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I would be with you if goods production somehow halted and we weren't able to get our hand on those very goods: less workers->less production->scarcity->unsatis

I would be with you if goods production somehow halted and we weren't able to get our hand on those very goods: less workers->less production->scarcity->unsatisfied demand->soaring prices that simply isn't happening. It seems to me that organizations that previously employed tens thousands of workers are now doing just fine with way less than that.

rayiner 13y ago
I'm not saying that there aren't efficiency improvements happening. The economy is clearly producing as much as it did before with fewer workers. But efficiency improvements reduce production costs, which, in a competitive market, tends to be reflected as reduced prices. But when prices go down, quantity demanded goes up, so efficiency improvements tend to result in more overall production. I.e. the fact that companies need fewer workers per unit produced does not mean that they need fewer workers overall. We're not seeing that in the existing economy. Growth is non-existent, so companies are using efficiency improvements to cut workforces instead of using efficiency improvements to expand production while maintaining or growing the size of their workforces.
- nostrademons 13y ago
  Part of this is because of wealth distribution, and part of it is because of a lack of imagination. When businesses use productivity enhancements to cut labor requirements without increasing price or output, then all the money saved by this accumulates to the business. That results in large cash surpluses, which we're seeing right now (Apple has $40B in cash and short-term investments). In order to capture and redistribute that cash, the rest of the population needs to produce products that appeal to the firms who have the cash - but there's relatively little of value that an individual or small business owner can supply to a giant company like Apple. In theory, cash is non-productive and so companies should have an incentive to re-invest this money into new products to make more cash. However, that requires that they see market opportunities that have a chance of succeeding. Since consumers have so little cash, that's a tough chore right now; the bar for a new consumer product that people will actually spend money on is quite high. And so companies never make the investments that generate employment that give people cash to spend on the products the companies are investing in. Catch-22. I think that the current seed-funding boom is a symptom of this. Cash piles up in the financial markets, some of it ends up with venture capitalists, they spray it across many little proof-of-concept ventures to figure out what the next big thing is. And ultimately this is a very good thing, because it's typically fear of irrelevancy that makes big companies spend money on investments anyway. It takes a long time to work its way out, though, because you can't just wave a magic wand and have a hit product.
  - jimbokun 13y ago
    "In order to capture and redistribute that cash, the rest of the population needs to produce products that appeal to the firms who have the cash - but there's relatively little of value that an individual or small business owner can supply to a giant company like Apple." If Apple has $40B in cash and no productive way to invest it at an above market return, the only sensible course of action is to distribute it all as a dividend.
- yummyfajitas 13y ago
  Growth is non-existent... Growth is the same as it was before the recession (about 2.5%). http://research.stlouisfed.org/fred2/series/GDPC1 http://research.stlouisfed.org/fred2/series/GDPC1 Efficiency improvements have resulted in more overall production.

rayiner 13y ago

I'm not saying that there aren't efficiency improvements happening. The economy is clearly producing as much as it did before with fewer workers. But efficiency improvements reduce production costs, which, in a competitive market, tends to be reflected as reduced prices. But when prices go down, quantity demanded goes up, so efficiency improvements tend to result in more overall production. I.e. the fact that companies need fewer workers per unit produced does not mean that they need fewer workers overall. We're not seeing that in the existing economy. Growth is non-existent, so companies are using efficiency improvements to cut workforces instead of using efficiency improvements to expand production while maintaining or growing the size of their workforces.

nostrademons 13y ago
Part of this is because of wealth distribution, and part of it is because of a lack of imagination. When businesses use productivity enhancements to cut labor requirements without increasing price or output, then all the money saved by this accumulates to the business. That results in large cash surpluses, which we're seeing right now (Apple has $40B in cash and short-term investments). In order to capture and redistribute that cash, the rest of the population needs to produce products that appeal to the firms who have the cash - but there's relatively little of value that an individual or small business owner can supply to a giant company like Apple. In theory, cash is non-productive and so companies should have an incentive to re-invest this money into new products to make more cash. However, that requires that they see market opportunities that have a chance of succeeding. Since consumers have so little cash, that's a tough chore right now; the bar for a new consumer product that people will actually spend money on is quite high. And so companies never make the investments that generate employment that give people cash to spend on the products the companies are investing in. Catch-22. I think that the current seed-funding boom is a symptom of this. Cash piles up in the financial markets, some of it ends up with venture capitalists, they spray it across many little proof-of-concept ventures to figure out what the next big thing is. And ultimately this is a very good thing, because it's typically fear of irrelevancy that makes big companies spend money on investments anyway. It takes a long time to work its way out, though, because you can't just wave a magic wand and have a hit product.
- jimbokun 13y ago
  "In order to capture and redistribute that cash, the rest of the population needs to produce products that appeal to the firms who have the cash - but there's relatively little of value that an individual or small business owner can supply to a giant company like Apple." If Apple has $40B in cash and no productive way to invest it at an above market return, the only sensible course of action is to distribute it all as a dividend.
yummyfajitas 13y ago
Growth is non-existent... Growth is the same as it was before the recession (about 2.5%). http://research.stlouisfed.org/fred2/series/GDPC1 http://research.stlouisfed.org/fred2/series/GDPC1 Efficiency improvements have resulted in more overall production.