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There's a difference between supply and quantity supplied. The OG is referring to "cheeseburger production" as supply and you're reading it as quantity supplied

by bko 5y ago

There's a difference between supply and quantity supplied. The OG is referring to "cheeseburger production" as supply and you're reading it as quantity supplied. Yes, a cheeseburger becomes more expensive will attract new producers and the aggregate amount of cheeseburgers sold will be higher. But the marginal cheeseburger being sold is at a higher cost to produce (otherwise it would have been produced to fulfill the original demand). I think the supply/demand model is useful. I think when people claim "its more complicated", they are trying to get around inconvenient truths and basic axioms. You print more money out of thin air, the price of goods is going to go up since its more money chasing the same goods. Creating wealth by printing money is kind of a perpetual motion machine. You need a lot of mental gymnastics to deny the fact that printing money doesn't cause prices to go up. Everyone knows this. Keynes knew this, as did Lenin. Keynes wrote the following: > Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. … Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. [0] https://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation.html https://www.pbs.org/wgbh/commandingheights/shared/minitext/e...

yazaddaruvala 5y ago
> But the marginal cheeseburger being sold is at a higher cost to produce (otherwise it would have been produced to fulfill the original demand). This may have been true at the time of Keynes but this statement of your hasn’t been true for a very long time. Because of Accelerating Automation “Economies of Scale” (i.e. the marginal cost of a cheeseburger goes down as more are made). The reality today is that the extra cheeseburgers are made because of a risk calculation on upfront capital investment and opportunity costs. I.e. a low inflation environment makes individuals more likely to save (play it safe) but also makes companies more likely to play it safe and not over allocate capital for supply. With higher inflation it also incentivizes companies to play less safe and buy more supply chain. Best example, as wage inflation occurs it incentivizes companies to invest and buy robots to make more parts of their burgers. But this is true for all input costs to making burgers. If tomatoes go up, buy tomato farms to reduce their costs. Here is an example of this from Costco: https://youtu.be/MSvCK_xH84s https://youtu.be/MSvCK_xH84s I don’t think this alleviates all of your concerns (and I’m not trying to, I agree with a bunch of them) but just do take into account Accelerating Automation in your calculations about the economy.
ephbit 5y ago
> I think when people claim "its more complicated", they are trying to get around inconvenient truths and basic axioms. Absolutely. Many people appear to habitually deny the existence of zero-sum-games, when in reality they are pervasive. They're just complex and can't easily be be recognized in the chaos of endless interconnections of society.
- jameshart 5y ago
  I think if your model of the economy assumes it amounts to a zero sum game you have definitely missed something. As time passes, human beings capture energy and use it to do work, and - against all thermodynamic probability - in doing so they locally reverse the inexorable entropy gradient of the universe and create value, by arranging atoms in useful structures, constructing useful or amusing arrangements of information, or transporting matter or information from one place to another where they might be more useful. This means that the world tomorrow is a little bit better, in some ways, than today. It contains a bit more utility. And we keep making more people and finding more useful ways for them to spend their time and our collective efforts make it look like that trend of arranging matter and data into ever more useful forms will continue into the future. (Of course, we do need to consider that this growth trajectory does rather depend on us not screwing up and breaking the systems that sustain us and enable us to continue surviving and thriving, so please don’t take this as a naive assumption that infinite growth without consequences is just inevitable) But basically, if there’s always more work to do, and more value to create, and more benefits to distribute, every day… … surely any model that is based on a static pie that can only be cut up so many ways is in flat denial of reality, and falls at the first hurdle.
  - ephbit 5y ago
    > I think if your model of the economy assumes it amounts to a zero sum game you have definitely missed something. What I wrote hardly supports your guess about my model of the economy. I merely claim that zero-sum-games appear more pervasive to me than most people are willing/able to admit/recognize. So no, I don't think "the economy amounts to a zero sum game" is all there is to my model of the economy. But maybe you correctly infer more about my mental model than I myself know about it, who knows. > ... thermodynamic probability ... Since you appear to be familiar with thermodynamics, you'll be able to follow my reasoning easily: Every aspect of society/economy that can be expressed by an equation in a useful way, can be thought of as a zero-sum-phenomenon. Why? Because every ordinary equation can be restructured as a zero-sum equation. Example: Y = a * X + b^2 * Z ... can be written as: 0 = a * X + b^2 * Z - Y > ... so please don’t take this as a naive assumption that infinite growth without consequences ... To my mind, the mere combination of "infinite growth" and "without consequences" sounds naive, to be honest. > ... surely any model that is based on a static pie that can only be cut up so many ways is in flat denial of reality, and falls at the first hurdle. Well, I never claimed that the pie that gets cut up - and this methaphor for the economy is ironically equivalent to the term "zero-sum-game" - be static. How the size of the pie develops over time (grow, shrink, remain the same) is completely separate from the question of how the pie gets cut up. The pie always gets cut up, thus there's always at least this very basic zero-sum-game. And there are many more subtle zero-sum-games.

by bko 5y ago

yazaddaruvala 5y ago

> But the marginal cheeseburger being sold is at a higher cost to produce (otherwise it would have been produced to fulfill the original demand). This may have been true at the time of Keynes but this statement of your hasn’t been true for a very long time. Because of Accelerating Automation “Economies of Scale” (i.e. the marginal cost of a cheeseburger goes down as more are made). The reality today is that the extra cheeseburgers are made because of a risk calculation on upfront capital investment and opportunity costs. I.e. a low inflation environment makes individuals more likely to save (play it safe) but also makes companies more likely to play it safe and not over allocate capital for supply. With higher inflation it also incentivizes companies to play less safe and buy more supply chain. Best example, as wage inflation occurs it incentivizes companies to invest and buy robots to make more parts of their burgers. But this is true for all input costs to making burgers. If tomatoes go up, buy tomato farms to reduce their costs. Here is an example of this from Costco: https://youtu.be/MSvCK_xH84s https://youtu.be/MSvCK_xH84s I don’t think this alleviates all of your concerns (and I’m not trying to, I agree with a bunch of them) but just do take into account Accelerating Automation in your calculations about the economy.

ephbit 5y ago

> I think when people claim "its more complicated", they are trying to get around inconvenient truths and basic axioms. Absolutely. Many people appear to habitually deny the existence of zero-sum-games, when in reality they are pervasive. They're just complex and can't easily be be recognized in the chaos of endless interconnections of society.

jameshart 5y ago
I think if your model of the economy assumes it amounts to a zero sum game you have definitely missed something. As time passes, human beings capture energy and use it to do work, and - against all thermodynamic probability - in doing so they locally reverse the inexorable entropy gradient of the universe and create value, by arranging atoms in useful structures, constructing useful or amusing arrangements of information, or transporting matter or information from one place to another where they might be more useful. This means that the world tomorrow is a little bit better, in some ways, than today. It contains a bit more utility. And we keep making more people and finding more useful ways for them to spend their time and our collective efforts make it look like that trend of arranging matter and data into ever more useful forms will continue into the future. (Of course, we do need to consider that this growth trajectory does rather depend on us not screwing up and breaking the systems that sustain us and enable us to continue surviving and thriving, so please don’t take this as a naive assumption that infinite growth without consequences is just inevitable) But basically, if there’s always more work to do, and more value to create, and more benefits to distribute, every day… … surely any model that is based on a static pie that can only be cut up so many ways is in flat denial of reality, and falls at the first hurdle.
- ephbit 5y ago
  > I think if your model of the economy assumes it amounts to a zero sum game you have definitely missed something. What I wrote hardly supports your guess about my model of the economy. I merely claim that zero-sum-games appear more pervasive to me than most people are willing/able to admit/recognize. So no, I don't think "the economy amounts to a zero sum game" is all there is to my model of the economy. But maybe you correctly infer more about my mental model than I myself know about it, who knows. > ... thermodynamic probability ... Since you appear to be familiar with thermodynamics, you'll be able to follow my reasoning easily: Every aspect of society/economy that can be expressed by an equation in a useful way, can be thought of as a zero-sum-phenomenon. Why? Because every ordinary equation can be restructured as a zero-sum equation. Example: Y = a * X + b^2 * Z ... can be written as: 0 = a * X + b^2 * Z - Y > ... so please don’t take this as a naive assumption that infinite growth without consequences ... To my mind, the mere combination of "infinite growth" and "without consequences" sounds naive, to be honest. > ... surely any model that is based on a static pie that can only be cut up so many ways is in flat denial of reality, and falls at the first hurdle. Well, I never claimed that the pie that gets cut up - and this methaphor for the economy is ironically equivalent to the term "zero-sum-game" - be static. How the size of the pie develops over time (grow, shrink, remain the same) is completely separate from the question of how the pie gets cut up. The pie always gets cut up, thus there's always at least this very basic zero-sum-game. And there are many more subtle zero-sum-games.