Inflation mystery. An Aha! moment for me.

[Jester]

I don't understand where this is coming from. The spiral I was speaking of is:

• Not enough demand for a product at a given price. Cannot drop price because it is already at break even -- product sells for the cost of the materials and energy needed to make it.
  
• Production is cut back to reduce existing surpluses. However, there are fixed costs (taxes and insurance on the manufacturing facilities, etc.) that now have to be spread over a smaller number of items. Since the item was at break even, either the price goes up or the loss kills the company.
  
• Increased price puts the product out of reach of even more people, thus further lowering the demand, thus starting another cycle.
  

This would involve a peculiar circumstance where we invested an enormous amount in very inflexible industries with huge economies of scale, where profit margins were tiny. These industries would have to be a huge slice of the economy - maybe almost all of it. All entrepreneurs across all sectors would have to be figuring "Okay, we can make money out of this, but only barely, and only if the production run is huge. We can't recoup our money, so this better work out!" I just don't see it as being very likely to happen. Maybe in a couple sectors, over-exuberance leads to malinvestment in high-capital tech, but even in a sci-fi world, surely production is more flexible than this, and can scale back without breaking the spine of the economy, leaving us spiralling down into the stone age?

And what would that be? Punctuation poems? Covers of 4'33"?

We pay people for stupider things. And, if we had overwhelming resources to waste doing so, why the heck not? What would be stopping us from our John Cage festivals, if we could produce a million flying cars with the press of a button at mind-boggling speed and efficiency?

Really?

Yes, really. We do what other people are willing to pay us to do. When people are phenomenally wealthy, they will pay to have people do all sorts of banal things.

It is very different. Right now we have a heterogeneous system. It's like a box of gas that is warm in some spots and cold in others. There is heat flow, but the heat flow is a transient phenomenon. Eventually, it will be homogeneous, and the heat flow will end.

I think this metaphor is getting a touch obscure for my understanding. Surely you are not suggesting a world in which the production of everything requires homogeneous inputs and processes, for both goods and services, to the point where there is no division of labour at all? Or where the poorest are capable of doing nothing to earn some meager pennies, even if every penny they earn can buy a fleet of flying cars, because we can make those a million at a time with the press of a button?

The thing is, solutions requiring eons and galaxies are not too practical for the problems of an entity that lives decades and occupies about 25% of one planet.

Surely your science fiction dystopian scenario is not meant to apply to the here and now, where the economy looks very little like this? Unless they extend my lifespan, surely I will not live to see robots outperform humans at all non-idiotic production and services except the super-elite creative jobs.

-Jester