
Economic Possibilities for our Grandchildren (1930) [pdf] - jseip
http://www.econ.yale.edu/smith/econ116a/keynes1.pdf
======
neaden
I think the two big problem with Keynes analysis are 1\. He underestimated how
much we wanted stuff vs leisure. We have much bigger homes now, eat more meat,
have computers and television etc. 2\. He underestimated how much work had to
get done that he didn't count. He was from a class that had servants and of
course all the invisible work done by women. Raising a child doesn't take
substantially less person hours today then it did when Keynes wrote this.
Neither does cleaning, since we now expect everything to be cleaner.

~~~
philipkglass
I think that his argument works in the limit case. Above a certain square
footage the work of keeping a larger dwelling outweighs the benefit of having
more space. (I've avoided buying a larger house that I could easily afford
because I didn't want another 1000 square feet to clean and maintain.) Above a
certain consumption level you get uncomfortable and ill from eating more food
instead of additional nutrition/pleasure. Nobody can watch television more
than 24 hours per day.

Or to put it in more concrete terms, look at five different 40 year old males
all living in Los Angeles. One has $100,000 in net worth, the next has $1
million, the next $10 million, the next $100 million, and the last has $1
billion. That's spanning 5 orders of magnitude, but personal consumption goes
up very sub-linearly with increasing wealth. When people near the top of the
wealth pyramid spend a lot they're typically bidding up positional goods to
insane levels (how much for the penthouse with the very best location in
Manhattan?) or spending for _control_ (e.g. as a shareholder in a corporation)
instead of for personal consumption. You can't take a typical middle class
family and scale up all the financial numbers by 100x to get a realistic
picture of how today's wealthy (or the future middle class after a long period
of compounded economic growth) will consume.

~~~
tetraodonpuffer
personal consumption in terms of durable goods probably, but what about in
terms of services / experiences? those seem to be more and more the things
that high net worth individuals go after, and as many religions will tell you
there is really no limit to human desire (and consequently to the money you
are willing to spend to fulfill those desires)

This is how you go from "I'd like to see Europe some day" to "I am going to
have a week to go to Europe once every few years" to "I am flying business
class to Europe for tourism every year" to much later "I own a private jet and
I feel like having those baguettes from that shop for breakfast tomorrow so I
am going to get my personal assistant to fly there and get them for me"

There are always goods available no matter how much money you have, as much as
the quantity of the food you eat is limited by your physiology, the amount of
money it costs is only limited by your imagination.

~~~
philipkglass
_many religions will tell you there is really no limit to human desire_

Yes, and I've heard both environmentalists and economists say that human wants
are infinite. The economists say it in a reassuring tone (don't worry, robots
can't cause unemployment because wants are infinite) while the
environmentalists say it in a despairing way. But I think that religions,
economists, and environmentalists are all exhibiting scope insensitivity
and/or neglecting observable behaviors of people who are far above median
wealth.

Let's compare the person who flies to Paris from New York once per year for
pleasure and someone who sends the assistant on a private jet to fetch
baguettes from Paris every weekend. If the once-per-year person flies on a
fully occupied Airbus A380 that's about 367 liters of jet fuel consumed (~5800
kilometers each way, 3.16L/seat/100 km). If a Gulfstream G550 does the round
trip every weekend that's about 21200 liters of jet fuel consumed per trip or
1,102,400 liters per year (~5800 kilometers each way, G550 max range 12501 km,
G550 max fuel load 18733 kilograms, kerosene specific gravity 0.82, 52
weekends per year).

The richie-rich New Yorker regularly sending a personal jet across the ocean
for fresh baguettes consumes up to 3000 times as much jet fuel as the
comfortably middle class New Yorker who flies commercial to Paris once per
year. That's a big consumption gap. But even this out-there conspicuous
consumption spans only 3 orders of magnitude in fuel use, whereas (see
previous post) it's easy to find _5_ orders of magnitude difference in wealth
in one large city. My conclusion, which I repeat: consumption grows with
wealth but very sub-linearly.

~~~
wolfgke
> Yes, and I've heard both environmentalists and economists say that human
> wants are infinite. The economists say it in a reassuring tone (don't worry,
> robots can't cause unemployment because wants are infinite) while the
> environmentalists say it in a despairing way.

This also shows that appeals to people to reduce the standard of living (for
environmental reasons) will be mostly futile. Thus it would be much better to
decrease the birth rate.

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sien
The NPR Podcast Planet Money did a really good episode on this:

[http://www.npr.org/sections/money/2015/07/24/426017148/episo...](http://www.npr.org/sections/money/2015/07/24/426017148/episode-641-why-
we-work-so-much)

Fun points - Keynes was a rich man who didn't have to work but who effectively
worked himself to death.

The descendants of his siblings work heaps despite also being fairly well off
as well.

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Falkon1313
1\. It's not about luxury stuff. Our homes aren't bigger because we want
bigger homes (except for those wealthy enough to hire architects and design
their own homes). We have to pay for whatever the developers have built in the
area we need at the time we need it. Smaller homes are less available, older,
less efficient, and often need a lot of work.

Things like computers and televisions aren't expensive luxuries, they are
durable commodities with negligible and decreasing costs. You can get a decent
computer that will last for years at an average cost of $75 per year (less if
you don't need a high-end one). That's a fraction of one workweek per year,
even at minimum wage. The real issue is that the cost of living hasn't scaled
with those occasional consumer goods purchases. Housing, healthcare,
utilities, transportation, food, education, etc. are constant necessity
expenses, and costs are increasing in those areas.

2\. This is somewhat true, but primarily in light of the fact that we see it
as a tradeoff - that more time at home / with family hurts our
careers/earning; or more extreme, we're too busy working so we have to hire
people to raise our kids and clean our houses. If we didn't see it in terms of
costs (or opportunity costs), then spending time with family and tidying up
our homes would just be things that we did, rather than work.

If anything, he was overly optimistic in thinking that we could go 100 years
without wars or civil dissensions, and without the powerful few increasing the
cost of living and draining wealth from the masses.

~~~
Kenji
_The real issue is that the cost of living hasn 't scaled with those
occasional consumer goods purchases. Housing, healthcare, utilities,
transportation, food, education, etc. are constant necessity expenses, and
costs are increasing in those areas._

How peculiar, where is the state most involved?? Is it a coincidence?

~~~
pixl97
Well, the state is simply involved in those because they are life and death
matters. If there were suddenly not utilities tomorrow the modern way of life
would disappear.

Food, for example, is one that rapidly decreased in the 1900s due to
automation and rapid advances in farming. This lead to a drastic decrease in
the number of farmers, making all of us more dependent on those few. If
floods, famines, or rapid price swings occurred farmers could easily go out of
business in such numbers that it could lead to food shortages the next year.
This lead to government insurance of crops and price protection on many
commodities. It has been said that food security is national security, and
it's not wrong. If you want people angry, get them hungry.

Separate from that, the listed 'needs' you stated above can be automated in
production, but they aren't easily optimized for use. For example, you can
make a computer that's half the size, use half the materials, runs twice as
fast for half the cost if you keep investing in R&D. But you cannot cut a
humans caloric intake and half and make them more efficient. Education too, is
one of the things that is difficult to measure what 'enough' is. In theory the
more education you get the better. We could probably give out 1930s levels of
education pretty easily, and much less expensive than we do it now. But you
don't need a 30's education, you need to compete in the world of 7 billion
people and computerized everything.

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norea-armozel
Considering how many modern jobs aren't about productive work but busy work I
have to wonder if capitalism dies under an endless stream of meetings and
marketing/financing positions.

~~~
eli_gottlieb
[http://strikemag.org/bullshit-jobs/](http://strikemag.org/bullshit-jobs/)

------
justinlardinois
On Hacker News it's usually courtesy to put the year in the title for older
works.

