(09-11-2012, 12:56 PM)Bolty Wrote: This is a pretty interesting discussion here. I'm wondering what you mean, Jester, when you say that incomes are rising. It's been my understanding that historical income rise in the US is mostly due to an increasing number of women who enter the workforce, and that per person, incomes have actually been going down (adjusting for inflation). The real gain in income has actually come from the reduction in price for almost all common goods. Essentially, food is much cheaper than it was decades ago. Same with clothing, "basic" appliances, and so on. This naturally increases the buying power of every dollar earned, so in that sense, incomes have been rising.
I agree with you that in that sense - how much "stuff" can be purchased in exchange for an hour of "work" - incomes have been rising. What is puzzling to me is, in what other sense does one mean the term "income," and in what sense could they be falling?
Real incomes are defined by the relationship between wages and prices. All that matters is the ratio - there is no sense in which everyone can be "richer" unless they can buy more goods with their riches.
Personal annual incomes have been flatlined since 2000 - but hours worked has plummeted. http://research.stlouisfed.org/fred2/series/USAAHWEP . More is being made with less work time - confirming the prediction, I suppose, but since the US was already way over most OECD countries in hours worked, it's really just becoming more like France or Germany.
Quote:But why is everything cheaper? With food, advances in farming technology have most certainly made production and distribution of food cheaper. A solid theory as to the cause of the obesity crisis in the US is the drastic reduction of food prices over the last few decades, but I suppose that's a separate discussion. With clothing, appliances, and other expenses, it could be argued that the cheaper prices are due entirely to the exploitation of foreign economies (e.g. China) for cheap labor combined with low distribution costs (transport).
China (and lots of countries) are a part of this story. The drop in transportation and distribution costs due to containerization, information technology, and so forth are large. But the real key is that 1.2 billion people are making 30x per person today as they were 100 years ago, and 15x what they were 34 years ago. (And keeping their currency conveniently low, so that they consume less of it than they make, and hoard safe investments instead. But that's another story.)
Quote:What happens when the cheap sources of labor around the world dry up? What happens when the "Western" countries can't find 3rd world countries to abuse anymore?
While low-end manufacturing jobs are crap, they're largely better than what they replace. When "western countries" run out of cheap labour, then those poor countries we used to "exploit" will be wealthy - just like Japan, South Korea, and Taiwan used to be poor manufacturers, and are now rich. (Indeed, just like England, only further back.)
Quote:It does seem reasonable (at least to me, who is by no means an economist) that the world can reach a point eventually where due to productivity increases and automation, there is literally nothing for most of the population to do. Maybe we'll all just play World of Warcraft all day.
There are two outcomes here, one you seem to be presenting, and one Kandrathe is. They are similar in some ways, but totally at odds in some very key respects.
1) We become so good at making everything that nobody does any work, and everyone is rich (by today's standards).
2) We become so good at making everything that nobody has any work, and nearly everyone is poor (by today's standards) except for an owner-elite.
I think 1 is not only plausible, it's what our own society looks like from the vantage point of the 18th century. Shorter hours, more service jobs, longer lives, more amazing stuff to buy, less toil required to buy it. I think 2 is deeply mistaken, and would be like a medieval peasant imagining his village without the farmers employed, and thinking that's what 2012 will be like.
-Jester