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Any productive activity is a sum of the 3 factors of production: Land/Natural Goods + Labor + Capital If you increase any one of these factors, you get more pr

Any productive activity is a sum of the 3 factors of production: Land/Natural Goods + Labor + Capital If you increase any one of these factors, you get more production (i.e. more prosperity). For instance, Capital: if Chinese/Russian billionaires decide to invest all their money in American companies in America, then it would result in huge economic growth. Similarly Natural Goods: If prices of oil fall drastically, or lots of natural goods (even land) are discovered, then again there will be increased production of goods (i.e. more prosperity). Finally, Labor: if labor prices fall drastically, or labor force is increased, again more production will happen. Prosperity will ensue. The first two makes sense to most people, but somehow the third point doesn't because most people are part of the labor force therefore emotions kick in. The simple logic you're demonstrating is a childish whining: > Tech execs and investors love to complain about having to pay six figure salaries to the engineers doing all the real work, all while carting home hundreds of millions themselves in just severance pay< The whole job of tech execs and investors is to increase production. Acquiring capital for cheap (lower interest rates) would do the job, acquiring land/natural goods for cheap (like moving office to a cheaper part of the town) would also do the job, and finally getting cheap labor would also do the same thing. Complaining against a businessman trying to find cheaper labor is like complaining against the QA for trying to find bugs in your code.

jjoonathan 11y ago
> splintercell > if labor prices fall drastically ... more production will happen. Prosperity will ensue. > somehow the third point doesn't because most people are part of the labor force therefore emotions kick in. The simple logic you're demonstrating is a childish whining Next time a bubble pops and I get a 30% pay cut I will take comfort in the fact that the prices of goods & services around me will soon fall by >30% to compensate (because of all the prosperity) thus preserving my quality of life and proving that my concerns were merely "emotions kicking in" and "childish whining" rather than predictions that the terms of my social contract were about to get dramatically worse.
- splintercell 11y ago
  The post I was responding to was about how companies want relaxed immigration rules because they make more profit. My post was responding to the fact that increased immigration (of high tech or white collar, both) helps people in general by increased prosperity (nothing in this post was about an emotional outburst of the conditions and welfare of immigrants). You respond by talking a non-sequitur about a bubble. It doesn't make any sense. Funny thing is, what you wrote rhetorically is exactly what happens in a crash. As a consumer you don't care whether your salary is $100K or $50K, what matters is what you can buy from your salary. If you can buy a home on mortgage on $50K salary and save for your kid's education, but can barely pay rent and groceries on $100K then the $50K Salary is higher 'real salary' (albeit a lower 'nominal salary'). Any recession is only cleared when real wages fall faster than the real prices of the goods (because only then businesses can be profitable again). According to free market economists, let wages and goods of prices fall. This will eventually clear the market. According to non-free market economists (which includes Keynesians and monetarists) increasing the money supply is the solution because it lowers the real wages (albeit keeping the nominal wage high). So at the end of a recession you still make same salary as you did at the start of the recession, but you can afford fewer goods now. This ALSO clears out the market and businesses become profitable again. Introduction of educated immigration labor would actually result in faster recovery (just like lowering of interest rates would make businesses more profitable).
  - jjoonathan 11y ago
    You understand how the economy as an aggregated whole behaves. What you're ignoring -- intentionally or not -- is the other face of economics, the hairy & ugly one, distribution. The way that any given person experiences the economy is a product of prosperity (as you put it) and distribution. In this day and age the volatility in distribution reliably dwarfs trends in overall prosperity. There are a large number of individuals who will be hurt by this (or any other) shift many orders of magnitude more than they will be helped. You invoke a collectivist argument to defend these groups' suffering on the basis that it will benefit the whole according to the economic dogma you hold dear. Fair enough. You might even be right. Even if one were to assume that you are, however, why does it follow that those involved should be happy with their fate as a stepping stone for society? That their complaints are nothing but "childish whining"? Furthermore, the fact that an action creates winners and losers is far less open to interpretation than its ultimate connection to the progression (or regression) of society. If you substitute faith in one system for faith in another then the same argument you made earlier has been made in a million other contexts to defend acts that you would consider unconscionable. In this context "It's for the best, honest!" is a weak argument regardless of how convinced you are that your model of ultimate benefit/detriment to society is correct.

jjoonathan 11y ago

> splintercell > if labor prices fall drastically ... more production will happen. Prosperity will ensue. > somehow the third point doesn't because most people are part of the labor force therefore emotions kick in. The simple logic you're demonstrating is a childish whining Next time a bubble pops and I get a 30% pay cut I will take comfort in the fact that the prices of goods & services around me will soon fall by >30% to compensate (because of all the prosperity) thus preserving my quality of life and proving that my concerns were merely "emotions kicking in" and "childish whining" rather than predictions that the terms of my social contract were about to get dramatically worse.

splintercell 11y ago
The post I was responding to was about how companies want relaxed immigration rules because they make more profit. My post was responding to the fact that increased immigration (of high tech or white collar, both) helps people in general by increased prosperity (nothing in this post was about an emotional outburst of the conditions and welfare of immigrants). You respond by talking a non-sequitur about a bubble. It doesn't make any sense. Funny thing is, what you wrote rhetorically is exactly what happens in a crash. As a consumer you don't care whether your salary is $100K or $50K, what matters is what you can buy from your salary. If you can buy a home on mortgage on $50K salary and save for your kid's education, but can barely pay rent and groceries on $100K then the $50K Salary is higher 'real salary' (albeit a lower 'nominal salary'). Any recession is only cleared when real wages fall faster than the real prices of the goods (because only then businesses can be profitable again). According to free market economists, let wages and goods of prices fall. This will eventually clear the market. According to non-free market economists (which includes Keynesians and monetarists) increasing the money supply is the solution because it lowers the real wages (albeit keeping the nominal wage high). So at the end of a recession you still make same salary as you did at the start of the recession, but you can afford fewer goods now. This ALSO clears out the market and businesses become profitable again. Introduction of educated immigration labor would actually result in faster recovery (just like lowering of interest rates would make businesses more profitable).
- jjoonathan 11y ago
  You understand how the economy as an aggregated whole behaves. What you're ignoring -- intentionally or not -- is the other face of economics, the hairy & ugly one, distribution. The way that any given person experiences the economy is a product of prosperity (as you put it) and distribution. In this day and age the volatility in distribution reliably dwarfs trends in overall prosperity. There are a large number of individuals who will be hurt by this (or any other) shift many orders of magnitude more than they will be helped. You invoke a collectivist argument to defend these groups' suffering on the basis that it will benefit the whole according to the economic dogma you hold dear. Fair enough. You might even be right. Even if one were to assume that you are, however, why does it follow that those involved should be happy with their fate as a stepping stone for society? That their complaints are nothing but "childish whining"? Furthermore, the fact that an action creates winners and losers is far less open to interpretation than its ultimate connection to the progression (or regression) of society. If you substitute faith in one system for faith in another then the same argument you made earlier has been made in a million other contexts to defend acts that you would consider unconscionable. In this context "It's for the best, honest!" is a weak argument regardless of how convinced you are that your model of ultimate benefit/detriment to society is correct.