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> At some point the declining demand for labor and the growing costs of things will come to a head. The current system will not work. Declining demand for labo

> At some point the declining demand for labor and the growing costs of things will come to a head. The current system will not work. Declining demand for labor goes hand in hand with lower production costs (cheaper labor overseas and automation). That means lower costs of things, not higher. And if the costs of things were higher than what people could afford due to being underemployed, the demand drops, which puts even more negative pressure on prices.

StanislavPetrov 5y ago
>That means lower costs of things, not higher. Theory and reality aren't the same. If Nike finds some slaves willing to work for .25 cents a day instead of .50 that has no bearing on what they charge for their sneakers. Nor does declining demand for labor mitigate the rapidly rising prices of the things people require to live (food, healthcare, housing, insurance).
- bitshiftfaced 5y ago
  If Nike competes with another shoe company (who can also find cheap labor), then what they can pay for labor does impact what they charge for sneakers.
  - StanislavPetrov 5y ago
    You're assuming fictional consumer behavior based on theories that do not comport with reality. Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories.
    - bitshiftfaced 5y ago
      > You're assuming fictional consumer behavior based on theories that do not comport with reality. Yes, I understand that this is your original argument. You don't believe that established economic theories like supply and demand apply in today's society. > Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories. Nike gets a higher price because of the strength of their brand. When I talk about their competitors, I'm referring to other premium sneaker brands like Adidas, Asics, and Puma. In fact, premium brands aren't an appropriate example for either of our arguments. It's not appropriate for my argument, since there is in fact a well known psychological effect (contrary to your claim) where consumers assume higher prices are associated with exclusivity and luxury. This can change the equation of how cost inputs effect price equilibrium. It's also a poor example for your argument, since we are talking about people who may not be able to afford sneakers due to rising prices that allegedly break the laws of supply in demand. For that discussion, we'd need to use an example of a brand perceived as affordably-priced, not luxury-priced. (I could go on Amazon and find some, but their brand probably wouldn't be recognizable anyway, which is part of the point.) Those brands do compete on price, and cost inputs like labor absolutely effect what they charge consumers.
  - mbrodersen 5y ago
    Nope not at all. The cost of high end goods has very little to do with cost of production. Brands like Nike is about paying for virtue/wealth/attractiveness signaling.

StanislavPetrov 5y ago

>That means lower costs of things, not higher. Theory and reality aren't the same. If Nike finds some slaves willing to work for .25 cents a day instead of .50 that has no bearing on what they charge for their sneakers. Nor does declining demand for labor mitigate the rapidly rising prices of the things people require to live (food, healthcare, housing, insurance).

bitshiftfaced 5y ago
If Nike competes with another shoe company (who can also find cheap labor), then what they can pay for labor does impact what they charge for sneakers.
- StanislavPetrov 5y ago
  You're assuming fictional consumer behavior based on theories that do not comport with reality. Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories.
  - bitshiftfaced 5y ago
    > You're assuming fictional consumer behavior based on theories that do not comport with reality. Yes, I understand that this is your original argument. You don't believe that established economic theories like supply and demand apply in today's society. > Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories. Nike gets a higher price because of the strength of their brand. When I talk about their competitors, I'm referring to other premium sneaker brands like Adidas, Asics, and Puma. In fact, premium brands aren't an appropriate example for either of our arguments. It's not appropriate for my argument, since there is in fact a well known psychological effect (contrary to your claim) where consumers assume higher prices are associated with exclusivity and luxury. This can change the equation of how cost inputs effect price equilibrium. It's also a poor example for your argument, since we are talking about people who may not be able to afford sneakers due to rising prices that allegedly break the laws of supply in demand. For that discussion, we'd need to use an example of a brand perceived as affordably-priced, not luxury-priced. (I could go on Amazon and find some, but their brand probably wouldn't be recognizable anyway, which is part of the point.) Those brands do compete on price, and cost inputs like labor absolutely effect what they charge consumers.
- mbrodersen 5y ago
  Nope not at all. The cost of high end goods has very little to do with cost of production. Brands like Nike is about paying for virtue/wealth/attractiveness signaling.