9 ms·

If goods aren't being sold, then the price will drop.

by alex_sf 6mo ago

cjbgkagh 6mo ago
It's not that simple. If a poor person makes zero dollars how much of the reduced cost item could they now afford? We have a massively distorted economy driven by debt financialization and legalised banking cartels. It leads to weird inversions. For example as long as housing gets increasingly expensive at a predictable rate the housing becomes more affordable instead of less as banks are more able to lend money. The inverse is also true, if housing were to drop at a predictable rate fewer people would be able to get a mortgage on the house so fewer people could afford to buy one. Housing won't drop below cost of materials and labor (ignoring people dumping housing to get rid of tax debts as I would include such obligations in the cost of acquisition). Long term it's not sustainable but long term is multi-generational.
- carlosjobim 6mo ago
  > Housing won't drop below cost of materials and labor Only if every person born needs to have a brand new house constructed for them. Not if - you know - people die and don't need a house to live in anymore. But considering how it's been the past 20 years, I'm starting to expect that a lot of the current elder generation will opt to have their houses burnt down to the ground when they die. Or maybe the banker owned politicians will make that decision for them with a new policy to burn all property at death to "combat injustice". Who knows what great ideas they have?
- kjkjadksj 6mo ago
  Fwiw in places like parts of the midwest housing is below cost of labor and materials. An existing house might be $70k and several bedrooms at that. You just can’t get anything built for that even if you build it all yourself.
  - cjbgkagh 6mo ago
    I intended to make a weaker claim of ‘in general long run / maintainable’ circumstances and should have done so. Many low cost areas have bad crime problems, there is another little phenomenon where the wealthy by doing a poor job in governance can increase the price of their assets by making alternative assets (lower cost housing) less desirable due to the increase in crime.
    - kjkjadksj 6mo ago
      Not really the case for much of the midwest. These are low crime areas generally. Working class population is not nearly so rent burdened so less pressure towards making ends meet in other ways. Gang activity is effectively nill unlike placed where you find ms13 written on walls. Homeless people amount to probably a small few dozen visibly homeless if that, and you really need to look to find them.
      - cjbgkagh 6mo ago
        I gather that such places do exist it would help if you gave an example. When I did travel to middle america there seemed to be a general drug problem and associated thefts. Perhaps there could be a copper theft map which could be used as a proxy for crime.
        kjkjadksj 6mo ago
        Three Cs. Wisconsin. Minnesota. Pittsburg. Not gary IN. The thing is with these sorts of midwestern cities. The nicest neighborhood in the area, you know the one with the 5 bed ornate 100 year old mansions with the nicest school district, you can get one of those for barely half mill maybe even less.
- charcircuit 6mo ago
  It depends. There are people and businesses today who even make negative dollars each month, but they still purchase things every month.
_DeadFred_ 6mo ago
Cool concept, but this isn't 1980. We've been sold these sorts of concepts for 40+ years now and things have only gotten worse. We have a K shaped economy. Top earners take the majority. The top 20% make up 63% of all spending, and the top 10% accounted for more than 49%. The highest on record. Businesses adapt to reality and target the best market, in this case the top 10 to 20%, and the rest just get ignored, like in many countries around the world. All that unlocked money? In a K shaped economy it mostly goes to those at the top, who look to new places to park/invest it, raising housing prices, moving the squeeze of excess capital looking for gains to places like nursing homes and veterinary offices. That doesn't result in prices going down, but in them going up. The benefit to the average American will be more capital in the top earners' hands looking for more ways to do VC style squeezes in markets previously not as ruthless but worth moving to now as there are less and less 'untapped' areas to squeeze (because the top 10-20% need more places to park more capital). The US now has more VC funds than McDonalds.
- runarberg 6mo ago
  Irrelevant aside: But I hold grudge against the economists who picked the letter K to represent increased inequality. They missed the perfect opportunity to use the less-then inequality symbol (<) and call it a “less-then economy”.
  - BoxOfRain 6mo ago
    Using an inequality symbol to highlight inequality is elegant, I wish they'd gone with that!
  - bananaflag 6mo ago
    Nitpick: it's less-than, not less-then.
idiotsecant 6mo ago
This and other fairytales. The only solution here is to stop tying people's value to their productivity. That makes a lot of sense in the 1900s but it makes a lot less sense when the primary faucet of productivity is automation. If you insist on tying a person's fundamental right to a decent and secure life to their productivity and then take away their ability to be productive you're left with a permenant and growing underclass of undesirables and an increasingly slim pantheon of demigods at the top. We have written like, an ocean of scifi about this very subject and somehow we still fail to properly consider this as a likely outcome.
- karol 6mo ago
  They key is to do it by setting up the right structure or end up with it naturally, not by laws and control, because then you end up in a oppressive nanny state at the very best.
  - hackyhacky 6mo ago
    The key, as history teaches us, is guillotines.
  - ap99 6mo ago
    You couldn't set up a lemonade stand using that principle let alone an entire society.
  - Sohcahtoa82 6mo ago
    > They key is to do it by setting up the right structure or end up with it naturally This is extremely hand-wavy. Can you be more concrete in what you think this looks like? The way I see it, we're only 5-10 years away from having general purpose robots and AI that can basically do anything. If the prices for that automation is low enough, there will be massive layoffs as workers are replaced. There's no way to "naturally" solve the problem of skyrocketing unemployment without government involvement.
    - NetMageSCW 6mo ago
zerotolerance 6mo ago
"will" being the operative word here. High school level Econ makes no promises about WHEN prices adjust. Price setting is a whole science highly susceptible to collusion pressure. Prices generally drop only when the main competition point is price (commodities). In this case the main issue is that AI is commoditizing many if not all types of labor AND product. In a world where nothing has value how does anything get done?
layer8 6mo ago
Or the goods will just go away if too few people are willing to pay their price, and only the lower-quality cheaper-to-make goods will remain.
marcosdumay 6mo ago
I don't know what economy you are looking at, because the opposite is usually true since humanity industrialized. If goods aren't being sold, then the price will increase.
wnc3141 6mo ago
to the point of where the cost of bringing the goods to market or its opportunity cost exceed the price the market will bear. Its why people living in areas of material poverty don't just get everything on discount.

If goods aren't being sold, then the price will drop.

by alex_sf 6mo ago

If goods aren't being sold, then the price will drop.

It's not that simple. If a poor person makes zero dollars how much of the reduced cost item could they now afford? We have a massively distorted economy driven by debt financialization and legalised banking cartels. It leads to weird inversions. For example as long as housing gets increasingly expensive at a predictable rate the housing becomes more affordable instead of less as banks are more able to lend money. The inverse is also true, if housing were to drop at a predictable rate fewer people would be able to get a mortgage on the house so fewer people could afford to buy one. Housing won't drop below cost of materials and labor (ignoring people dumping housing to get rid of tax debts as I would include such obligations in the cost of acquisition). Long term it's not sustainable but long term is multi-generational.

carlosjobim 6mo ago
> Housing won't drop below cost of materials and labor Only if every person born needs to have a brand new house constructed for them. Not if - you know - people die and don't need a house to live in anymore. But considering how it's been the past 20 years, I'm starting to expect that a lot of the current elder generation will opt to have their houses burnt down to the ground when they die. Or maybe the banker owned politicians will make that decision for them with a new policy to burn all property at death to "combat injustice". Who knows what great ideas they have?
kjkjadksj 6mo ago
Fwiw in places like parts of the midwest housing is below cost of labor and materials. An existing house might be $70k and several bedrooms at that. You just can’t get anything built for that even if you build it all yourself.
- cjbgkagh 6mo ago
  I intended to make a weaker claim of ‘in general long run / maintainable’ circumstances and should have done so. Many low cost areas have bad crime problems, there is another little phenomenon where the wealthy by doing a poor job in governance can increase the price of their assets by making alternative assets (lower cost housing) less desirable due to the increase in crime.
  - kjkjadksj 6mo ago
    Not really the case for much of the midwest. These are low crime areas generally. Working class population is not nearly so rent burdened so less pressure towards making ends meet in other ways. Gang activity is effectively nill unlike placed where you find ms13 written on walls. Homeless people amount to probably a small few dozen visibly homeless if that, and you really need to look to find them.
    - cjbgkagh 6mo ago
      I gather that such places do exist it would help if you gave an example. When I did travel to middle america there seemed to be a general drug problem and associated thefts. Perhaps there could be a copper theft map which could be used as a proxy for crime.
      - kjkjadksj 6mo ago
        Three Cs. Wisconsin. Minnesota. Pittsburg. Not gary IN. The thing is with these sorts of midwestern cities. The nicest neighborhood in the area, you know the one with the 5 bed ornate 100 year old mansions with the nicest school district, you can get one of those for barely half mill maybe even less.
charcircuit 6mo ago
It depends. There are people and businesses today who even make negative dollars each month, but they still purchase things every month.

_DeadFred_ 6mo ago

Cool concept, but this isn't 1980. We've been sold these sorts of concepts for 40+ years now and things have only gotten worse. We have a K shaped economy. Top earners take the majority. The top 20% make up 63% of all spending, and the top 10% accounted for more than 49%. The highest on record. Businesses adapt to reality and target the best market, in this case the top 10 to 20%, and the rest just get ignored, like in many countries around the world. All that unlocked money? In a K shaped economy it mostly goes to those at the top, who look to new places to park/invest it, raising housing prices, moving the squeeze of excess capital looking for gains to places like nursing homes and veterinary offices. That doesn't result in prices going down, but in them going up. The benefit to the average American will be more capital in the top earners' hands looking for more ways to do VC style squeezes in markets previously not as ruthless but worth moving to now as there are less and less 'untapped' areas to squeeze (because the top 10-20% need more places to park more capital). The US now has more VC funds than McDonalds.

runarberg 6mo ago
Irrelevant aside: But I hold grudge against the economists who picked the letter K to represent increased inequality. They missed the perfect opportunity to use the less-then inequality symbol (<) and call it a “less-then economy”.
- BoxOfRain 6mo ago
  Using an inequality symbol to highlight inequality is elegant, I wish they'd gone with that!
- bananaflag 6mo ago
  Nitpick: it's less-than, not less-then.

idiotsecant 6mo ago

This and other fairytales. The only solution here is to stop tying people's value to their productivity. That makes a lot of sense in the 1900s but it makes a lot less sense when the primary faucet of productivity is automation. If you insist on tying a person's fundamental right to a decent and secure life to their productivity and then take away their ability to be productive you're left with a permenant and growing underclass of undesirables and an increasingly slim pantheon of demigods at the top. We have written like, an ocean of scifi about this very subject and somehow we still fail to properly consider this as a likely outcome.

karol 6mo ago
They key is to do it by setting up the right structure or end up with it naturally, not by laws and control, because then you end up in a oppressive nanny state at the very best.
- hackyhacky 6mo ago
  The key, as history teaches us, is guillotines.
- ap99 6mo ago
  You couldn't set up a lemonade stand using that principle let alone an entire society.
- Sohcahtoa82 6mo ago
  > They key is to do it by setting up the right structure or end up with it naturally This is extremely hand-wavy. Can you be more concrete in what you think this looks like? The way I see it, we're only 5-10 years away from having general purpose robots and AI that can basically do anything. If the prices for that automation is low enough, there will be massive layoffs as workers are replaced. There's no way to "naturally" solve the problem of skyrocketing unemployment without government involvement.
  - NetMageSCW 6mo ago

zerotolerance 6mo ago

"will" being the operative word here. High school level Econ makes no promises about WHEN prices adjust. Price setting is a whole science highly susceptible to collusion pressure. Prices generally drop only when the main competition point is price (commodities). In this case the main issue is that AI is commoditizing many if not all types of labor AND product. In a world where nothing has value how does anything get done?

layer8 6mo ago

Or the goods will just go away if too few people are willing to pay their price, and only the lower-quality cheaper-to-make goods will remain.

marcosdumay 6mo ago

I don't know what economy you are looking at, because the opposite is usually true since humanity industrialized. If goods aren't being sold, then the price will increase.

wnc3141 6mo ago

to the point of where the cost of bringing the goods to market or its opportunity cost exceed the price the market will bear. Its why people living in areas of material poverty don't just get everything on discount.