People are literally spending all their money on food and rent, not stuffing it in their mattress. The only ones doing that are the ones on top, hoarding wealth and exploiting their underlings.
> ability to make products people want
Wealthy investors have decided this isn't important, all that's important is cutting costs so they can hoard more wealth, which usually means exporting production out of the country so they can exploit laborers in other countries where they don't have protection through the law. This is why we currently don't have enough masks and rely on foreign countries to produce them for us.
The "world economy" only seems to measure things that make rich people richer, and how effective these things are at doing so.
If it was possible to produce apartments for you for half the price, or deliver food, or an fda approved ventilator, and still have a profit investors would be jumping over themselves to do so.
Businesses are hoarding cash because they predict a drop in revenue and want to save as much as they can so they can continue operations and realign for the new economy.
The large number of empty apartments being rented 3-4 nights a month on AirBnb in most large cities seems to indicate otherwise.
The CPAP machine "jailbreak" posted here yesterday seems to indicate otherwise.
The large quantity of food going to the trash every day seems to indicate otherwise.
I agree that there is a "fixed" amount of stuff out there, but it's far from allocated efficiently. I think it's time we recognized that.
These are all kind of bad examples, but I'll go with this one. Food takes time to grow or produce, so you have to accurately predict months out how much food you can sell. So, who is to blame for imperfect predictions of future demand? We could donate all this food instead of just binning it, so then who's to blame for not building the mass infrastructure required to coordinate such distribution, and then running it all for free? And then if such an individual did do this, why didn't they spend their considerable resources instead on a project that could have benefited humanity way more?
We don't want the government doing anything in our lives, so we don't expect any sort of mass infrastructure to be built to support for food distribution. We expect the wealthy and corporations to be philanthropists.
But being a philanthropist costs money. So instead we have a bunch of farms and food producers instead tossing out food because it's cheaper to throw it away than it is to donate it.
So how can you claim it's a bad example when people would rather throw food away for profit?
In fact, with a little tweaking, most food businesses can profit from throwing away less food: garbage disposal isn't free, and food donations are a tax writeoff.
Someone I knew in Philadelphia used to trash pick food from the Trader Joe's dumpster. But they caught him on camera and then put up signs, and eventually put a lock on the dumpster. They literally spent money to buy signs and a lock, and pay people to put up the signs and lock the dumpster every night.
High rent for shitty apartments has been part of SF and NYC life for 30 years before Airbnb. This is more of a NIMBY problem. It’s politically easier to blame Airbnb then to build high rises with affordable rent and change the “culture” of the neighborhood /barf
> but it's far from allocated efficiently. I think it's time we recognized that.
Who hasn’t recognized there can be inefficiency in the current system? The argument is that a central planning committee is going to do much worse.
They most certainly are. Vast amounts of private real estate in the most prime locations are sitting empty. See the Royal Family's property in Mayfair London for example.
They literally are actually. Buying expensive houses and leaving them empty is an incredibly common way of hoarding wealth. https://londonist.com/london/housing/how-many-vacant-empty-h...
[1]: https://www.nytimes.com/2017/07/21/upshot/when-the-empty-apa...
[2]: https://www.nytimes.com/2020/03/29/business/coronavirus-us-v...
Well actually, at least two of your examples are clearly wrong. In NYC, one of the most competitive housing markets in the world, one in four luxury apartments is vacant[1] while the homeless freeze to death outside each winter. Any shortage of food is hard to argue when we're turning corn into fuel instead of food[2]. The only reason people aren't sitting on piles of ventilators yet is that the high demand is new enough that a way of making money by letting people die of suffocation hasn't yet emerged.
[1] https://www.nytimes.com/2019/09/13/realestate/new-developmen...
[2] https://www.forbes.com/sites/stevensalzberg/2016/04/25/why-a...
Getting laid off isn't wealth hoarding, but does that mean there isn't wealth hoarding?
If this response was about crashing financial markets the blasé tone would be OK (ignoring that many retirees rely on pensions or bank accounts tied to financial markets). But this is about the entire economy.
Make no mistake, whatever the goal is, the side-effects are unfortunate.
Last time I checked both of these still exist and wield massive power globally. Just because something is “illegal” doesn’t mean that it isn’t part of the system. The system was “designed”, it’s behavior is emergent. States institute laws which have side effects and those side effects are part of the system.
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[0]: https://www.businessinsider.com/10-companies-control-the-foo...
That's a transference of wealth from the wealthy to the wealthy -- possibly to themselves.
As most people only offer labour and only a small group offer the more and more productivity gains of automation, it is true that the rewards end up being concentrated in that small group of productivity providing people. "The top" as you put it. That disparity is meant to incentivize you to develop your own technologies that increase productivity further instead of "wasting" your time selling productive-constrained labour, but in the real world it is unquestionably difficult to recognize where productivity can be gained.
The understanding of that was the basis for the idea behind pushing everyone into post-secondary schools, with a promise that higher learning would teach you how find solutions for increasing productivity, and thus increasing your reward for increasing overall productivity (a.k.a. providing you with a higher income). However, the real world is again messy and it hasn't really worked out. Despite a substantial increase in post-secondary attainment in recent times, the vast majority of graduates are making no more than they would have without having attended a post-secondary school (wages have been stagnant for decades upon decades) as they by and large end up only selling their productivity-limited labour.
but that has been true since the first chimp figured out how to shove a stick into an anthill and get more tasty bugs than just picking off the ants on the surface. We use tools, better tools are how productivity advances.
Yes, yes, we have better tools than ever before, to the point where they don't look like tools. We can build a machine to do a thing and then leave, and only come back and tinker with it when it breaks.
Some time in the previous century basically everything switched over to assembly-line type production, where nobody built the whole widget themselves. the current switchover is to, uh, I guess you would call them robots. Tools that do the thing with one time input to guide them (and, of course, lots of ongoing maintenance)
But make no mistake, these "robots" we have are still just tools; tools that give massive leverage to the labor that programs those robots and that maintains those robots.
Even if a person can't provide productivity "on their own", productivity per person increases, and it's bad for that to be tied to an increase of wealth inequality.
And trying to have everyone invent solutions sounds like a weak justification for a broken system to me, along the lines of the temporarily embarrassed millionaire.
Sure they can. Who is designing and building and installing all that automation?
I know that you recognize this since it's a key point of the rest of your post. But I don't think you've fully realized the implications. The problem is not just that post-secondary schools haven't lived up to their promise of teaching people how to increase overall productivity. The problem is that, fundamentally, increasing overall productivity is entrepreneurship, and entrepreneurship is not something that can be taught in schools. It's a fundamental change in viewpoint: you have to stop thinking of yourself as an employee, a wage earner, and start thinking of yourself as a business owner. But schools teach people to be wage earners, and as you quite correctly point out, there is no real growth to be had at this point in being a wage earner.
The work of designing, building, and installing remains constrained to the limits of human productivity. The only way to make those jobs more productive is to use tools, and, like always, those who control the tools are those who reap the additional spoils.
There is actually fairly weak data to support the popular theory of a decreasing labor share of income (and thus an increasing capital share) causing more inequality and to the extent such an effect could exist its size is only a few percent of GDP over the past few decades.
This idea that only management making the investment and shareholders benefit from productivity gains is wrong. People like myself and many others on HN that are engineers are major beneficiaries of the productivity gains because we’re the ones actually building the solutions responsible for those gains.
There is no issue with people using the tools. The issue is with workplaces where multiple people need to work together. People with jobs where they use the tools but don't need to be around others or very many others are generally still working.
Also, not all productivity improvements are from tools that still need to be used by workers. A lot is from automation.
Anyways, my point is that tons of people who are not at the top of the businesses experiencing increased productivity are reaping the rewards of productivity improvements. It's a falsehood to think that only those making the investments are reaping the benefits. It only looks that way if you myopically don't look beyond the firm whose productivity improved.
Your point literally misses the point. From the perspective of improving the lot of ordinary workers, "beyond the firm whose productivity improved" doesn't matter. What matters is peoples' paychecks.
Before the mid 70's, when overall productivity went up, wages went up. That is no longer the case. It wouldn't be a problem if things like housing (both home prices and rents), education, medical insurance, and healthcare services (which is still important even for those with health insurance due to out of pocket maximums and deductibles). Notice how all of these are basic essentials of life, some of which are essential enough to form the base of Maslow's hierarchy of needs? I also want to stress that people today have to fund their own retirement, because there are no more company pensions.
Things that have gone up at or below the rate of inflation since the mid 70s are, by and large, not essentials: cars, computers, airline tickets, phone service, TVs, and clothes. [0] Granted, clothes, and sometimes cars are essential, but the savings there don't come close to making up the shortfall in the other things.
> Also, not all productivity improvements are from tools that still need to be used by workers. A lot is from automation.
If anything, I would guess that automation has harmed workers by eliminating good jobs, rather than benefiting people overall. Yeah, we have free stock trades now, but who cares?
I'm open to being convinced otherwise on the automation point, but I have a hard time seeing how people like my mom and dad, neither of whom went to college, could make it into the middle class today if you waved a magic wand and made them 25 again.
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[0]: https://www.bizjournals.com/bizjournals/how-to/growth-strate...
As the tooling and automation got better, the skills contributed by the worker have been responsible for less and less of the productivity gains to the point where the worker is contributing almost none of the productivity gains.
From the perspective of improving the lot of ordinary workers, "beyond the firm whose productivity improved" does matter. You can still make it to the middle class life today, but you do so by taking those jobs that help improve productivity like being a software engineer. I'm middle class myself. I got there by contributing to productivity gains.
Make no mistake, even prior to the 1970s, there were plenty of jobs that would not have gotten someone into the middle class life. Those jobs that didn't get you a middle life back then have a lot in common with those that won't get you a middle class life today in terms of the amount of skills and effort required.
Low skill immigration. Without them McDonalds workers would earn $25 an hour in San Francisco like they do in Zurich since otherwise nobody would want to work there.
GDP is a flow variable.
Since large parts of the world's population barely had enough for food as it were, and that even in the first world, a lot of the production goes to create wealth for the few rich, and most people don't save much or anything to begin with, it's going to be felt.
And do we really believe it stops there? Will people actually want to travel and dine out as much as they used to once the lockdowns are over? Or will they be careful for months or maybe years to come? What happens when the virus really spreads in Africa, India, South East Asia and South America? Will they barely care because they are so young it's not dangerous to them? And what about the second and third wave in the first world? What if the vaccine or cure is not that easy to make and distribute so we don't have any before mid or late 2021?
This isn't really true.
A 3% contraction in the world's economy is the sum of all countries GDPs. That's a measure of how much "stuff" (goods and services) is produced.
It's more closely correlated with unemployment than with the stock market (ie, with private wealth).
What you observe is that fact that a great majority of people live on fixed income which doesn't get hit (because these people are useless anyway, like most government employees), and many live off pensions, plus government boosts it's spending. So those who actually make their living, lose a lot more. But same is true about good times, when economy books it's not policemen or school teachers who get biggest raises. Those with capital are even further up the risk curve: when stock market drops, they directly lose money. And dividends on the stock can easily drop to almost zero.
"The economy" refers to a system that's primarily designed to concentrate and protect private wealth, and a 3% loss of private wealth isn't all that bad at all. The people who are really hurting have no wealth to lose.
I hope an outcome of this crisis is that we start to think about "the economy" in more humane terms.