6 ms·

What does immigration has to do with price deflation? (I know you can come up with some relation, of course everything is related, but again, it is not straigh

by fiatjaf 10y ago

What does immigration has to do with price deflation? (I know you can come up with some relation, of course everything is related, but again, it is not straightforward, and you shouldn't just assume that saying a bunch of buzzywords and stating some facts stands out as an explanation)

pcurve 10y ago
Immigration staves off demographic time bomb, which is cited as one of the causes (or symptoms depending on who you ask) for Japan's no-growth economic environment.
- internaut 10y ago
  Although I lean libertarian I don't see how you can control monetary policy without also needing to control population size. Lots of awkward ethical questions nobody wants to talk about here.
  - eru 10y ago
    I don't get it? Just print money? (Or more formal, do QE?)
    - internaut 10y ago
      What I mean is that there must exist an elemental relationship (min-max limits) between population size and the depth of the division of labour (how complex production can become). Pairing population to production optimally is a synchronization problem. Cybernetics I suppose, not usually how economists think. Economic growth and recession could be modulated if there were enough people when we needed them, and there were not, when we did not. Recessions won't go away but they wouldn't be compounded by demographic issues. Currently this is solved in a haphazard way e.g. using illegal immigration of people like fruit pickers (deporting them when inconvenient) or by green belt zoning and class siloing. That can't be efficient. It couldn't possibly make humans happier. Most actually adopted solutions appear to be quite damaging to humans. How much of this is consciously orchestrated is also hard to ascertain. I suspect it is mostly Scott Alexander's Moloch at work. Every central banker ought to read that poetry because it's quite recognizable. Since it is unethical to force children to exist (Ceausescu) and also wrong to murder people or prevent them having offspring when demographic issues arise, we need a plausible solution to allow for a world in which people have a realistic chance of having sustenance and purpose in their lives. Most people really don't like this topic! It is understandable. We prefer not to think of ourselves as elements of production and supply. Of course we are, we're just a special case of it. All of the problems are ultimately rectified by markets, or failing them, mother Nature. You know what they say about Nature being a mother. My point is that we don't necessarily need to let it get to market corrections if we think ahead. Suppose you were a Communist official in charge of the One Child policy who anticipated the female infanticide rate. You'd have solved for a good deal of human suffering decades later on with perhaps an afternoon's work. Right place, right time. Monetary policy tools work on a similar lever principal to this which is a large part of the reason I'm talking about them in the same vein. I'm not confident I know what to do, only that it is a factor. And now; tell me how I'm wrong!
      - pm90 10y ago
        You seem to be trying to say a lot of things without making it clear exactly what the main point is. From what I gather, its that one can control a very exacting control over the market by having a very exacting control over division of labor. Which sounds a lot like communism, which you use in an example. Is that what you're trying to say?
        internaut 10y ago
        Think of Malthus. He described how human populations could overshoot the food supply because the growth rate in humans was exponential but the growth rate for food production was linear. Famines then follow a predictable cycle. My hypothesis is that in the economy the growth rate in humans does not relate directly to economic growth. There could exist a religion that promotes large families for example; that's why I said mother nature would ultimately take care of business if things got out of hand. Sometimes we need more humans but there is a lag time before they appear. Sometimes we need less humans but they stick around absorbing dwindling resources and leaving their children with higher prices later. Both of these outcomes sabotage future growth prospects. How this relates to economics is that central bankers use interest rates changes in an attempt to produce stable growing economies. As I understand it the mechanism is a kind of lever, by modifying the trajectory of money supply you can slightly influence the larger flow. Central banks then spend their time compiling statistics to anticipate the future. If one can do that with money then you can do it with humans too by finely tuning the probability of them being able to give birth. Then as long as you can anticipate the amount of workers required you can provide that many at the correct time. Demographic hiccups become a thing of the past. I leave a lot unsaid here. Evidently controlling one part of the economy causes you to require as you say 'very exacting control' over other parts. As you can see there is nothing controversial here. I want to point out that the actions of governments tend to support a belief (that they believe) in something of this sort and that changing human production rates is some kind of corollary to changing interest rates. After all the humans use the money. They're the ones incorporating information into prices with their decisions. This whole topic has the feeling of an 'Ugh field' about it. I understand if I'm downvoted into oblivion but it's an important idea. If I'm totally wrong then great, tell me how.
- mynameishere 10y ago
  Immigration pushes back the social welfare Ponzi scheme time bomb. That's it--and that assumes that the imported people aren't net tax eaters themselves. At any rate, you can set off the bomb now or later, but the longer you wait the more explosive it will be. Back on planet earth, a smaller population is almost always better than a larger one. The only real difference is that a smaller population has more natural resources per person.
  - pcurve 10y ago
    I'd like to stay hopeful and perhaps they can figure out a way balance the welfare income and expenditure. But that will probably not happen. The bomb does need to blow to reset the clock.
    - pm90 10y ago
      It is possible: the US can technically be indebted (and thus borrow) infinitely. Sovereign debt is not like private debt, there is no ceiling to it (unless willingly mandated, as the US Congress does). I'm not going to pretend to know what the future will look like, but presumably some political change involving multiple planetary systems will succeed the US and do something with the debt. In any case, human population will peak and then start reducing at some point in the not too distant future (unless we expand to other planets). I wonder what happens if the holders of the debt themselves were to perish.
      - nihonde 10y ago
        What a terrifying prospect: war waged in order to eliminate a creditor nation.
stephengillie 10y ago
Without immigration, the US population would have peaked in the 1970s and our economy would be much worse off. We replaced our reducing replacement rate with an increasing immigration rate. When you have more people wanting stuff, prices rise and jobs create themselves to meet this need. With a declining population, you have fewer people wanting stuff, so prices go down.
- fiatjaf 10y ago
  Right, but if prices go down, then people can pay less for them and they don't need to earn a lot in their jobs, everything fits and we're as good as in the other scenario.
  - jonknee 10y ago
    Sure, until you find yourself in a deflationary spiral and the economy screeches to a halt. Why would you buy a house if you know that next year it will be cheaper? Who would finance a mortgage in a deflationary environment?
    - gozur88 10y ago
      >Sure, until you find yourself in a deflationary spiral and the economy screeches to a halt. That's the thought experiment, but it doesn't pan out in reality. The US economy experienced long stretches of high growth and low deflation in the 19th century. People still have physical needs even if the currency is deflating.
    - nradov 10y ago
      Computers, cell phones, and other consumer electronics get cheaper every year for a given level of features and performance. Yet consumers still buy more and more of them. Certainly I would buy a house if I know that next year it will be cheaper. I need somewhere to live and don't want to have to move over and over again. Nothing about a deflationary environment would prevent lenders from providing mortgage financing. Mortgages were obviously still available to qualified borrowers during the worst of the housing market crash.

by fiatjaf 10y ago

pcurve 10y ago

Immigration staves off demographic time bomb, which is cited as one of the causes (or symptoms depending on who you ask) for Japan's no-growth economic environment.

internaut 10y ago
Although I lean libertarian I don't see how you can control monetary policy without also needing to control population size. Lots of awkward ethical questions nobody wants to talk about here.
- eru 10y ago
  I don't get it? Just print money? (Or more formal, do QE?)
  - internaut 10y ago
    What I mean is that there must exist an elemental relationship (min-max limits) between population size and the depth of the division of labour (how complex production can become). Pairing population to production optimally is a synchronization problem. Cybernetics I suppose, not usually how economists think. Economic growth and recession could be modulated if there were enough people when we needed them, and there were not, when we did not. Recessions won't go away but they wouldn't be compounded by demographic issues. Currently this is solved in a haphazard way e.g. using illegal immigration of people like fruit pickers (deporting them when inconvenient) or by green belt zoning and class siloing. That can't be efficient. It couldn't possibly make humans happier. Most actually adopted solutions appear to be quite damaging to humans. How much of this is consciously orchestrated is also hard to ascertain. I suspect it is mostly Scott Alexander's Moloch at work. Every central banker ought to read that poetry because it's quite recognizable. Since it is unethical to force children to exist (Ceausescu) and also wrong to murder people or prevent them having offspring when demographic issues arise, we need a plausible solution to allow for a world in which people have a realistic chance of having sustenance and purpose in their lives. Most people really don't like this topic! It is understandable. We prefer not to think of ourselves as elements of production and supply. Of course we are, we're just a special case of it. All of the problems are ultimately rectified by markets, or failing them, mother Nature. You know what they say about Nature being a mother. My point is that we don't necessarily need to let it get to market corrections if we think ahead. Suppose you were a Communist official in charge of the One Child policy who anticipated the female infanticide rate. You'd have solved for a good deal of human suffering decades later on with perhaps an afternoon's work. Right place, right time. Monetary policy tools work on a similar lever principal to this which is a large part of the reason I'm talking about them in the same vein. I'm not confident I know what to do, only that it is a factor. And now; tell me how I'm wrong!
    - pm90 10y ago
      You seem to be trying to say a lot of things without making it clear exactly what the main point is. From what I gather, its that one can control a very exacting control over the market by having a very exacting control over division of labor. Which sounds a lot like communism, which you use in an example. Is that what you're trying to say?
      - internaut 10y ago
        Think of Malthus. He described how human populations could overshoot the food supply because the growth rate in humans was exponential but the growth rate for food production was linear. Famines then follow a predictable cycle. My hypothesis is that in the economy the growth rate in humans does not relate directly to economic growth. There could exist a religion that promotes large families for example; that's why I said mother nature would ultimately take care of business if things got out of hand. Sometimes we need more humans but there is a lag time before they appear. Sometimes we need less humans but they stick around absorbing dwindling resources and leaving their children with higher prices later. Both of these outcomes sabotage future growth prospects. How this relates to economics is that central bankers use interest rates changes in an attempt to produce stable growing economies. As I understand it the mechanism is a kind of lever, by modifying the trajectory of money supply you can slightly influence the larger flow. Central banks then spend their time compiling statistics to anticipate the future. If one can do that with money then you can do it with humans too by finely tuning the probability of them being able to give birth. Then as long as you can anticipate the amount of workers required you can provide that many at the correct time. Demographic hiccups become a thing of the past. I leave a lot unsaid here. Evidently controlling one part of the economy causes you to require as you say 'very exacting control' over other parts. As you can see there is nothing controversial here. I want to point out that the actions of governments tend to support a belief (that they believe) in something of this sort and that changing human production rates is some kind of corollary to changing interest rates. After all the humans use the money. They're the ones incorporating information into prices with their decisions. This whole topic has the feeling of an 'Ugh field' about it. I understand if I'm downvoted into oblivion but it's an important idea. If I'm totally wrong then great, tell me how.
mynameishere 10y ago
Immigration pushes back the social welfare Ponzi scheme time bomb. That's it--and that assumes that the imported people aren't net tax eaters themselves. At any rate, you can set off the bomb now or later, but the longer you wait the more explosive it will be. Back on planet earth, a smaller population is almost always better than a larger one. The only real difference is that a smaller population has more natural resources per person.
- pcurve 10y ago
  I'd like to stay hopeful and perhaps they can figure out a way balance the welfare income and expenditure. But that will probably not happen. The bomb does need to blow to reset the clock.
  - pm90 10y ago
    It is possible: the US can technically be indebted (and thus borrow) infinitely. Sovereign debt is not like private debt, there is no ceiling to it (unless willingly mandated, as the US Congress does). I'm not going to pretend to know what the future will look like, but presumably some political change involving multiple planetary systems will succeed the US and do something with the debt. In any case, human population will peak and then start reducing at some point in the not too distant future (unless we expand to other planets). I wonder what happens if the holders of the debt themselves were to perish.
    - nihonde 10y ago
      What a terrifying prospect: war waged in order to eliminate a creditor nation.

stephengillie 10y ago

Without immigration, the US population would have peaked in the 1970s and our economy would be much worse off. We replaced our reducing replacement rate with an increasing immigration rate. When you have more people wanting stuff, prices rise and jobs create themselves to meet this need. With a declining population, you have fewer people wanting stuff, so prices go down.

fiatjaf 10y ago
Right, but if prices go down, then people can pay less for them and they don't need to earn a lot in their jobs, everything fits and we're as good as in the other scenario.
- jonknee 10y ago
  Sure, until you find yourself in a deflationary spiral and the economy screeches to a halt. Why would you buy a house if you know that next year it will be cheaper? Who would finance a mortgage in a deflationary environment?
  - gozur88 10y ago
    >Sure, until you find yourself in a deflationary spiral and the economy screeches to a halt. That's the thought experiment, but it doesn't pan out in reality. The US economy experienced long stretches of high growth and low deflation in the 19th century. People still have physical needs even if the currency is deflating.
  - nradov 10y ago
    Computers, cell phones, and other consumer electronics get cheaper every year for a given level of features and performance. Yet consumers still buy more and more of them. Certainly I would buy a house if I know that next year it will be cheaper. I need somewhere to live and don't want to have to move over and over again. Nothing about a deflationary environment would prevent lenders from providing mortgage financing. Mortgages were obviously still available to qualified borrowers during the worst of the housing market crash.