The General Economics Thread

All those US indicators: what did we learn this week?:

A look at the connection of how getting severely ill in America can cost a person their home via foreclosure.

The Rentier would prefer not to be euthanized: "The problem is, the liquidity specialists don’t want to go away…. So we get all these arguments that boil down to: Money must be kept scarce so that the private money-sellers can stay in business…"

Geographic mobility has long set the U.S. apart from Europe, and its recent decline has created concerns. A new paper from the IMF suggests that one cause of this decline is a change in the way people respond to regional economic shocks…. Workers have become less likely to leave their states of residence in search of work and more likely to instead leave the labor force…. Declining geographic mobility is seen as yet another worrisome sign of a general decrease in economic dynamism. With labor force participation down more than would be expected following the last recession, the new research suggests these factors may be related…”

NAFTA isn't what stole American jobs, failure to seize on good trade deals and expansions along and resistance to expand welfare programs is what caused it.

In a mature bull market, financial engineering trumps business innovation

The amazingly rapid suburbanization of poverty: “Once upon a time (specifically, the 1990s), the US was making remarkably fast progress against concentrated poverty. During that decade, the number of poor people living in poor neighborhoods fell by 24 percent. That progress has entirely reversed, according to a new report from the Brookings Institution. The share of people living in neighborhoods with 40 percent or higher poverty grew by 76 percent between 2000 and the 2008-12 period. And that concentration is growing in suburban neighborhoods in particular…

edited 5th Aug '14 12:27:56 PM by PotatoesRock

I dislike the rentier article's obiter dictum on robots. Automation of labor will empower capitalists because they'll control the robot capital and no longer need to negotiate with labor. (Note that my solution to that is socialism, not Luddism; automate as you please so long as the profits are distributed to the people.)

Sources say Dollar General is looking to counter-bid Dollar Tree for the purchase of Family Dollar.

So a friend of mine asked me a question.

If we move further and further into automation for things like auto truck drivers and auto taxi drivers and then auto cashiers and what have you. What happens to all these people? What do you do? Theres physically less work in the market than there is for people to actually do.

Now I know that there's some good answer saying that the jobs don't actually disappear and so on and I told him that but I'd like to give him a proper answer.

edited 6th Aug '14 1:37:19 PM by LeGarcon

The jobs do disappear, actually. This is one of the things that has been extensively debated in some economics circles — the idea of technology, specifically capital technology, making labor increasingly obsolete. The answer is to tax the income from said capital technology and use it to provide a guaranteed living standard for everyone regardless of whether they work.

This will increase consumption, guaranteeing a steady supply of jobs for those who do want to work.

edited 6th Aug '14 2:02:31 PM by Fighteer

That's a bit like asking "what happens to all the horse traders after cars go mainstream"? The answer is "they lose their jobs, but other jobs in other areas become available — and everyone has cars now, to boot". Adding automation to make manufacturing cheaper is, generally speaking, an economic positive. Cheaper goods has the effect of increasing demand. More people can afford it, so more people want it, so more people buy it, which benefits everybody all up and down the supply chain (including consumers, as the benefit from the improved quality of life provided by the product). So in the long term, automation is definitely a good thing.

In the short term, though, the people that used to do the work that's now being done by robots have lost their jobs. If such automation is happening all throughout their industry, there may not be any more of the jobs that they've been doing. In terms of pure market forces, they are, unfortunately, screwed. That's why it's important to have social welfare programs, like unemployment benefits and retraining programs, that ease the blow for individuals (which, incidentally, eases the blow for the economy as you suddenly have a high unemployment rate and all the unpleasantness that entails).

The other issue is what the replacement jobs actually are. Sure, if you get fired from a factory job because of automation, you could always get a part-time job at Wendy's. Unfortunately, you would most likely get paid way less. Those things that say a ton of new jobs have been added to the market are rather misleading since they equate a high paying CEO job with a part time burger flipping job and they don't bother to break down what the new jobs actually are.

Hell, some of them include volunteer positions in the listing, which is just kind of mean.

edited 6th Aug '14 2:10:49 PM by Zendervai

The likely answer in the near future is that the need for work will become less constant and more intermittent. We can see a degree of that in the increase in temping and whatnot, or contract work.

Let's have a look at what happens when a company decides to remain in the U.S., despite taxes being theoretically lower if it was based overseas...

In the case of Walgreen's, the shareholders get ticked off and its stocks tumble.

In principle, we can have robots automate every job (let's just pretend that the computing power involved doesn't get ideas for a sec).

If capitalists control this automation and don't share the wealth, you get a mass die-back of humanity (as people are faced to choose between death by starvation, or rebelling, which leads to death by robot army). If the government can tax it, you get guaranteed basic income for everyone and a cradle-to-grave welfare state run by robot labor. Or a third option is that capital develops in such a way as to be cheap enough for everyone, and then the likely result is a growing trend towards economic atomization and anarchism, the results of which are necessarily unpredictable.

edited 6th Aug '14 6:14:56 PM by Ramidel

You're forgetting that we can completely re-tool our education system so that everyone who's job is being taken by a robot can learn to take care of robots in some way. Design, building, maintenance...there's lots of solutions to the problem besides "Whelp, we don't need you guys anymore, I guess now we get to decide if you all starve to death or go into permanent retirement."

Though I will admit the idea of having the plutocrats in charge of massive robot armies, even if they're not designed for military use, to be more than a little disturbing. We'll have to keep an eye on that.

There are visions of dystopic futures where most of the population is reduced to mindless sheep whose every need is served by machines that none of them understand. I don't think it will come to that; people have an innate desire to be productive — to accomplish things. When basic needs are taken care of, they'll reach out and create new things.

This has been a recurring theme throughout human history: a new technology radically increases productivity, liberating people from starvation, drudgery, etc., and creating the freedom for them to achieve new heights of science, culture, art, etc. I doubt that it will ever reach a point where it just stops and nobody has any ambition left.

However, if capitalists end up exerting such overwhelming economic dominance that there is no room for anyone else to achieve, then we will indeed see a dystopic future that will lead inevitably to revolution. At that point, I hope for the plutocrats' sake that they've designed their robots to kill, otherwise they're in deep trouble. Mme. Guillotine shall pay her respects.

edited 7th Aug '14 12:53:14 PM by Fighteer

Japan's out of recession, but it's not going to be growing all wonderful and amazing either, though. It's just going to be hideously mediocre.

The mantra of the 21st century: Everyone except the top 1 percent gets to be hideously mediocre.

It's Japan — their top 1% are also hideously mediocre, and rather modest, as can be seen with their top-of-the-market car, the Toyota Century:

I did mention above that once they automate the military, revolution is unlikely to succeed. And of course they're going to automate the military; we're working on that now.

Sweet dreams!

edited 7th Aug '14 7:14:58 PM by Ramidel

Eh, drones are much too stupid to be a threat.

Hell they're barely useful now.

And robot/android soldiers are only a pipe dream. I really hope they stay that way.

edited 7th Aug '14 7:23:06 PM by Quag15

It's way more likely that some sort of central A.I. hub would be developed, but it would probably be pretty stupid too.

Honestly, an A.I. doing surveillance? Sure, fine. All it would be able to do would be to tell actual people what it saw, and it could actually watch the footage. An A.I. in charge of weaponry? That's a really dumb idea. What if the A.I. gets a fault and shoots off everything at once? What if a virus gets into it? A Skynet type situation is not likely, for the simple question of what exactly the A.I. would get out of it, or why it would even want to do that.

Now that I think about it, wouldn't true A.I. have a huge impact on the global economy? Like, kick people out of the stockbroking profession completely since no one would be able to keep up.

edited 7th Aug '14 8:07:34 PM by Zendervai

Our computers really aren't developing in the way Sci Fi epics would have you suggest. AI is developing through machine learning, which is based on pattern recognition. If you wanna talk AI and military applications, once our AI gets strong enough to recognize the distinction between "enemy" and "friendly" units autonomously, then you might want to throw them on a battlefield. But recognizing when the technology is there is going to be an issue.

Germany is getting closer to lapsing into recession as the European Central Bank admits recovery for the country is extremely weak.

Jared Bernstein reviews the Standards & Poor's paper on inequality.

edited 9th Aug '14 1:02:18 AM by PotatoesRock

The Telegraph is not the most reliable source, so I'll try fo find other sources. Also, you might post that first article in the Euro debt thread as well.

Bloomberg New York Times

Both of them indicate Italy HAS fallen back into recession, and Germany is hurting in terms of factory orders.

Restaurant owner strikes back against the voters for supporting minimum wage... http://wonkette.com/556416/brave-minnesota-job-creator-takes-brave-stand-against-waitresses