5 ms·

I'm intrigued by your comment that you have an advanced degree in economics. I don't, but it seems obvious to me that you're missing something (I'm happy to be

by leot 15y ago

I'm intrigued by your comment that you have an advanced degree in economics. I don't, but it seems obvious to me that you're missing something (I'm happy to be corrected here!): the problem isn't the lack of consumers so much as a lack of incentive to produce. If everyone becomes an entrepreneur, compelled to be stingy and just do productive things for the fun of it, then they're still being productive, and the world is still getting useful stuff. But, it seems your concern is that if everyone just does the work they'd like to do then there will be a misallocation of labor: certain things that need to get done won't get done.[1] Is this really true? Are there well-organized economies that are stagnating while people are engaged in their own independently productive pursuits? Is Japan's economy stagnating because they consume too little or because they are working too little? [1] An immediate counter-argument here is that people are likely to be more productive when they love their work.

ahsanhilal 15y ago
Actually that is NOT at all what my argument is. My argument is that people can produce as much as they want, but you still need someone to consume your product. Just being productive gives you only the supply side, but what about demand, why make would make something when people do not demand it. Remember PG's rule: Make something that people want. Want is demand. You cannot make things without taken into contention who would consume them and by how much. A business is based on how many people actually USE what it makes, and are ready to pay for it.
- leot 15y ago
  > but you still need someone to consume your product Do we? We're not trying to make a lot of money, just enough to get by. And we're talking about an entire economy here, not about the profitability of an individual business. The whole point is that people in this model don't really care about how much money they're making (or, put another way, they place a very high value on their time). The question is whether there would be something fundamentally wrong with a society in which people spent very little, but were nonetheless productive doing "their own thing".
  - dpatru 15y ago
    . . . they shall beat their swords into plowshares, and their spears into pruninghooks: nation shall not lift up a sword against nation, neither shall they learn war any more. But they shall sit every man under his vine and under his fig tree; and none shall make them afraid . . . --Micah 4:3b-4a
  - icebraining 15y ago
    But you still need "enough to get by", and OP's living might not reach that if everyone was following it. What then?
- dpatru 15y ago
  > You cannot make things without taken into [consideration] who would consume them and by how much. A business is based on how many people actually USE what it makes, and are ready to pay for it. Exactly. Perhaps a good way to view this would be to resrict the definition of supply to be only something that has a demand. So a fisherman that "supplies" rotten fish that nobody wants is not providing a supply, he is just wasting resources. The hard part of economics is always the supply part: how can you increase supply? (Supply defined as what people want.) When productivity is below the subsistence level, increasing supply consists in just producing more food. But as productivity grows beyond the subsistence level, the challenge becomes an informational one: out of all the things you could do, what should you do to increase the total supply the most? A man who is hungry just wants more food, any food. But a man who is sated will only want certain particular kinds of food or maybe something else entirely. This is what prices in a free market are for: they provide information about what the economy needs the most. In an economy of hungry people, any kind of food will sell. But as the population gets sated, prices will tell producers that common-place food is not needed anymore and that they should produce something else.
  - icebraining 15y ago
    You're just redefining terms without adding anything new. Parent's question is: what if people are stated, and like OP, they don't want different kinds of food, or anything else? What if, like OP, they're happy consuming only a small part of what can be produced by all those entrepreneurs?
    - dpatru 15y ago
      The point of trade is to allow each party to get what they want at less cost than they would be able to get independently. If one party wants to sell, but the other party doesn't want to buy, then trade does not happen. This is not bad thing. In fact, per Micah, it's even idyllic: "every man sitting under his vine and under his fig tree." That is, every man having his own food supply so that he is not dependent on someone else. Defining supply to require a corresponding demand makes this explicit. An entrepreneur can't just start producing stuff that nobody wants and then complain that there is no demand for his supply. He's not entitled to force a trade. Examples make this clear. The auto industry has the capacity to produce many more cars than they do. But they will not be heard to complain that people should be forced to buy more cars so that they can produce more. Likewise movie theaters with empty seats are not allowed to force people to buy tickets. By the way, there are industries that partner with government in order to be able to force trade. The money industry is the biggest one. See G. Edward Griffin's presentation of The Creature from Jekyll Island (http://video.google.com/videoplay?docid=6507136891691870450 http://video.google.com/videoplay?docid=6507136891691870450).

by leot 15y ago

ahsanhilal 15y ago

Actually that is NOT at all what my argument is. My argument is that people can produce as much as they want, but you still need someone to consume your product. Just being productive gives you only the supply side, but what about demand, why make would make something when people do not demand it. Remember PG's rule: Make something that people want. Want is demand. You cannot make things without taken into contention who would consume them and by how much. A business is based on how many people actually USE what it makes, and are ready to pay for it.

leot 15y ago
> but you still need someone to consume your product Do we? We're not trying to make a lot of money, just enough to get by. And we're talking about an entire economy here, not about the profitability of an individual business. The whole point is that people in this model don't really care about how much money they're making (or, put another way, they place a very high value on their time). The question is whether there would be something fundamentally wrong with a society in which people spent very little, but were nonetheless productive doing "their own thing".
- dpatru 15y ago
  . . . they shall beat their swords into plowshares, and their spears into pruninghooks: nation shall not lift up a sword against nation, neither shall they learn war any more. But they shall sit every man under his vine and under his fig tree; and none shall make them afraid . . . --Micah 4:3b-4a
- icebraining 15y ago
  But you still need "enough to get by", and OP's living might not reach that if everyone was following it. What then?
dpatru 15y ago
> You cannot make things without taken into [consideration] who would consume them and by how much. A business is based on how many people actually USE what it makes, and are ready to pay for it. Exactly. Perhaps a good way to view this would be to resrict the definition of supply to be only something that has a demand. So a fisherman that "supplies" rotten fish that nobody wants is not providing a supply, he is just wasting resources. The hard part of economics is always the supply part: how can you increase supply? (Supply defined as what people want.) When productivity is below the subsistence level, increasing supply consists in just producing more food. But as productivity grows beyond the subsistence level, the challenge becomes an informational one: out of all the things you could do, what should you do to increase the total supply the most? A man who is hungry just wants more food, any food. But a man who is sated will only want certain particular kinds of food or maybe something else entirely. This is what prices in a free market are for: they provide information about what the economy needs the most. In an economy of hungry people, any kind of food will sell. But as the population gets sated, prices will tell producers that common-place food is not needed anymore and that they should produce something else.
- icebraining 15y ago
  You're just redefining terms without adding anything new. Parent's question is: what if people are stated, and like OP, they don't want different kinds of food, or anything else? What if, like OP, they're happy consuming only a small part of what can be produced by all those entrepreneurs?
  - dpatru 15y ago
    The point of trade is to allow each party to get what they want at less cost than they would be able to get independently. If one party wants to sell, but the other party doesn't want to buy, then trade does not happen. This is not bad thing. In fact, per Micah, it's even idyllic: "every man sitting under his vine and under his fig tree." That is, every man having his own food supply so that he is not dependent on someone else. Defining supply to require a corresponding demand makes this explicit. An entrepreneur can't just start producing stuff that nobody wants and then complain that there is no demand for his supply. He's not entitled to force a trade. Examples make this clear. The auto industry has the capacity to produce many more cars than they do. But they will not be heard to complain that people should be forced to buy more cars so that they can produce more. Likewise movie theaters with empty seats are not allowed to force people to buy tickets. By the way, there are industries that partner with government in order to be able to force trade. The money industry is the biggest one. See G. Edward Griffin's presentation of The Creature from Jekyll Island (http://video.google.com/videoplay?docid=6507136891691870450 http://video.google.com/videoplay?docid=6507136891691870450).