How severe is overpopulation?

The world could support several times more people than it's already got, if they all lived at a third world standard, whereas without further technological development it can only support the number of people currently living on it at the present standards for a very limited time.

Question since I don't know exactly what kind of study took place to get that. How do things like overfishing and livestock populations factor into that?

1. What is the link between minimum wages and unemployment levels?

2. Which theorem promotes greater efficiency: spontaneous order and the invisible hand, or guarenteed property/exhange/contract and the second best theorem: which is more realistic?

3. does the general equilibrium model have any validity as a tool for evaluating the market as a efficiency-promoting mechanism?

4. which produces more wealth in an economy: government or the private sector? which consumes more wealth?

5. is competitve advantage more or less importants than comparative advantage?

Wow, those are tough. I'll give it a shot.

1. I'm not sure, but I imagine that it depends on a number of factors.

2. In the theoretical case where everyone is omniscient and there are no transaction costs, it doesn't matter. In real life, it's impossible to have a functioning economy without some kind of property rights.

3. No

4. How do you define the amount of wealth produced by the government or the private sector? They're interdependent.

5. Important to what?

edited 15th Jan '11 8:18:35 PM by storyyeller

OK, lest's see how you did

1. That is the correct answer. That is not, however, the answer that appears in economics textbooks. economics textbooks assert that "minimum wage" = "unemployment", with little or no supporting evidence

2. True, although you ignored the second best theorem. that's okay, you've probably not heard about it. second best says that if you change one thing (modify the market), you can't get perfect efficiency (nowhere near perfect), so the only way to increase efficiency, is to interfere a few more times to correct the market. less a justification for interventionism, and more a "the sky is blue" observation obout perfect competition vs real world

3. correct

4. It was a trick question. they produce the same amount of wealth: none. People produce wealth, not government or companies. companies are a nexus of contracts with limited membership, and states are nubs of transactions with universal membership (and associated collective scale benefits)

5. with regards to trade, was the question. Ricardo (the trade guy) talked about comparative advantage. pro-globalisation twits talk about competitive advantage (how will we compete with lower-wage countries for the same jobs. Easy! cut our wages, and environmental protection laws, and...). comparative advantage is important for economies. competitive advantage is only important for companies.

edited 17th Jan '11 5:01:15 PM by pathfinder

I thought it was machines that produced most wealth. Since wealth is tied to products.

deboss, machines are like levers (laevers are simple machines, right?), they act as multipliers of human activity

I suggest that we all switch to a diet of insects and human flesh.

Unless it's fully automated. Wealth comes from the production, humans are just the tools it's accomplished with.

and jobs are good for the economy, but bad for society

I wonder how much overpopulation/sustainability would be affected if meat consumption in the more developed countries was cut 90% and 90% of all the living meat livestock were destroyed and all the resources devoted to those animals were put to other uses, such as growing crops to feed humans directly (giving the system a while to stabilize; such radical transitions make huge messes that take a fair amount of time to straighten out). Raising large animals for food, while delicious, is extremely inefficient and consumes an enormous amount of natural resources for relatively little output. I love beef, but I think my great-nephews and -nieces (no children for me) will not have much access to it, and what red meat they will get will probably be exorbitantly expensive by modern standards.

edited 17th Jan '11 11:45:27 PM by WoolieWool

From a strict survival standpoint it would be a good deal more efficient. One must consider overall diet though — for instance, my health suffers quite a bit if I don't get enough meat.

At the same time, we could generally do with a less meat-heavy market, both from health and sustainability standpoints.

edited 17th Jan '11 11:52:04 PM by Pykrete

A lot of the nutrients in meat not present in many other foods can be synthesized in some way, and great strides are being made towards the creation of nutritionally and gastronomically acceptable substitutes for various kinds of meat. I'd sure miss cheeseburgers though.

given the amount of grain required to produce the amounts of meat consumed, no one would go hungry if meat consumption was dropped by that much

As I recall, jobs are bad for the economy since it's costs wasted on people rather than production.

@pathfinder: Nobody would go hungry calorie-wise; however even in less developed countries, calorie-wise is not usually the main problem.

Protein and other nutrients are much harder to get then mere calories.

I read in a recent issue of New Scientist that as far as supporting 9 billion people goes, there are no technological barriers to doing so. The barriers which do exist are political and economic.

Unfortunately, that's all I can remember from the article and I don't have a copy of the magazine available to look up.

i acknowledge my error in grossly oversimplifying matters.

yes, the major issues are of political economy, and the distribution of resources between competing demands

i also acknowledge that decreasing first world meat consumption would increase global grain availabilty (assuming demand =/= supply)

Well our problem has mostly been politics, not economics per se, though the two are closely related. You know, you look at a country like Sweden, they pollute basically around the same amount as China, but with a GDP per capita and living standard that is one of the highest in the world. There are plenty of ways to reduce resource consumption without compromising our way of life and really, we could focus on increasing productivity, utilise the oceans better or do space exploration where environmental concerns are less prominent (It'll be some time before we would be complaining about radiation poisoning of space if ever).

And just because it is fun, I want to take a crack at answering those questions. My economics education was mostly of the classical/keynesian kinds, and I took quick peeks at Austrian a few times.

1. What is the link between minimum wages and unemployment levels?

2. Which theorem promotes greater efficiency: spontaneous order and the invisible hand, or guarenteed property/exhange/contract and the second best theorem: which is more realistic?

3. does the general equilibrium model have any validity as a tool for evaluating the market as a efficiency-promoting mechanism?

4. which produces more wealth in an economy: government or the private sector? which consumes more wealth?

5. is competitve advantage more or less importants than comparative advantage?

1) Minimum wage is usually said to increase unemployment. But most textbooks put major caveats to that concept by looking at real world studies, at least mine did. The general answer is that, it is isn't as clear cut as that. If the market were "pure", then that is what would happen but the introduction of minimum wage does a lot of things in society which then has all these side effects.

The issue is that, with menial jobs where you get the state minimum wage, unemployment numbers shift because if companies hire less of these people, the economy doesn't care and simply supplies less labour anyway (thus unemployment doesn't change). The majority of these jobs are held by young people and they take the brunt of "will not work if there are no jobs", thus for people who actually live off it, they benefit and people who just wanted excess cash will just abandon the idea and focus on academics (which in turn increases productivity, statistically speaking).

With things such as unions, the minimum wage does appear to have a depressive effect on labour supply but the key thing to note is that no industry lives in a vacuum. If the electricians union restricts members to keep wages above market rate, people just go to get different jobs, and those professions may experience a price drop.

2) I'm not entirely sure what you mean by "guaranteed property/exchange/contract", are you saying that all market exchanges are backed by the legal entity known as the government in order to ensure the market is fair?

In any case, with regards to the invisible hand, economics these days teaches several models. You can't just blanket apply one model to all industries because each industry is different. I'll give two examples of things that don't follow the normal classical model you are probably thinking of (a curve for demand, a curve for supply, both of which are monotonically increasing/decreasing and they meet at one point to get you the market price)

Natural Monopoly: This is the case where you have to build expensive infrastructure, where splitting it up between corporations is either cost-ineffective or impossible. This naturally leads to one company owning all the infrastructure and therefore setting a monopoly price. The optimum solution is state control (as for what price you want to set is up to the people but generally, you want to go with the lowest possible price while having a small amount of profit to pay for expanding infrastructure).

The best example is the electric grid. It is completely idiotic to privatise this. What the heck are you going to do - build fifteen separate grids? Enron is a great real world example of what happens when you privatise the grid. California has yet to repair the damage that the company did and you still have rolling blackouts there.

Inelastic Demand - This is where the demand for a product can't change, up or down, but supply can be volatile in the short term, year to year. This is a model used for agriculture, where farm output is variable but demand is always the same (people don't start eating more/less food magically, as an aggregate). So generally, this argues for price controls, production quotas or subsidies. Or it argues for banking food in case of future shortages. In any case, it does show that government control is necessary if you want a stable society (a sudden food shortage isn't going to be pretty). It does not, exactly, tell you what you should do but just that if you do nothing, shit will hit the fan.

3) Short answer: no.

The model is talking about being able to set a price without the cost of a government agency doing it that has automatic controls to bump it up or down without any added cost. That is, it is efficient from the point of view of government cost but not in terms of resource use. I think my answer for 2 talks more about social benefit/efficiency as well.

4) Economics doesn't teach you whether one inherently does more wealth generation than the other, in classical or keynesian analysis. Not in any economics I learned.

5) Competitive advantage? I'm not sure this question makes much sense, in that, competitive advantage is a business term, not an economics term.

Comparative advantage deals with one entity being able to produce a good at less opportunity cost for another, therefore justifying trade. Competitive advantage is the business concept that they somehow outperform others in the industry through some magical knowledge they know, which has nothing to do with macro-economics anyway and I don't think you learn it in any economics class. But you know what, maybe they teach it elsewhere but I didn't learn about it.

Well let me look it up and then I'll edit the post.

EDIT: Well I looked it up and I really don't see how one theory is a competitor for another. All comparative advantage says is that one party is going to produce a good at a lower opportunity cost than another. It says nothing about what you should do with that information, most just say that it means you should trade between each other to minimise opportunity costs.

No one is going to say something is more important than the other, that's a business decision.

edited 18th Jan '11 9:31:47 AM by breadloaf

As I recall, jobs are bad for the economy since it's costs wasted on people rather than production

lolwut

Seriously, is this supposed to be a rebuttal to my post or something? What I was saying was that the amount of energy, land, and resources to create meat, especially red meat, is many times more than the amount required to make most other kinds of foods, and the animals must consume vast quantities of food themselves. If the animals are destroyed, the land and resources used to support them could support human beings directly by growing more efficient plant-based foods, and you would be able to support far more people that way.

Not to mention the statement is absurd on its face—you need people working (i.e. jobs) to produce anything, and you need people working (i.e. jobs) for what is produced to be consumed. Not to mention that despite what some people seem to think these days, the purpose of an economy is to benefit the lives of human beings, not produce for the sake of merely producing.

edited 18th Jan '11 9:58:24 AM by WoolieWool

@pathfinder: Nobody would go hungry calorie-wise; however even in less developed countries, calorie-wise is not usually the main problem.

Protein and other nutrients are much harder to get then mere calories.

Some people worldwide are protein deficient, most often due to diets consisting almost entirely of corn mush or similar foods, but protein is not that hard to get in sufficient quantity even on most purely vegetarian diets, and there are other micronutrient deficiencies that are considerably more common. Iodine deficiency, for instance, is the world's leading cause of preventable mental deficiency, affecting about 2 billion people worldwide.

I wasn't talking to you Wool. I was responding to

and jobs are good for the economy, but bad for society

The purpose of an economy is resource distribution, particularly by sending resources toward where it get's the most use. Sending resources to where they get the most use in their varied outputs, primarily products. People are bad at this because robots and other forms of automation and the like because robots are, overall, more efficient allowing more products and results to be produced for the same input, or the same product/result for less input depending on the goal. Since products are the important part of jobs, improving efficiency, frequently by removing the human factor from a production line or service, is about as close as you can get to an intrinsic good.

edited 18th Jan '11 2:36:37 PM by Deboss

@Desertopa: "Protein and other nutrients".

The majority of people who suffer from protein malnutrition worldwide also suffer from calorie malnutrition. Generally speaking it is not much more difficult to get enough protein than to get enough calories, although this is not true of some other nutrients.

Generally speaking it is not much more difficult to get enough protein than to get enough calories, although this is not true of some other nutrients.

protein and other nutrients

Seriously, are you even reading what I write?

I am, but while the "and other nutrients" is correct, the protein part is not. Some nutrients are considerably harder to get than enough calories, but protein isn't one of them. The statement that "even in underdeveloped countries, calorie-wise is usually not the main problem," is misleading, because starvation is one of the most common types of malnutrition, whereas protein malnutrition alone is way down the list.

edited 21st Jan '11 10:15:13 PM by Desertopa