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The era of reduced expectations

J

josephkk

Well - I'd like to correct your anti-Obama screed just a tad. The U.S.
Congress are the ones who are fiddling while the rest of the United
States suffers.

Get it right.

Ahem, the conductor (president) calls the tunes and sets the tempo, the
orchestra (congress) plays the tunes. Get it?

?-)

Of course it isn't really that lopsided either way, but the base is
president / conductor points the direction.
 
B

Bill Sloman

Ahem, the conductor (president) calls the tunes and sets the tempo, the
orchestra (congress) plays the tunes.  Get it?

?-)

Of course it isn't really that lopsided either way, but the base is
president / conductor points the direction.

And at the moment the Republican majority in congress wants to play a
completely different tune. The president would like to conduct, but
the first violin has other ideas.
 
Most people barely work for enough to cover expenses.

??? (That's too ambiguous to understand.)

Few people will work extra if there's no profit in it.
Sure it does. If you make stuff nobody wants, it
goes in the landfill.

I really don't understand what you're talking about--you can't
landfill something unless it was produced first. Yes, the landfill is
where a great deal of new stuff goes--just look at Obama's "green
jobs" stuff.

That's a separate question from what is and is not successful.

Creating products, I tried asking customers over and over, but they
never had any idea what they wanted or what was possible. So, I made
my best guess, we built it, and customers lined up. That is, there
was no demand until after the thing was well under way, as details
leaked.


James Arthur
 
L

Les Cargill

??? (That's too ambiguous to understand.)

What people are paid barely covers expenses, in general.
Few people will work extra if there's no profit in it.

Savings rates have been quite low until the last few years. That means
wages aren't exactly high. There's no "reward" in the majority of
cases.

I'm not quite as quick to blame people for that as some. There are
a lot of conditions that have to be met for savings rates to be
up.
I really don't understand what you're talking about--you can't
landfill something unless it was produced first.

I mean that in transfers of goods and services through markets,
consumption is the independent variable. I don't mean "comes
first" in time/temporal terms.

The problem with discussing it is that people don't always independently
know up front what they want. The process of establishing demand is
a bit complex - as you note.
Yes, the landfill is
where a great deal of new stuff goes--just look at Obama's "green
jobs" stuff.

That's a separate question from what is and is not successful.

Creating products, I tried asking customers over and over, but they
never had any idea what they wanted or what was possible.

Right. They don't know it until they see it. That's not saying that
supply leads demand. There's sometimes a bootstrap
process.
So, I made
my best guess, we built it, and customers lined up. That is, there
was no demand until after the thing was well under way, as details
leaked.

Well, sure, but that's not what I mean either :) Good for you, by the
way. As it turns out, the demand was there but it wasn't known to
anybody.

What I'm talking about is the basic debate that continues over Say's
Law. There are a lot of people who still think that we're overall
supply-constrained, and I hold the opinion that we're not.

When I say "Say's Law", that gets talked about as "supply side
economics" in the popular press. I think it's poorly understood.
There are a lot of cases where something other than supply is the
constraint.
 
What people are paid barely covers expenses, in general.

That simply means that people's "expenses" are too high (buy less
crap) or they need to work harder (make more money). Both are within
their power.
Savings rates have been quite low until the last few years. That means
wages aren't exactly high. There's no "reward" in the majority of
cases.

No, it means nothing of the kind. It means that their priority is/was
(I'm not convinced there is a real change) not savings, rather
consumption. Their "reward" is/was consumption; immediate
gratification.
I'm not quite as quick to blame people for that as some. There are
a lot of conditions that have to be met for savings rates to be
up.

No, there aren't a "lot". Fear explains it all.
I mean that in transfers of goods and services through markets,
consumption is the independent variable. I don't mean "comes
first" in time/temporal terms.

No, demand is the independent variable. Until you create demand there
is no consumption.
The problem with discussing it is that people don't always independently
know up front what they want. The process of establishing demand is
a bit complex - as you note.

Which is where risk comes into the equation. You have to make demand.
Sometimes it works.
Right. They don't know it until they see it. That's not saying that
supply leads demand. There's sometimes a bootstrap
process.

No, demand *has* to come first. Demand can't be there until the widget
is, or at least the promise of the widget. That comes *after* the
investment part.
Well, sure, but that's not what I mean either :) Good for you, by the
way. As it turns out, the demand was there but it wasn't known to
anybody.

That's just silly. There can be no demand for what doesn't exist,
even in someone's mind.
What I'm talking about is the basic debate that continues over Say's
Law. There are a lot of people who still think that we're overall
supply-constrained, and I hold the opinion that we're not.

Tell that to the gold traders.
When I say "Say's Law", that gets talked about as "supply side
economics" in the popular press. I think it's poorly understood.
There are a lot of cases where something other than supply is the
constraint.

No, I've found there is no shortage of weeds in the spring but they
have little economic value.
 
Right. Usually expenses rise to meet or exceed income. This happens at all
levels of income.

Right, and governments. As a younger man, I noticed that yeast do the
same thing.

Gubmint, with the exception that unrestricted govt has no natural
limit--it just demands more.

I'm reading a book from 1850's France, lamenting the same problems,
the same hope-and-change, the same arguments that redistribution makes
more. It could've been written today. Bastiat, the economist /
statesman author noted that the natural end to the empty promises
(high benefits, low taxes) is revolution, which in fact happened,
shortly thereafter (but not before he himself perished).

James
 
B

Bill Sloman

The only time it happened to my wife and me was when were getting
settled into a new house. We'd spend everything we had for a year or
two, then get back to being too busy working to spend the money as
fast as it came in.
Right, and governments.  As a younger man, I noticed that yeast do the
same thing.

Yeasts don't have much sense. Governments have electorates, which tend
to impose a sense of proportion.
Gubmint, with the exception that unrestricted govt has no natural
limit--it just demands more.

But there's no such thing as an unrestricted government, so James
Arthur is busy frightening himself with a monster of his own
invention.
I'm reading a book from 1850's France, lamenting the same problems,
the same hope-and-change, the same arguments that redistribution makes
more.  It could've been written today.

But probably wouldn't have been. Bastiat's political environment
wasn't exactly modern and the boogeymen that frightened him aren't
really the same as the ones that frighten James Arthur.
Bastiat, the economist /
statesman author noted that the natural end to the empty promises
(high benefits, low taxes) is revolution, which in fact happened,
shortly thereafter (but not before he himself perished).

Actually, the revolution that threw out the Orleans monarchy and
established the Republic happened in 1848, and Bastiat died in 1850,
shortly before Louis Napoleon seized power in a coup d'etat, which
isn't actually a revolution - he'd been president of the Republic
before he made himself Emperor

The actual revolution displaced a decidedly reactionary bunch of
nitwits with the predictable uneasy combination of revolutionaries and
hold-overs from the more liberal wing of the previous regime.

http://en.wikipedia.org/wiki/French_Revolution_of_1848

http://en.wikipedia.org/wiki/Napoleon_III

Your history is as off the wall as your economics.
 
Right, and governments. As a younger man, I noticed that yeast do the
same thing.

Perfect parallel. Yeast is only limited by its food. Government must
be starved the same way.
Gubmint, with the exception that unrestricted govt has no natural
limit--it just demands more.

The people must starve it but why bother if it's only OPM. *THE*
reason that *everyone* must pay taxes.
I'm reading a book from 1850's France, lamenting the same problems,
the same hope-and-change, the same arguments that redistribution makes
more. It could've been written today. Bastiat, the economist /
statesman author noted that the natural end to the empty promises
(high benefits, low taxes) is revolution, which in fact happened,
shortly thereafter (but not before he himself perished).

But it'll be different this time...
 
L

Les Cargill

That simply means that people's "expenses" are too high (buy less
crap) or they need to work harder (make more money). Both are within
their power.

You assume it is. I don't.
No, it means nothing of the kind. It means that their priority is/was
(I'm not convinced there is a real change) not savings, rather
consumption. Their "reward" is/was consumption; immediate
gratification.

That is far too simple a model. We now see Gen Y not marrying,
not having kids, mostly for economic reasons. Somebody making
$40k can probably about feed,clothe and house themselves and that's
about all, unless they're in a place with low cost
of living.

I got to calibrate that working remote contract in '10, and
I pretty much know I can do it on (much) less, but most
people don't seem to be able to. It's just not credible
for me to say *everybody* is a profligate spender.
No, there aren't a "lot". Fear explains it all.

Heh. There's that.

No, demand *has* to come first. Demand can't be there until the widget
is, or at least the promise of the widget. That comes *after* the
investment part.


That's just silly. There can be no demand for what doesn't exist,
even in someone's mind.

The axes we're talking about are basically
supply and demand, and there's no "time" axis there. Demand
can affect supply, but supply can only very rarely affect demand.
Tell that to the gold traders.

I'd tell 'em "good luck with that."
 
L

Les Cargill

John said:
Right. Usually expenses rise to meet or exceed income. This happens at all
levels of income.

But somebody close to median wages doesn't have a whole lot of things to
do without, really. I'm not clucking in sympathy - it's more of
a matter of them not being people you can expect a lot of future
consumption from. Since they're the biggest lot in the economy,
we're liable to see dreary times for a long time.
 
You assume it is. I don't.

Worse, you assume it isn't. It is in fact is within the power of 99%
of Americans to both spend less and make more. The fact is that well
over half piss away more than they *can* make. BTW, I can piss away
more than my share, too, but I can make a bunch more.
That is far too simple a model. We now see Gen Y not marrying,
not having kids, mostly for economic reasons.

Because living in mom's basement, while married, is a bummer. Living
in mom's basement isn't so bad, though. They think it beats working
for a living, anyway.
Somebody making
$40k can probably about feed,clothe and house themselves and that's
about all, unless they're in a place with low cost
of living.

So you admit that you agree with me. Nice. The problem is that they
demand more; the 70" TV, and every game for their game console. hey,
living in mom's basement is boring without every shoot-em-up made.
I got to calibrate that working remote contract in '10, and
I pretty much know I can do it on (much) less, but most
people don't seem to be able to. It's just not credible
for me to say *everybody* is a profligate spender.

Geez, all you have to do is look at the *stuff* going out the door at
WallyWorld and how it's paid for.
Heh. There's that.



The axes we're talking about are basically
supply and demand, and there's no "time" axis there. Demand
can affect supply, but supply can only very rarely affect demand.

Nonsense. There certainly is time between investment and profit and
between earning and spending. Economics is all about time. If you
take time out of physics it screws it up pretty badly, too.
I'd tell 'em "good luck with that."

You're the one that believes there are no constraints on supply.
 
L

Les Cargill

Perfect parallel. Yeast is only limited by its food. Government must
be starved the same way.

Government makes its own "food", though. Out of thin air... and
we're back to the start of the circle :)
The people must starve it but why bother if it's only OPM. *THE*
reason that *everyone* must pay taxes.

*THE* reason we have an income tax is because FDR wanted it that way.
Prior to that, taxes were mostly hidden - excise, tariffs, what not.

.... more of a coup, really...
But it'll be different this time...

It's been quite different the last few times, really.
 
Government makes its own "food", though. Out of thin air... and
we're back to the start of the circle :)

History has already shown that it can only feed on itself for so long
before it dies a horrible death.
*THE* reason we have an income tax is because FDR wanted it that way.
Prior to that, taxes were mostly hidden - excise, tariffs, what not.

Certainly. FDR, in another life, would have been Stalin, as would
(will?) Obama.
... more of a coup, really...


It's been quite different the last few times, really.

No, the result is always the same.
 
But somebody close to median wages doesn't have a whole lot of things to
do without, really. I'm not clucking in sympathy - it's more of
a matter of them not being people you can expect a lot of future
consumption from. Since they're the biggest lot in the economy,
we're liable to see dreary times for a long time.

Nonsense. The "poor" have cars, microwave ovens, 60" televisions,
take vacations, and many things our parents couldn't afford.
 
B

Bill Sloman

History has already shown that it can only feed on itself for so long
before it dies a horrible death.



Certainly.  FDR, in another life, would have been Stalin, as would
(will?) Obama.

Stalin started off his revolutionary career robbing banks.

http://en.wikipedia.org/wiki/Early_life_of_Joseph_Stalin

Neither FDR or Obama started their careers in a way that suggests that
they might have/have had a psychopathic personality disorder.

Krw is a bit to ignorant to be aware of this small but significant
difference.

James Arthur was comically ignorant - the revolution happened in 1848,
while Bastiat was still around, and he was in fact elected to the
national legislative assembly after the 1848 revolution, and it was
Louis Napoleon's 1851 coup d'etat that took place after Bastiat's
death,
No, the result is always the same.

Not exactly. The current French constitution was designed by Charles
De Gaulle to suit Charles de Gaulle, but he was no Stalin, if no FDR
either, and it worked well enough to let the electorate reject Charles
de Gaullle when he'd done his job, and seems to have been working
adequately ever since. The US does need a new constitution, but the
1948 German model might be a better choice.
 
L

Les Cargill

Worse, you assume it isn't. It is in fact is within the power of 99%
of Americans to both spend less and make more. The fact is that well
over half piss away more than they *can* make. BTW, I can piss away
more than my share, too, but I can make a bunch more.

For better or for worse, people with kids just can't control
costs. the inference from that is rather grim.

Single people or married-no-kids have less of an excuse.

Because living in mom's basement, while married, is a bummer. Living
in mom's basement isn't so bad, though. They think it beats working
for a living, anyway.

Many live in the basement while working. Can't blame 'em.
So you admit that you agree with me. Nice.

But $40k is about median income.
The problem is that they
demand more; the 70" TV, and every game for their game console.

That racks up a horrifying $4k there, assuming a 70" is
$2k :)
hey,
living in mom's basement is boring without every shoot-em-up made.


Geez, all you have to do is look at the *stuff* going out the door at
WallyWorld and how it's paid for.

Yeah, there's that.

Nonsense. There certainly is time between investment and profit and
between earning and spending. Economics is all about time. If you
take time out of physics it screws it up pretty badly, too.


You're the one that believes there are no constraints on supply.

I'm assuming significant substitution because that's generally what
happens. Gold has no substitute; that's why people think it's valuable.
 
L

Les Cargill

Nonsense. The "poor" have cars, microwave ovens, 60" televisions,
take vacations, and many things our parents couldn't afford.

A microwave oven, used car, TV cost *much much less* now. The microwave
is a net cost savings; if you use it right, you can spend a lot less on
food.

but yes- in absolute terms, the poor now live better than relatively
wealthy people fifty years ago.
 
J

Jasen Betts

Do you think people all over the world watched that show, or even
remember that fact?

As a child in New Zealand, I watched reruns of "Bonanza" on saturdays,
I seem to recall seeing references to it in English television too.
 
J

josephkk

That's just silly. There can be no demand for what doesn't exist,
even in someone's mind.

Really? How about redemption (especially without any effort on the
redemee's part)? And what do churches sell?
Tell that to the gold traders.


No, I've found there is no shortage of weeds in the spring but they
have little economic value.

Wonderful. A beautiful example of just one of the problems with Say's
"law".

?-)
 
P

P E Schoen

"Les Cargill" wrote in message
A microwave oven, used car, TV cost *much much less* now. The
microwave is a net cost savings; if you use it right, you can spend
a lot less on food.
but yes- in absolute terms, the poor now live better than relatively
wealthy people fifty years ago.

A big problem is that we increasingly measure our wealth and welfare in
terms of material possessions and appearances, which usually involve
superfluous and unnecessary things that people are convinced they need for
happiness and success. This is largely due to the effectiveness of
advertising and peer pressure, which is often reinforced with promises of
sexual gratification, which of course appeals strongly to adolescents as
well as aging baby boomers going through late mid-life crises.

I know someone who works in truly poor neighborhoods in the Baltimore inner
city, and she knows people who really struggle to get by on income levels
that I might find perfectly adequate. As she puts it, some of these people
have poor problem solving skills, so they cannot avail themselves of simple
ways to reduce costs, or avoid getting caught under untenable mountains of
debt. They have little sense of how purchasing items on credit will result
in financial difficulties in the future, and they do not know how to
purchase and prepare inexpensive yet highly nutritious foods, in large
quantities, that can be easily stored, such as brown rice and dried beans.
Also, many of the bargains we are used to at large suburban supermarkets and
big lots stores are not as easily available to them at neighborhood grocery
stores.

With a paradigm shift from individualism and isolationism, to cooperation
and sharing of resources, it is possible to live comfortably and probably
healthier and happier. Much of the deplorable conditions and frustration
people complain about is because of their obsession with conspicuous
consumption, and electronic entertainment and communications which have
replaced normal human interactions. People have become slaves to the
technology which was supposed to have reduced our need to work so hard, and
has fostered isolation and dependency on frivolous things. Such conditions
also spawn mental illness and road rage and lack of civility, morality, and
ethics, which result in criminal behavior and need for extra security and
self-protection.

Paul
www.newkoinonia.com
 
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