5 ms·

Why does the economy require new entrants?

by ikeboy 6y ago

brenden2 6y ago
Where do you think the growth comes from? More people at the bottom push up everyone at the top.
- notduncansmith 6y ago
  Not “everyone”. Imagine the economy like a tank of water, and each person a single molecule of H20, and proximity to the top of the tank represents relative wealth. So all the water molecules are constantly shifting a bit, but mostly stay in place unless something shakes up the tank. If you sprinkle water on the top, those molecules stay mostly at the top: rich parents’ kids mostly stay rich. If you feed water in through a pump at the bottom, most of those molecules will stay at the bottom: poor parents’ kids usually stay poor. In general, the closer you are to the top or bottom, the more likely you are to stay there. Adding from the bottom pushes the people at the top even higher, yes; but those in between the bottom and top mostly just shift around as the middle gets wider.
  - brenden2 6y ago
    It's more like a pyramid, where the people at the top of the pyramid go farther up the more people you add to the bottom. The size of the whole pyramid increases over time, and some people might move up or down a few levels, but the majority of people will spend their whole lives near the bottom.
- deleted 6y ago
  [deleted]
- scld 6y ago
  That's not where per capita growth comes from...
  - brenden2 6y ago
    Most per-capita growth is just inflation. Additionally, metrics like CPI don't include inflation of assets like real estate, even though the utility of a home doesn't change over time without some kind of upgrades. Real estate in particular is inflated largely because of the ease of acquiring leverage.
- empath75 6y ago
  You still have innovation in a stable population size.
  - brenden2 6y ago
    What's "innovation" these days? More ads? An iPhone with 5 cameras? A new SaaS product that's a glorified spreadsheet/database?
spamizbad 6y ago
You need human beings to actually produce stuff and grow the economy, which drives most public and private retirement accounts (we're not just talking about social security here).
- ikeboy 6y ago
  Sure, but why do you need an increasing number of them?
  - hiram112 6y ago
    > but why do you need an increasing number of them? Because most public and private retirement accounts assumed that the growth would occur, thus it was okay to promise themselves a pension and health package that was very, very generous based on lots of younger people paying X%. They literally are pyramid schemas which require a larger group of workers to support. In other words, they calculated something like 'When I'm 63, there will be 4 workers available for each retiree, and each worker can afford to pay $15K a year in taxes to support that $60K / year pension.' Well, it turns out there are only 3 workers for each retiree. So either the workers need to be taxed $20K each to support this pensioner, or the pensioner has to take a 25% cut.
    - ikeboy 6y ago
      I'll refer you to my post arguing against this exact claim: https://www.reddit.com/r/badeconomics/comments/dr74i0/life_is_not_a_ponzi_scheme/ https://www.reddit.com/r/badeconomics/comments/dr74i0/life_i...
weatherman2 6y ago
A couple of reasons: -As people grow old, they are economically dependent upon people younger than them. -A growing population goes hand-in-hand with a growing economy. This tends to bring prosperity to many people. And as a bit of a tangent: The argument that a shrinking population is good for the planet and is therefore better than a growing population feels to me like an extremely pessimistic argument, and the people that I personally know that embrace it have a much less human-centric moral intuition than I do. I put a lot lot lot more worth on human happiness than that of animals, and to me it seems that a cultural disconnect from the natural act of procreation implies an unhappiness that is rooted in how cultures are run nowadays.
- ikeboy 6y ago
  You're just repeating the premise. Why does a growing economy require a growing population? There's not a very strong correlation between population and GDP per capita - the US has the highest GDP and there's several countries with significantly larger populations.
- shadowgovt 6y ago
  As automation comes online, the amount of wealth generated per unit of human labor goes up. A growing economy requires, in the large, an increasing labor pool, but that labor can be human or machine-amplified human. If the amplification rate is growing fast enough, we can grow the economy with a shrinking headcount. (The other side of the equation---consumption---also balances out; people with more leisure time consume more).
- econcon 6y ago
  >-A growing population goes hand-in-hand with a growing economy. This tends to bring prosperity to many people To have higher GPD US atleast doesn't require more population. Here is why: 1. American companies sell outside US so we can benefit from selling to India, china and Europe. 2.Even if we aren't exporting to some countries, there is still demand for our currency as they can use it to trade for other things like petroleum 4. Even if we've no petrol or exports, rich people and companies from other countries invest in our treasury bills, bonds and stock market. Look at how many companies of different countries even like the ones from UK, India and China invest into US market because of its safety
raldi 6y ago
The American Dream is that all families climb the ladder to the point where they own a house that always goes up in value and a stock market portfolio basically guaranteed by federal economic policy to grow 10% a year over the long term. All those people earning money by doing nothing needs to be supported by an ever-increasing influx of people actually doing work. So we promise the latter the American Dream. Ponzi scheme.
creddit 6y ago
The economy doesn’t and just about every argument that says it does shows very clearly the bias of those who make them. That said, there are many things social structures and institutions with embedded growth assumptions such as social security, pension plans, government debt, etc.

Why does the economy require new entrants?

by ikeboy 6y ago

Why does the economy require new entrants?

brenden2 6y ago

Where do you think the growth comes from? More people at the bottom push up everyone at the top.

notduncansmith 6y ago
Not “everyone”. Imagine the economy like a tank of water, and each person a single molecule of H20, and proximity to the top of the tank represents relative wealth. So all the water molecules are constantly shifting a bit, but mostly stay in place unless something shakes up the tank. If you sprinkle water on the top, those molecules stay mostly at the top: rich parents’ kids mostly stay rich. If you feed water in through a pump at the bottom, most of those molecules will stay at the bottom: poor parents’ kids usually stay poor. In general, the closer you are to the top or bottom, the more likely you are to stay there. Adding from the bottom pushes the people at the top even higher, yes; but those in between the bottom and top mostly just shift around as the middle gets wider.
- brenden2 6y ago
  It's more like a pyramid, where the people at the top of the pyramid go farther up the more people you add to the bottom. The size of the whole pyramid increases over time, and some people might move up or down a few levels, but the majority of people will spend their whole lives near the bottom.
deleted 6y ago
[deleted]
scld 6y ago
That's not where per capita growth comes from...
- brenden2 6y ago
  Most per-capita growth is just inflation. Additionally, metrics like CPI don't include inflation of assets like real estate, even though the utility of a home doesn't change over time without some kind of upgrades. Real estate in particular is inflated largely because of the ease of acquiring leverage.
empath75 6y ago
You still have innovation in a stable population size.
- brenden2 6y ago
  What's "innovation" these days? More ads? An iPhone with 5 cameras? A new SaaS product that's a glorified spreadsheet/database?

spamizbad 6y ago

You need human beings to actually produce stuff and grow the economy, which drives most public and private retirement accounts (we're not just talking about social security here).

ikeboy 6y ago
Sure, but why do you need an increasing number of them?
- hiram112 6y ago
  > but why do you need an increasing number of them? Because most public and private retirement accounts assumed that the growth would occur, thus it was okay to promise themselves a pension and health package that was very, very generous based on lots of younger people paying X%. They literally are pyramid schemas which require a larger group of workers to support. In other words, they calculated something like 'When I'm 63, there will be 4 workers available for each retiree, and each worker can afford to pay $15K a year in taxes to support that $60K / year pension.' Well, it turns out there are only 3 workers for each retiree. So either the workers need to be taxed $20K each to support this pensioner, or the pensioner has to take a 25% cut.
  - ikeboy 6y ago
    I'll refer you to my post arguing against this exact claim: https://www.reddit.com/r/badeconomics/comments/dr74i0/life_is_not_a_ponzi_scheme/ https://www.reddit.com/r/badeconomics/comments/dr74i0/life_i...

weatherman2 6y ago

A couple of reasons: -As people grow old, they are economically dependent upon people younger than them. -A growing population goes hand-in-hand with a growing economy. This tends to bring prosperity to many people. And as a bit of a tangent: The argument that a shrinking population is good for the planet and is therefore better than a growing population feels to me like an extremely pessimistic argument, and the people that I personally know that embrace it have a much less human-centric moral intuition than I do. I put a lot lot lot more worth on human happiness than that of animals, and to me it seems that a cultural disconnect from the natural act of procreation implies an unhappiness that is rooted in how cultures are run nowadays.

ikeboy 6y ago
You're just repeating the premise. Why does a growing economy require a growing population? There's not a very strong correlation between population and GDP per capita - the US has the highest GDP and there's several countries with significantly larger populations.
shadowgovt 6y ago
As automation comes online, the amount of wealth generated per unit of human labor goes up. A growing economy requires, in the large, an increasing labor pool, but that labor can be human or machine-amplified human. If the amplification rate is growing fast enough, we can grow the economy with a shrinking headcount. (The other side of the equation---consumption---also balances out; people with more leisure time consume more).
econcon 6y ago
>-A growing population goes hand-in-hand with a growing economy. This tends to bring prosperity to many people To have higher GPD US atleast doesn't require more population. Here is why: 1. American companies sell outside US so we can benefit from selling to India, china and Europe. 2.Even if we aren't exporting to some countries, there is still demand for our currency as they can use it to trade for other things like petroleum 4. Even if we've no petrol or exports, rich people and companies from other countries invest in our treasury bills, bonds and stock market. Look at how many companies of different countries even like the ones from UK, India and China invest into US market because of its safety

raldi 6y ago

The American Dream is that all families climb the ladder to the point where they own a house that always goes up in value and a stock market portfolio basically guaranteed by federal economic policy to grow 10% a year over the long term. All those people earning money by doing nothing needs to be supported by an ever-increasing influx of people actually doing work. So we promise the latter the American Dream. Ponzi scheme.

creddit 6y ago

The economy doesn’t and just about every argument that says it does shows very clearly the bias of those who make them. That said, there are many things social structures and institutions with embedded growth assumptions such as social security, pension plans, government debt, etc.