other hand, it does mean that if there any sort of instability, people will have to rediscover from scratch how to deal with it, a process that sounds relatively painful to me. Here's hoping we never really have to find out.
    • mfoy_ 11y ago
      >everyone is freakishly wealthy by historical standards and has a lot to lose You raise a really good point here, and I think this is one of the most important stabilizing factors in today's society.
  • netcan 11y ago
    Yes, I can imagine it. I think revolution is more imaginable than war and even though we've made a lot of progress on war, it's not unimaginable. I'm not a Marxists and I don't think these things are deterministic, but I do think certain societal conditions make revolutions more likely. If you look around the world today, most "wars" are civil conflicts or centre around civil conflicts or something in that neighborhood. Ukraine, Syria, Israel, Korea, Taiwan… The line between civil conflict and revolution is pretty blurry. The dominant revolutionary paradigms are religious, national and economic-ideological. The last one's big examples are the US-French revolutions and their communist descendants. It's not as much of a big paradigm now. I think the intellectual zeitgeist has moved passed it. New paradigms emerge though and old ones like religion and nationalism have a long half life. To go back to the quasi-marxist point… I think economic inequality plays a role. If enough people have little enough of the income generating power, whether that's capital or labour (or land and privilege or whatever the system), they have no interest in maintaining the status quo. I think capitalism's "raises all boats" promise is a key promise. If it holds no power, I think revolution becomes a greater possibility.
    • ThomPete 11y ago
      Revolutions require a fairly equal amount of weapons. That doesn't exist today because it's not needed. Instead we have election and they take care of the anger. At the end of the day if enough people care for it. Sanders or someone like him will get elected. But there aren't enough yet to make revolutions in any way we normally think about it.
      • netcan 11y ago
        I don't think this is true. Revolutions come in all sorts of flavors, but some of them involve some point where armed forces are required to choose between shooting on citizens or not. Most of the eastern block revolutions 25 years agos were peaceful. None had dissident firepower playing a significant role. When East German security forces decided not to fire on the wall crossers, it was 50% over. When Moscow decided not to send in tanks it got to 100%. Not many revolutions are armed insurrection like you see in Syria.
  • pjc50 11y ago
    There aren't too many absolute monarchies with starving peasants in the west today. However, it's easy to imagine domino instability at the edges of the "west". For example, if an agreement hadn't been reached on Greece. Or Catalan secession turning violent. Or something triggered by the millions of Syrian refugees.
  • ionised 11y ago
    I think that kind of scenario is inevitable if we carry on the way we are.
  • snowwrestler 11y ago
    The West has invented political/cultural systems that permit revolutions without violence. The transition that is happening in Canada now is a good example, as were the 2008 and 2010 elections in the U.S. Basically, most people in rich Western countries today have a lot more to lose from violence than they do from policy disagreements. And most citizens essentially believe in the power of the political system, because they can remember popular political uprisings that had tangible impacts: the labor movement, the environmental movement, LGBT rights, etc. If you look at the most desperate movement in the U.S. today, it has to be Black Lives Matter. Even those organizers reject violence as a means to their ends.
  • nemo44x 11y ago
    Not an 18th century French style revolution but similar results I can easily imagine. What you'll end up with is a state which becomes more and more Socialist. This is a prediction Marx made about Capitalism. It will eventually result in many more have-nots than haves and the have-nots will either through violent revolution or political policy enact Socialism. It is not an outcome we want but it is up to the capital class to ensure this doesn't happen by regulating themselves well enough so everyone feels they are getting a fair piece of the pie. My point is, there is a balance somewhere between chaotic growth at any cost with its wealth generation and ensuring people can participate fairly and share the results and have equity in the future.
• ThomPete 11y ago
  The key point is that technology have increasingly replaced not just manual labour but also replaced higher and higher levels of abstracted thinking. I.e. technology now is gunning for competing with our brains too not just our muscle. The problem with the discussion is that people often assume that it will only happen if we create robots that are as general purpose as ourselves. However no one uses everything they are to do their jobs. And so a lot of people from radiologist to factory workers will find themselves out of a job with no realistic way to re-educate themselves into areas that require them. The horses lost to the cars and didn't find new jobs. I don't know if technology is going to take over all the jobs but it is going to take over enough that it will require all nations to rethink society. The longer that discussion is brushed aside the harder it's going to be to change.
  • johngalt 11y ago
    This comment sounds like the short version of 'humans need not apply' by cgp grey.
    • ThomPete 11y ago
      I just saw the video another commenter posted it. I guess cgp and me are in agreement then :)
    • ggrothendieck 11y ago
      The link is set to start at 3:22 but its the whole Humans video if you start from the beginning.
  • netcan 11y ago
    "The horses lost to the cars and didn't find new jobs" That's a good line. I hope you don't mind if I pinch it. I agree that there is not obvious rule in economics stating that most humans must remain employed. I also agree that without close to full employment (say long term >80% of people that want/need jobs) the basic economic and political paradigms we have no longer work. I'm kind of agnostic whether or not we are headed there. Technology taking skill out of the equation like in Adam Smith's famous pin example is somewhat similar to driverless cars. Generally technology has affected the demand for labour all throughout history, and it's affected the demand for labour of all kinds. We used to need musicians to listen to music, bars & cinemas employed them. Is that brain power or manual labour? We used to need engineers to do calculations by hand. Demand for engineers stayed high because we just do more engineering. Also, in my agnosticism, I think there's a bunch of room for middle ground outcomes. Unemployment that stays around 30%, for example. That is also a political paradigm shift. I don't expect we'll soon run out of demand or that people will not have an effect on our productive capacity. But perhaps the bar for economic productivity will be higher. That's potentially a problem.
• rumcajz 11y ago
  Luddites were wrong because the rise in efficiency was matched by rise in consumption back than. Today the main problem is how to rise consumption even further. And there seems to be easy answer to that. There's definitely a limit to what ads can do.
  • netcan 11y ago
    I kind of disagree. That is, I suspect this is wrong but I don't think we really know. The problem with imagining increased consumption is that we tend to imagine frivolous consumption. There are non frivolous things tot consumer too. Health, for example. We have a pretty greedy appetite for health "consumption." If we can afford more of that we will. Elderly care is another thing people struggle to afford enough of. Education… I don't think consumption capacity is really the issue. I think the ability of the great majority to contribute economically to a sufficient degree that they can have a non-humiliating piece of the pie. Jobs, basically.
    • rumcajz 11y ago
      True. If we are able to channel more wealth to the poorest they will definitely spend much more on health, education and such. Even more so if it's done on global level: How much more would Africa, India and such consume if given the chance! But when all that is done we are back to the fundamental problem: Productivity can raise without a limit, while consumption is inherently limited.
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• xrange 11y ago
  >People with 1990 skills now are not employable today in many/most fields. Citation or clarification or examples needed. If you started a job in 1990 at 25 years old, you'd only be 50 years old today. I don't think unemployment among 50 year olds is higher today than in 1990. So I guess they got upgraded skill along the way? Which fields are we talking about? Nursing? Law? Architecture? Garbage man? Interior decorator? Computer programmer? Car salesman? Retail worker? Heavy equipment operator? http://www.bls.gov/web/empsit/cpseea10.htm http://www.bls.gov/web/empsit/cpseea10.htm
  • pessimizer 11y ago
    > I don't think unemployment among 50 year olds is higher today than in 1990. Aren't they generally more employed and at higher wages than younger people?
  • T-hawk 11y ago
    > I don't think unemployment among 50 year olds is higher today than in 1990. Unemployment numbers don't show it, because that only includes people looking for work. The missing 50-year-old workers are on disability and don't factor in to labor statistics. The Social Security Disability dole swelled from 5M in 2000 to 9M in 2015, nearly double. And it's fairly certain that these disability recipients skew older than the median age of the working population. http://www.ssa.gov/oact/STATS/dibStat.html http://www.ssa.gov/oact/STATS/dibStat.html (it was responding spottily for me, but search for the url and use google's cache if you need)
  • sologoub 11y ago
    You also have to look at labor participation rate, as discouraged workers who stop looking for a job are not counted in unemployment numbers: http://www.bls.gov/emp/ep_table_303.htm http://www.bls.gov/emp/ep_table_303.htm Note an interesting trend that while the rate drops from 80.2% for 45-54 age to 64.5% for 55-64, it's been trending up since 1992 sharply, while other participation rates have seen a modest decline. This could suggest that people 55-64 are more employable today, but it could also mean they are poorer on average and have to take a job to survive. My money is on the latter.
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• saalweachter 11y ago
  > People with 1990 skills now are not employable today in many/most fields. There has been a shift in the US from businesses providing training for workers to the expectation that workers will train themselves in advance of seeking employment. I suspect this is the most untenable modern development in the US going forward. It shifts a significant amount of cost and risk to workers: you both have to pay for your own education (instead of getting paid while training) and take on a substantial risk that the skills you are training in will be relevant to an employer when you complete your training. It creates a large pool of people who have training no one needs (they guessed wrong on which skills a future employer needs in the future) and in too much debt to survive off of the income from unskilled labor. It's unsustainable. If this doesn't shift back, to employers accepting the cost of training employees and the risk that they may train employees they don't need five years from now, we end up with yet another way for government to subsidize big business: government picks up the tab for training employees (through its educational spending) and for misjudging training needs (through unemployment spending). It's no different than Walmart paying their employees so little they are eligible for SNAP.
• roymurdock 11y ago
  I've never heard of this idea of trade and technology being "economically equivalent, or literally fungible." I think you might be confusing technology with the means of production. Take a look at the basic production function: Y = zf(K,L) Where Y = output, z = Total Factor Productivity (technology), K = capital, and L = labor. We started by trading output for output when the production process was simple. Clothing for meat, lumber for gold, etc. As we began to organize by country, we started to specialize and create more sophisticated outputs to trade from country to country. Silk for glass, spice for minerals, cars for wheat, etc. Still, we traded mostly commodities and finished goods, but we also began to see countries "trading" labor in the form of immigration and emigration as people flowed from countries with low economic potential to those with higher potential. Nowadays, the flow of outputs (Y), labor (L), and capital (K), is extremely fungible relative to 100 years ago due to advances in logistics, transportation, finance - in one word, globalization. But we haven't addressed that last variable - Total Factor Productivity (z). Economists refer to this as the "level of technology," which makes it the economist's catchall for things that are hard to measure, but extremely important when determining an individual, firm, or country's level of output in the long term. It is thought to account for around 60% of the growth within economies, although I wouldn't put much stock in hard estimates - the point is, it bundles together some really important, non-fungible variables. We are still unable to trade things like education, social and legal norms and customs, and basic infrastructure. To me, this is what we mean when we talk about technology. Modern standards of living, medicine, software, hardware etc. are "high tech" because they could only have been brought about in a society with a sophisticated educational system, favorable social and legal norms, and advanced infrastructure. Technology should be thought of as the system that makes the creation of more advanced goods and services possible, not the goods and services themselves. In summary, yes commodities, labor, and capital are easily traded, but we are still working on transferring the underlying technology of one country to another. So I have to disagree with the statement that trade is indistinguishable from technology.
• obrero 11y ago
  > One of the key concepts for thinking like an economist One of the key concepts for thinking like an economist is following Marshall's lead and calling yourself an economist rather than someone studying political economy. The moment study of political economy became super-political, the new charlatans dropped the word political from the field. > Trade (like outsourcing) and technology is economically indistinguishable from technology from the perspective of a single country. The classic example is that if you export potatoes and import cars, this is economically equivalent to finding a way to grow cars in a field. In practice trade and technology have always been closely related. When China could make silk... David Ricardo can be forgiven for thinking this in the early 19th century, that this is still widely repeated is more of a function of ideological benefit than observation. Ricardo's example for this was ironically Portuguese wine and English textiles - he said both parties benefited from such change. Joan Robinson did a study in the 1970's showing the effects on both countries economies - England industrializing and Portugal concentrating on farming - of course the effect was great for England's economy and terrible for Portugal. Also, mentioning China is strange in this, since China's boom over the past decade was fueled by controlling capital leaving the country. Also, the US has been fighting against some of its technology going to China, as it keeps arresting (and releasing) Chinese people it has been accusing of "stealing" its technology, like Xiafen Chen last year and Bo Jiang in 2013. The TPP is widely seen (and described) as the US creating a trade bloc against China. > I think we also need to consider some points Marx was fairly right about, the inevitability of political instability as a result of certain economic realities. Too much inequality can lead to revolution. Marx (and Engels) said that every economic system reifies itself as a permanent thing, but every economic system is actually a temporary thing. Prior to 10,000 years ago, the entire world was communist, if communism is defined as common ownership of the means of profuction and the absence of classes, surplus, and the state. Then, a new economic system arose - slavery - with the slave states of Sumeria, Babylon, Egypt, Greece, Rome. With these changes in the relations of production came changes in the forces of production with the agricultural revolution. Between the fourth century and ninth century, the slavery and centralized empire of Rome and its latifundias was replaced by the decentralized feudalism of the Holy Roman Empire. Other political and hegemonic changes happened at this time - paganism was replaced by Christianity, Rome was sacked by the Visigoths, and relations of production changed from master and slave to lord and serf. In the early sixteenth century, capitalism began to develop in England and Holland, and along with it came things such as Martin Luther's 95 theses, the Copernican revolution, the Glorious revolution, the Age of Enlightenment and the French revolution. Enlightenment, liberal and scientific ideas came to dominate. Lord and serf became capitalist and wage worker. What Marx called the reserve army of labor became permanent, with their slightly coded counterparts in mainstream economics, using phrases such as "non-accelerating inflation rate of unemployment" - in other words, the permanent rate at which government and business should desire unemployment to be. We also see attempts to suppress wages, Steve Jobs secret deal with Eric Schmidt and other Silicon Valley honchos to illegally suppress wages would have been no surprise to Marx. So we've seen primitive communism, slavery, feudalism and now capitalism. As I said, each system reifies itself as being permanent. Is capitalism permanent, are we at the end of history as Fukuyama said? Marx thought not, he saw in the Paris Commune the dawn of the new type of society. Lenin's comrades in April 1917, who themselves were already not in the Marxist mainstream, were surprised when he said he planned to make Russia socialist. They had been expecting to support the bourgeois revolution against feudalism, and to then lightly agitate against that new formation, while waiting for the revolution to happen in Germany. One aspect of this was Marx always said the revolution would start at the center of capitalism, not a backwater like Germany. The Marxian idea is the change from capitalism to post-capitalism, which he called socialism, would start at the most advanced state and area of capitalism, where the means of production were being revolutionized. I mean terms bandied about here like "disruption" are just what Marx was talking about. Marx wasn't anti-capitalist as portrayed, he praised the development of capitalism. He had a "dialectical" approach to capitalism - he said one day it will have outlived its use, just like primitive communism, slavery and feudalism had done. Not to be millenialist about it, but if Marx was looking for signs of change in economic systems, it would probably be in things like the change from manual work to staring at the office wall, contemplating data models. The continual rise of AI to replacing not only manual work, but intellectual work. The ability of DNA sequencing, CRISPR and other advances in biology which may change what it means to be human. Things like Github and Debian and Linux - the free software movement allowing for raqpid changes in productivity (in a somewhat non-capitalist context). Also lots of things lurking underneath the surface like an iceberg. In Marx's day, working class school children were not being taught trigonometry and then chemistry in schools. The idea of a suburban/exurban area dotted by strip malls with Wal-Marts, Home Depots, and other national chains would have looked very much like a harbinger of socialism to him - the middle class merchants had been wiped out, now there were just the wage workers and the centralized capitalists.