Economics Discussion Thread

[Great Minarchistan]

What are you trying to say here?

Firstly, Constantinopolis is talking about the "catch up effect" in oblique terms.

Not really. He used it as an example, but his primary argument was that a growing GDP/c doesn't necessarily means a growing income of the population (which I proved to be false).

Secondly, between 1910 and 1942 and then again from 1946-1962 (all years approximate) what happened was the wage level measure (whatever that is) was being outstripped by GDP per capita (hence falling from about 80% of GDP per capita to about 40%, recovering to about 50% before returning to 40% ish). That's not growth in unison. It's not a temporary trend either.

Periods which seem to indicate "in unison" growth (i.e. a stationary ratio) include 1790-1798, 1826-1858, (kindly) 1870-1910 and 2002-2016.

Well then, that's even better: Historically, the US wages grew faster than GDP/c.

[Forsher]

What are you trying to say here?

Firstly, Constantinopolis is talking about the "catch up effect" in oblique terms.

Not really. He used it as an example, but his primary argument was that a growing GDP/c doesn't necessarily means a growing income of the population (which I proved to be false).

Secondly, between 1910 and 1942 and then again from 1946-1962 (all years approximate) what happened was the wage level measure (whatever that is) was being outstripped by GDP per capita (hence falling from about 80% of GDP per capita to about 40%, recovering to about 50% before returning to 40% ish). That's not growth in unison. It's not a temporary trend either.

Periods which seem to indicate "in unison" growth (i.e. a stationary ratio) include 1790-1798, 1826-1858, (kindly) 1870-1910 and 2002-2016.

Well then, that's even better: Historically, the US wages grew faster than GDP/c.

Where is the data used to make that graph?

[Great Minarchistan]

Not really. He used it as an example, but his primary argument was that a growing GDP/c doesn't necessarily means a growing income of the population (which I proved to be false).



Well then, that's even better: Historically, the US wages grew faster than GDP/c.

Where is the data used to make that graph?

https://www.measuringworth.com/

[Forsher]

Where is the data used to make that graph?

https://www.measuringworth.com/

Can you be more specific please? There seems to be a lot of different data sets on that site and I haven't seen an inherent copy of the real wage/real GDP per capita (ratio) you have provided.

[Great Minarchistan]

https://www.measuringworth.com/

Can you be more specific please? There seems to be a lot of different data sets on that site and I haven't seen an inherent copy of the real wage/real GDP per capita (ratio) you have provided.

https://www.measuringworth.com/usgdp/
Select "US real GDP per capita"
https://www.measuringworth.com/uswage/
Select "Production Workers Compensation"

Since those wages are on nominal terms, I adjusted them by the CPI data available on the site (https://www.measuringworth.com/uscpi/).

There isn't a rWage/rGDPpc ratio offered in the site. I just picked the whole spreadsheet and put it on Excel.

[Forsher]

Can you be more specific please? There seems to be a lot of different data sets on that site and I haven't seen an inherent copy of the real wage/real GDP per capita (ratio) you have provided.

https://www.measuringworth.com/usgdp/
Select "US real GDP per capita"
https://www.measuringworth.com/uswage/
Select "Production Workers Compensation"

Since those wages are on nominal terms, I adjusted them by the CPI data available on the site (https://www.measuringworth.com/uscpi/).

There isn't a rWage/rGDPpc ratio offered in the site. I just picked the whole spreadsheet and put it on Excel.

Okay, so it is wage/GDP per capita. That means that if you've got a number less than 1, such as 0.8 then 0.6 then 0.4 what is happening is that wages are shrinking relative to GDP per capita... not growing. If the ratio is increasing (which in the US is only from 1970-ish to 2002) then wages are growing faster than GDP per capita.

The way I would interpret your graph is that there is no consistent relationship between GDP per capita and the incomes of the working classes (blue collars), i.e. GDP per capita is a deeply flawed measure of (typical?) living standards (let alone quality of life).

[Great Minarchistan]

Okay, so it is wage/GDP per capita. That means that if you've got a number less than 1, such as 0.8 then 0.6 then 0.4 what is happening is that wages are shrinking relative to GDP per capita... not growing. If the ratio is increasing (which in the US is only from 1970-ish to 2002) then wages are growing faster than GDP per capita.

The way I would interpret your graph is that there is no consistent relationship between GDP per capita and the incomes of the working classes (blue collars), i.e. GDP per capita is a deeply flawed measure of (typical?) living standards (let alone quality of life).

Jesus Christ, you actually made me realize that it's not a ratio of wages divided by GDP/c, rather it is the inverse...



Gotta correct it brb

[Great Minarchistan]

Now this looks a whole lot better

[Orostan]

https://theleftlibertarian.wordpress.co ... formation/

[Great Minarchistan]

https://theleftlibertarian.wordpress.com/2013/10/15/critique-of-austrian-price-formation/

Prices set by businesses are often impacted by the production costs of said good. But the price at which the highest amount of customers will buy it is decided through subjectivity i.e. there is a certain price at which the most amount of customers will agree that is fair, leading them to buy it. Austrian Price Formation doesn't mean that the businesses will inherently set their prices based on subjectivity.

[Orostan]

https://theleftlibertarian.wordpress.com/2013/10/15/critique-of-austrian-price-formation/

Prices set by businesses are often impacted by the production costs of said good. But the price at which the highest amount of customers will buy it is decided through subjectivity i.e. there is a certain price at which the most amount of customers will agree that is fair, leading them to buy it. Austrian Price Formation doesn't mean that the businesses will inherently set their prices based on subjectivity.

No, a business will just reduce inventory if there aren't enough buyers by scaling back production. If you read the article you'd know this.

[Taihei Tengoku]

Prices set by businesses are often impacted by the production costs of said good. But the price at which the highest amount of customers will buy it is decided through subjectivity i.e. there is a certain price at which the most amount of customers will agree that is fair, leading them to buy it. Austrian Price Formation doesn't mean that the businesses will inherently set their prices based on subjectivity.

No, a business will just reduce inventory if there aren't enough buyers by scaling back production. If you read the article you'd know this.

This doesn't contradict Austrian theory at all? The lower price is a signal to divert resources elsewhere.

[Orostan]

No, a business will just reduce inventory if there aren't enough buyers by scaling back production. If you read the article you'd know this.

This doesn't contradict Austrian theory at all? The lower price is a signal to divert resources elsewhere.

It's not about price. It's about demand. There is no lower price for a certain product, just a lower demand. Read the article, please.

[Taihei Tengoku]

This doesn't contradict Austrian theory at all? The lower price is a signal to divert resources elsewhere.

It's not about price. It's about demand. There is no lower price for a certain product, just a lower demand. Read the article, please.

The Y-axis of a supply/demand graph is price. If there is a surplus of goods to demand the price will lower to clear and in future periods the production lowered. For large manufacturing firms the menu prices are high so they just skip right to the "adjusting production" bit.

[Orostan]

It's not about price. It's about demand. There is no lower price for a certain product, just a lower demand. Read the article, please.

The Y-axis of a supply/demand graph is price. If there is a surplus of goods to demand the price will lower to clear and in future periods the production lowered. For large manufacturing firms the menu prices are high so they just skip right to the "adjusting production" bit.

Not true. If a retailer has excess of a product every year, the retailer isn't going to lower prices. It will instead reduce inventory. This is because the retailer wants to make a certain amount of money on each product sold. The last thing the retailer wants to do is lower prices. Please read the article.

[Great Minarchistan]

The Y-axis of a supply/demand graph is price. If there is a surplus of goods to demand the price will lower to clear and in future periods the production lowered. For large manufacturing firms the menu prices are high so they just skip right to the "adjusting production" bit.

Not true. If a retailer has excess of a product every year, the retailer isn't going to lower prices. It will instead reduce inventory. This is because the retailer wants to make a certain amount of money on each product sold. The last thing the retailer wants to do is lower prices. Please read the article.

That's only true under a scenario without competition. When there is competition, you'll likely shave off the price of your product since there will be another sellers with production costs likely around the ones of yours.

[Orostan]

Not true. If a retailer has excess of a product every year, the retailer isn't going to lower prices. It will instead reduce inventory. This is because the retailer wants to make a certain amount of money on each product sold. The last thing the retailer wants to do is lower prices. Please read the article.

That's only true under a scenario without competition. When there is competition, you'll likely shave off the price of your product since there will be another sellers with production costs likely around the ones of yours.

But you don't want to do that. A Capitalist doesn't want to compete. That's the last thing they want to do. My point is that:

1- prices are not set to clear the market, they are set to accomplish a specific goal. Prices may decline during a period of competition but that in no way is an attempt to clear the market.

2- you should really read the article

[Great Minarchistan]

But you don't want to do that. A Capitalist doesn't want to compete. That's the last thing they want to do.

Yet it seems to happen systematically. Funny.

1- prices are not set to clear the market, they are set to accomplish a specific goal. Prices may decline during a period of competition but that in no way is an attempt to clear the market.

Define clear the market.

[Orostan]

But you don't want to do that. A Capitalist doesn't want to compete. That's the last thing they want to do.

Yet it seems to happen systematically. Funny.

1- prices are not set to clear the market, they are set to accomplish a specific goal. Prices may decline during a period of competition but that in no way is an attempt to clear the market.

Define clear the market.

The market clearing price is the price at which demand matches supply. It's the equilibrium price.

The only reason capitalists compete is not because they want to, it's because they have to. For example, ISPs realized thst they did not have to compete, so they divided the USA up into their own markets and agreed not to compete. The reason i may compete with another capitalist isn't to reach the market clearing price. It's because the capitalist has the goal of "x" amount of sales or something, same as the other capitalist. The thing is is that there isn't an infinite amount of buyers for every seller. So in periods of competition sellers are competing for buyers to accomplish their own goals which are mutually exclusive.

[Great Minarchistan]

The market clearing price is the price at which demand matches supply. It's the equilibrium price.

So you believe that businesses won't want optimal price in order to reap as much money as possible.

The only reason capitalists compete is not because they want to, it's because they have to.

I don't care if businesses like or not to compete, I do care if they aren't competing though.

For example, ISPs realized thst they did not have to compete, so they divided the USA up into their own markets and agreed not to compete.

Anti-trust laws.

[Taihei Tengoku]

The Y-axis of a supply/demand graph is price. If there is a surplus of goods to demand the price will lower to clear and in future periods the production lowered. For large manufacturing firms the menu prices are high so they just skip right to the "adjusting production" bit.

Not true. If a retailer has excess of a product every year, the retailer isn't going to lower prices. It will instead reduce inventory. This is because the retailer wants to make a certain amount of money on each product sold. The last thing the retailer wants to do is lower prices. Please read the article.

Menu prices obviate the entire article. A retailer will lower the prices they see (on the supply curve) by reducing production, rather than the costly action of changing a wide variety of nominal prices.

And of course, bargain bins don't exist ever

[Orostan]

The market clearing price is the price at which demand matches supply. It's the equilibrium price.

So you believe that businesses won't want optimal price in order to reap as much money as possible.

The only reason capitalists compete is not because they want to, it's because they have to.

I don't care if businesses like or not to compete, I do care if they aren't competing though.

For example, ISPs realized thst they did not have to compete, so they divided the USA up into their own markets and agreed not to compete.

Anti-trust laws.

1- A business wants to make a certain amount of money per product, and if that isn't possible make the same amount by selling more. A business wants more people to buy its product always, but it doesn't want to lower prices if it doesn't have to. Please read the article now.

2- You should care. If you don't care then you do not care about economics.

3- Anti-Trust laws haven't been enforced since Reagan, would you care to know why?

[Taihei Tengoku]

and we return to moaning about Reagan and antitrust

EDT is a story that repeats

[Orostan]

and we return to moaning about Reagan and antitrust

EDT is a story that repeats

>hahaha anything i don't like is wrong because i say it's wrong

[Taihei Tengoku]

With you I have a pretty good track record.

Regardless that article, like many attempts to "unlearn" some widely-held theory, thinks itself into stupidity and rationalizes its way into absurd conclusions. Retailers often do lower prices to clear inventory in what are called "sales," and unwanted inventory is often sold off at a discount. That the "nominal" price is stable can be explained by menu costs (signaling stability), obviating the foundation of the article (there's no such thing as price discovery!) and leaving only its intentions (all prices are unjust!)