
Why the Massive Wealth of the 1% Could Ruin the Economy - ph0rque
http://www.theatlantic.com/business/archive/2011/10/why-the-massive-wealth-of-the-1-could-ruin-the-economy/247277/
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Adrock
My favorite part:

Ford CEO Henry Ford II and United Automobile Workers president Walter Reuther
are jointly touring a modern auto plant. Ford jokingly jabs at Reuther:
"Walter, how are you going to get these robots to pay UAW dues?" Not missing a
beat, Reuther responds: "Henry, how are you going to get them to buy your
cars?"

~~~
kevin_morrill
That is the essence of the contradiction. We ultimately don't want jobs, we
want the results they create. There is no law written in nature that man must
work 9 to 5 to live.

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kingoftheintern
"High-skill workers, given extra income, may choose to increase their leisure
and savings rather than work extra hours. Meanwhile, low-skill workers lose
their jobs, go on disability, or otherwise drop out of the labor force. Both
groups work less than before, so overall output falls."

This seems to neglect the greater revenue or decreased costs the employer also
enjoys as a result. "Fewer total hours are worked = a less productive economy"
looks transparently wrong.

~~~
stan_rogers
Is there not a demand side to the equation? So costs are reduced essentially
to zero. Who's buying?

~~~
kingoftheintern
Your questions are confusing to me. What's being demanded? Whose costs are
reduced "essentially to zero" and why?

~~~
olefoo
Demand = shorthand for the aggregate demand for goods and services across the
economy as a whole; this includes everything from massages to nuclear
submarines.

costs being reduced = the cost of the production of those goods and services
(much of that cost also shows up as demand e.g. the masseuses massage chair,
or the nuclear hardened wrenches used to assemble submarines.)

If labor costs are entirely removed from the cost of production ( the cost of
production is reduced to the raw materials + power + design of the goods to be
produced ), then in conventional economic thinking, the aggregate demand for
goods and services will also tend to a minimum.

Since almost no goods will be in demand in this new economy, it's unlikely
that there will be any great shift towards employing the labor force that used
to do basic assembly in the production of designs for new goods.

So. Quiz time.

What will happen to the millions of human beings who are not employable in
this new economy?

Will they:

a. quietly dry up into dust and accept being swept into the dustbin of
history?

b. form a chaotic seething, resentful mass of violence and petty crime that
will make every effort to continue feeding themselves even if they are no
longer economically viable entities?

c. form a peaceful agrarian commune on otherwise useless spare real estate and
sell quaint handcrafts to the few lucky humans who happen to be born into the
ownership of mines, powerplants and other assets employed by the new economy?

e. all of the above and some other solutions not mentioned as well?

Your answer should be provided by how you live through the next twenty years;
this exam is final.

~~~
pron
We could just pay a living wage to everyone -- working or not. Those wishing
to earn more would work for the extra pay.

~~~
tankenmate
This looks amazingly like the welfare state that so many hate no?

~~~
pron
Far more than that -- I'm talking about welfare one can quite comfortably live
on. Let's make work a lifestyle choice. If technology allows for that to
happen, perhaps even opponents of the welfare state, who are mostly found in
the US, will come around. I mean, maybe even they will realize that it makes
sense even for the richest person to be only so many times richer than the
common folk.

~~~
rdl
We already basically do this by paying people to provide services (either
directly through government, or indirectly) which are essentially unnecessary
for production. Or by over-staffing government agencies above what is needed
to actually do the work.

This is super common in the middle east. You can make $200-400k/yr doing a
make-work bureaucratic job, provided you're a local.

