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I don't think we are literally able to imagine the implications of an economic scenario where the market clearing wage for toilet cleaning is $200.000, with cur

I don't think we are literally able to imagine the implications of an economic scenario where the market clearing wage for toilet cleaning is $200.000, with current purchasing parity (that is, every janitor could buy the equivalent of a nice suburban home, every year, or accumulate the equivalent of 100 acres / 40 hectares of land in capital, every year). That world would have more to do with a Star Trek episode than with the current society.

rosser 8y ago
>>>> I was imagining a scenario where... Isn't the point of an imagined scenario not to be like current society in some way?
- cornholio 8y ago
  Sure, my point is that we are not really imagining it. It's like a 12 old imagining he could do his homework by tapping a magic wand, not realizing that possessing such a magic wand would make the whole concepts of homework, school or teachers irrelevant.
TangoTrotFox 8y ago
You just described precisely why your scenario is impossible. Money is fundamentally just a representation of access to resources and labor, which are finite. You can create infinite money but you can't create infinite quantities of that which it represents. There are about 1.9 billion acres of land in the continental united states. That works out to 5.8 acres per person. If people could afford to purchase 100 acres of land per year, and even a tiny percent of people utilized this - land prices would skyrocket. And a similar story would end up being true of other resources and labor costs. In describing fantasy scenarios you have to consider the implications on the allocation of limited resources such that everything isn't just completely overwritten by inflation.
- cornholio 8y ago
  That's precisely why I used the phrases "equivalent land in capital" and "equivalent to a nice suburban home". In context, it should be obvious such a wealth explosion would cause an unfathomable real estate inflation. While land is limited, wealth and capital are not. It's perfectly possible to posit a society where people own, say, shares of robotic mining companies that roam the solar system for resources. Or that values genuine human sexual intercourse to the tune of one million dollars per act, inflation adjusted. It's much harder to substantiate how such a society would actually look like.
raducu 8y ago
That is a very interesting point you are making. While I'm sure we could(and most likely will) make sure no one suffers from hunger, has access to quality education(in the online form), and quality goods, things that cannot be mass produced/duplicated will become even more expensive-real estate in tourist cities, tropical/scenic places, art and so on.
njarboe 8y ago
In the US in 1960 one can find wage surveys[1] where one finds saleries of: Electric, gas, sanitary services: $6147/yr Wholesale and retail trade: $4478/yr The first would be where janitors would go and retail is another poorly paid job today. The average house cost in 1960 [2] was $11,900. So with a house price of around two times yearly income, we get to about $100k wage for a janitor or retail clerk in 1960. US post WWII was a pretty unique situation, but one would hope that you should be able to more than imagine such a situation. You can study the existence of such a culture in the recent past and still talk to people who actually lived it. [1](https://babel.hathitrust.org/cgi/pt?id=mdp.39015021301612;view=1up;seq=406;size=125 https://babel.hathitrust.org/cgi/pt?id=mdp.39015021301612;vi...) [2]https://www.census.gov/hhes/www/housing/census/historic/values.html https://www.census.gov/hhes/www/housing/census/historic/valu...
- cornholio 8y ago
  Using average housing prices is a poor proxy since both the average size and quality of homes have increased, while the US real estate market has had a very particular evolution, unrepresentative for the overall inflation. It was a bad choice on my part, I was trying to give an intuitive current wealth reference, not track housing trends over decades. An inflation adjusted wage of $5000 in 1960 represents $42.500 in 2018, which is in line with the often repeated tidbit that real wages of blue collar workers have stagnated for decades. Therefore, what you are describing is a world with similar real wages to those of today, and with real estate cheaper by a factor 2-3x, inflation and quality adjusted. That is indeed easy to imagine. What I am describing is a world where real wages are 4-5 times larger. Yes, those wealth increases could be trapped by a ballooning real estate market, where a single bedroom semi is worth $2 million at current purchasing parity, making it very similar to your world. Or something else could happen entirely, that is almost impossible to predict.

rosser 8y ago

>>>> I was imagining a scenario where... Isn't the point of an imagined scenario not to be like current society in some way?

cornholio 8y ago
Sure, my point is that we are not really imagining it. It's like a 12 old imagining he could do his homework by tapping a magic wand, not realizing that possessing such a magic wand would make the whole concepts of homework, school or teachers irrelevant.

TangoTrotFox 8y ago

You just described precisely why your scenario is impossible. Money is fundamentally just a representation of access to resources and labor, which are finite. You can create infinite money but you can't create infinite quantities of that which it represents. There are about 1.9 billion acres of land in the continental united states. That works out to 5.8 acres per person. If people could afford to purchase 100 acres of land per year, and even a tiny percent of people utilized this - land prices would skyrocket. And a similar story would end up being true of other resources and labor costs. In describing fantasy scenarios you have to consider the implications on the allocation of limited resources such that everything isn't just completely overwritten by inflation.

cornholio 8y ago
That's precisely why I used the phrases "equivalent land in capital" and "equivalent to a nice suburban home". In context, it should be obvious such a wealth explosion would cause an unfathomable real estate inflation. While land is limited, wealth and capital are not. It's perfectly possible to posit a society where people own, say, shares of robotic mining companies that roam the solar system for resources. Or that values genuine human sexual intercourse to the tune of one million dollars per act, inflation adjusted. It's much harder to substantiate how such a society would actually look like.

raducu 8y ago

That is a very interesting point you are making. While I'm sure we could(and most likely will) make sure no one suffers from hunger, has access to quality education(in the online form), and quality goods, things that cannot be mass produced/duplicated will become even more expensive-real estate in tourist cities, tropical/scenic places, art and so on.

njarboe 8y ago

In the US in 1960 one can find wage surveys[1] where one finds saleries of: Electric, gas, sanitary services: $6147/yr Wholesale and retail trade: $4478/yr The first would be where janitors would go and retail is another poorly paid job today. The average house cost in 1960 [2] was $11,900. So with a house price of around two times yearly income, we get to about $100k wage for a janitor or retail clerk in 1960. US post WWII was a pretty unique situation, but one would hope that you should be able to more than imagine such a situation. You can study the existence of such a culture in the recent past and still talk to people who actually lived it. [1](https://babel.hathitrust.org/cgi/pt?id=mdp.39015021301612;view=1up;seq=406;size=125 https://babel.hathitrust.org/cgi/pt?id=mdp.39015021301612;vi...) [2]https://www.census.gov/hhes/www/housing/census/historic/values.html https://www.census.gov/hhes/www/housing/census/historic/valu...

cornholio 8y ago
Using average housing prices is a poor proxy since both the average size and quality of homes have increased, while the US real estate market has had a very particular evolution, unrepresentative for the overall inflation. It was a bad choice on my part, I was trying to give an intuitive current wealth reference, not track housing trends over decades. An inflation adjusted wage of $5000 in 1960 represents $42.500 in 2018, which is in line with the often repeated tidbit that real wages of blue collar workers have stagnated for decades. Therefore, what you are describing is a world with similar real wages to those of today, and with real estate cheaper by a factor 2-3x, inflation and quality adjusted. That is indeed easy to imagine. What I am describing is a world where real wages are 4-5 times larger. Yes, those wealth increases could be trapped by a ballooning real estate market, where a single bedroom semi is worth $2 million at current purchasing parity, making it very similar to your world. Or something else could happen entirely, that is almost impossible to predict.