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On February 03 2014 04:33 itsjustatank wrote:Show nested quote +On February 02 2014 10:41 Vegetarian wrote:On February 02 2014 09:24 Roe wrote:On February 02 2014 09:17 Vegetarian wrote:On February 02 2014 08:40 SnipedSoul wrote:
One business cutting wages to increase profit might work, but when they all do it they start running out of customers.
I wonder how bad it will get before they decide to change anything. Businesses do not set wages, they are determined by supply and demand within a given marketplace. When I worked for the little garden shop around the corner, I'm pretty sure "the marketplace" didn't set my wage. Pretty sure my boss did. Roe can you explain this phenomenon of people being paid more than the minimum wage? If its just up to a boss what people are paid then why does anyone get paid more than the minimum wage? Not enough people are willing to do certain kinds of work for a minimum wage. These positions are hard to fill as they require education, experience, or expertise, and thus the workers are not easily replaceable. Thus, wages are set to a point where people are willing to do the job.
Which is exactly the "marketplace", and not bosses setting wages willy nilly like roe suggests. It's not just that say an accountant won't go work for $15/hour because he feels its below him, it's that an accountant won't work for that little because he knows that just about every accounting job pays $50,000 as its minimum, hence, the market.
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Hong Kong9183 Posts
Well there's some feeling of it being beneath you.
I would only do wedding photography for extravagant prices because fuck that shit. If you really want me there, you'll have to pay me a lot.
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On February 03 2014 04:33 Mercy13 wrote:Show nested quote +On February 03 2014 03:29 Nyxisto wrote:
I don't get the obsession with "what the market says.." Are the markets omniscient deities we have to follow? Instead of debating whatever the market dictates(which economists seem to be doing for a few centuries now, without making any kind of progress) wouldn't it make more sense to discuss if that even matters in the first place?
A few pages ago I suggested that people who full-fill important functions in a society should be paid accordingly. Danglars responded promptly with something along the lines of "yeah but morality is your personal thing, that has no place in payment, it's all supply&demand..". I'm a little confused why it's so ridiculous to think that only "what the market says.." counts and every other factor basically doesn't play a role. I think the fascination with markets stems from the widely held (incorrect) belief that free market systems lead to the most productive allocation of resources.
Then what leads to a better allocation of resources according to you?
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A regulated market, I would think.
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On February 03 2014 03:19 FabledIntegral wrote:Show nested quote +On February 03 2014 03:11 oneofthem wrote:On February 03 2014 02:18 FabledIntegral wrote:On February 03 2014 02:08 oneofthem wrote:On February 03 2014 02:05 FabledIntegral wrote:On February 03 2014 00:45 oneofthem wrote:
when you say le supply and demand it implies the wage is a product of natural forces. it's really not. different strategies of development taken by employers, employee leverage (unionization, laws, reserve pool of workers) and various factors affecting reservation wage positive and negative.
let's put it this way, looking at the world, you'll see the basic employer employee relationship without a chain (which apparently makes libertarians jump up in rage, rather than the more powerful and simple power of starvation) producing wages so low that it would seem to be barely worthwhile for an american minimum wage worker. why is the american minimum wage worker earning more than a bangladesh teenager, or why is the american worker today earning more than she was during the glory days of children in mines and factories?
the answer has quite a lot to do with politics. not recognizing this basic fact is just to shut your mind with ideology. it's pretty stupid I'm not really sure how I find your post to be relevant in this case... they're still all pretty much market forces when it comes down to it, just in a really broad sense. the market mechanism is always there. so when supply and demand in one situation leads to drastic different results from supply and demand in another situation, then it's not the central analysis anymore. Of course it is... barriers to entry are the direct result of the market wage gap between Bangladesh and the American minimum wage worker, which is a market force. These barriers prevent a more globalized economy. As globalization has become much more significant in the past 30 years, barriers have fallen and this is the exact reason why you see so many things being outsourced the and the U.S. losing the majority of it's status as a manufacturing powerhouse. this is a richer analysis than 'supply and demand' and does not make the situation seem like the product of natural forces. to put more meat on the issue, you can assign some portion to technology and some portion to political actions by specific factions and people. there are many comparative econ studies from for example an anthropological or sociology perspective. It's exactly supply and demand... From Wikipedia, it's the 2nd thing listed on basic premises for a perfect competition marketplace to function... one could hardly call this a "rich" analysis as opposed to the very basics you learn in your first econ class.... Show nested quote +
Basic structural characteristics
Generally, a perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. Specific characteristics may include:
Infinite buyers and sellers – An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
No barriers of entry and exit – No entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
Perfect factor mobility – In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions.
Perfect information - All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
Zero transaction costs - Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
Profit maximization - Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
Homogenous products - The qualities and characteristics of a market good or service do not vary between different suppliers.
Non-increasing returns to scale - The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
Property rights - Well defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
Rational buyers - buyers capable of making rational purchases based on information given
No externalities - costs or benefits of an activity do not affect third parties
This market - the one that "exist" under the condition of pure and perfect competition - consider that price are created by some miraculous process. Offer and demand are both price taker. In the situation of wage, it would mean that the market is responsible for the equilibrium price (the wage you receive) and not the employer - who is in fact just accepting the market price.
In the situation of walmart, it is absolutly wrong to use this modelisation of market, because Walmart has a huge market power : it is so big that it can make price and not necessarily take them. It is actually its strong force and the sole reason it can push producers to sell at lower price (not having your product in walmart is more costly than accepting a lower price and lower margin).
Plus, there are tons of work trying to find out one possible pure and perfect market, the existence of an equilibrium, and we know since Sonnenschein that it just does not exist (more exactly, that there are no way to know if we are in an equilibrium, and no way to know if it exist, just like god). So as you said, it is only first year economics, people who know a little more know it is ridiculous to just use this model with no reflexivity.
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On February 03 2014 04:37 itsjustatank wrote:
Well there's some feeling of it being beneath you.
I would only do wedding photography for extravagant prices because fuck that shit. If you really want me there, you'll have to pay me a lot.
Which is exactly what supply and demand is... you would not supply your services until you get $X because you'd rather do something else, aka the opportunity cost. However, at a certain point, you'd be willing to do it, if you could get that $X. That is pretty much the definition of supply/demand.
On February 03 2014 05:16 WhiteDog wrote:Show nested quote +On February 03 2014 03:19 FabledIntegral wrote:On February 03 2014 03:11 oneofthem wrote:On February 03 2014 02:18 FabledIntegral wrote:On February 03 2014 02:08 oneofthem wrote:On February 03 2014 02:05 FabledIntegral wrote:On February 03 2014 00:45 oneofthem wrote:
when you say le supply and demand it implies the wage is a product of natural forces. it's really not. different strategies of development taken by employers, employee leverage (unionization, laws, reserve pool of workers) and various factors affecting reservation wage positive and negative.
let's put it this way, looking at the world, you'll see the basic employer employee relationship without a chain (which apparently makes libertarians jump up in rage, rather than the more powerful and simple power of starvation) producing wages so low that it would seem to be barely worthwhile for an american minimum wage worker. why is the american minimum wage worker earning more than a bangladesh teenager, or why is the american worker today earning more than she was during the glory days of children in mines and factories?
the answer has quite a lot to do with politics. not recognizing this basic fact is just to shut your mind with ideology. it's pretty stupid I'm not really sure how I find your post to be relevant in this case... they're still all pretty much market forces when it comes down to it, just in a really broad sense. the market mechanism is always there. so when supply and demand in one situation leads to drastic different results from supply and demand in another situation, then it's not the central analysis anymore. Of course it is... barriers to entry are the direct result of the market wage gap between Bangladesh and the American minimum wage worker, which is a market force. These barriers prevent a more globalized economy. As globalization has become much more significant in the past 30 years, barriers have fallen and this is the exact reason why you see so many things being outsourced the and the U.S. losing the majority of it's status as a manufacturing powerhouse. this is a richer analysis than 'supply and demand' and does not make the situation seem like the product of natural forces. to put more meat on the issue, you can assign some portion to technology and some portion to political actions by specific factions and people. there are many comparative econ studies from for example an anthropological or sociology perspective. It's exactly supply and demand... From Wikipedia, it's the 2nd thing listed on basic premises for a perfect competition marketplace to function... one could hardly call this a "rich" analysis as opposed to the very basics you learn in your first econ class....
Basic structural characteristics
Generally, a perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. Specific characteristics may include:
Infinite buyers and sellers – An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
No barriers of entry and exit – No entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
Perfect factor mobility – In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions.
Perfect information - All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
Zero transaction costs - Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
Profit maximization - Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
Homogenous products - The qualities and characteristics of a market good or service do not vary between different suppliers.
Non-increasing returns to scale - The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
Property rights - Well defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
Rational buyers - buyers capable of making rational purchases based on information given
No externalities - costs or benefits of an activity do not affect third parties
This market - the one that "exist" under the condition of pure and perfect competition - consider that price are created by some miraculous process. Offer and demand are both price taker. In the situation of wage, it would mean that the market is responsible for the equilibrium wage. In the situation of walmart, it is absolutly wrong to use this modelisation of market, because Walmart has a huge market power : it is so big that it can make price and not necessarily take them. It is actually its strong force and the sole reason it can push producers to sell at lower price (not having your product in walmart is more costly than accepting a lower price and lower margin). Plus, there are tons of work trying to find out one possible pure and perfect market, the existence of an equilibrium, and we know since schonenschein that it just does not exist. So as you said, it is only first year economics, people who know a little more know it is ridiculous to just use this model with no reflexivity.
I feel like your post was more of a tangent than anything here, compared to what I was referring to. Despite someone earlier saying it's a "widely accepted belief" that the free market is the best, I'd counter with the majority of people acknowledge some regulation is better, because every market out there has imperfections that prevent it from acting like a free market.
As it relates to my point made earlier, there are barriers to entry, which is a significant reason for the wage gap between Bangladesh and U.S. workers. An example of markets not being perfect and thus wages not being identical despite what a free market would suggest.
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That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy.
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I don't think it's that sad, the new pope is a pretty cool dude.
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On February 03 2014 05:16 FabledIntegral wrote:Show nested quote +On February 03 2014 04:37 itsjustatank wrote:
Well there's some feeling of it being beneath you.
I would only do wedding photography for extravagant prices because fuck that shit. If you really want me there, you'll have to pay me a lot. Which is exactly what supply and demand is... you would not supply your services until you get $X because you'd rather do something else, aka the opportunity cost. However, at a certain point, you'd be willing to do it, if you could get that $X. That is pretty much the definition of supply/demand. Show nested quote +On February 03 2014 05:16 WhiteDog wrote:On February 03 2014 03:19 FabledIntegral wrote:On February 03 2014 03:11 oneofthem wrote:On February 03 2014 02:18 FabledIntegral wrote:On February 03 2014 02:08 oneofthem wrote:On February 03 2014 02:05 FabledIntegral wrote:On February 03 2014 00:45 oneofthem wrote:
when you say le supply and demand it implies the wage is a product of natural forces. it's really not. different strategies of development taken by employers, employee leverage (unionization, laws, reserve pool of workers) and various factors affecting reservation wage positive and negative.
let's put it this way, looking at the world, you'll see the basic employer employee relationship without a chain (which apparently makes libertarians jump up in rage, rather than the more powerful and simple power of starvation) producing wages so low that it would seem to be barely worthwhile for an american minimum wage worker. why is the american minimum wage worker earning more than a bangladesh teenager, or why is the american worker today earning more than she was during the glory days of children in mines and factories?
the answer has quite a lot to do with politics. not recognizing this basic fact is just to shut your mind with ideology. it's pretty stupid I'm not really sure how I find your post to be relevant in this case... they're still all pretty much market forces when it comes down to it, just in a really broad sense. the market mechanism is always there. so when supply and demand in one situation leads to drastic different results from supply and demand in another situation, then it's not the central analysis anymore. Of course it is... barriers to entry are the direct result of the market wage gap between Bangladesh and the American minimum wage worker, which is a market force. These barriers prevent a more globalized economy. As globalization has become much more significant in the past 30 years, barriers have fallen and this is the exact reason why you see so many things being outsourced the and the U.S. losing the majority of it's status as a manufacturing powerhouse. this is a richer analysis than 'supply and demand' and does not make the situation seem like the product of natural forces. to put more meat on the issue, you can assign some portion to technology and some portion to political actions by specific factions and people. there are many comparative econ studies from for example an anthropological or sociology perspective. It's exactly supply and demand... From Wikipedia, it's the 2nd thing listed on basic premises for a perfect competition marketplace to function... one could hardly call this a "rich" analysis as opposed to the very basics you learn in your first econ class....
Basic structural characteristics
Generally, a perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. Specific characteristics may include:
Infinite buyers and sellers – An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
No barriers of entry and exit – No entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
Perfect factor mobility – In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions.
Perfect information - All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
Zero transaction costs - Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
Profit maximization - Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
Homogenous products - The qualities and characteristics of a market good or service do not vary between different suppliers.
Non-increasing returns to scale - The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
Property rights - Well defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
Rational buyers - buyers capable of making rational purchases based on information given
No externalities - costs or benefits of an activity do not affect third parties
This market - the one that "exist" under the condition of pure and perfect competition - consider that price are created by some miraculous process. Offer and demand are both price taker. In the situation of wage, it would mean that the market is responsible for the equilibrium wage. In the situation of walmart, it is absolutly wrong to use this modelisation of market, because Walmart has a huge market power : it is so big that it can make price and not necessarily take them. It is actually its strong force and the sole reason it can push producers to sell at lower price (not having your product in walmart is more costly than accepting a lower price and lower margin). Plus, there are tons of work trying to find out one possible pure and perfect market, the existence of an equilibrium, and we know since schonenschein that it just does not exist. So as you said, it is only first year economics, people who know a little more know it is ridiculous to just use this model with no reflexivity. I feel like your post was more of a tangent than anything here, compared to what I was referring to. Despite someone earlier saying it's a "widely accepted belief" that the free market is the best, I'd counter with the majority of people acknowledge some regulation is better, because every market out there has imperfections that prevent it from acting like a free market. As it relates to my point made earlier, there are barriers to entry, which is a significant reason for the wage gap between Bangladesh and U.S. workers. An example of markets not being perfect and thus wages not being identical despite what a free market would suggest.
What I am trying to imply is that even the supply and demand modelisation is nothing but a model and, as the guy you responded to stated, there are other modelisation of the market (in sociology there are various interesting try out to explain the evolution of market prices, especially in financial market).
Supply and demand is a model, with no or almost no empirical ground, and altho it is really interesting to use it and try to understands how market price should evolve in specific situations (the law of offer and demand), there are no objective ground to refute another analysis that would put in perspective market price and history or politics (especially for labor market). That was Keynes (or Marx, or Smith) point of view btw, wage are defined as the result of societal process (class struggle, survival, consensus, etc.).
On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy.
When I try to make sure my students understands optimal allocation of ressources (that happens when the market is at equilibrium), I tell them that it is a world where everybody is happy. lol
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On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy.
Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc.
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On February 03 2014 05:38 FabledIntegral wrote:Show nested quote +On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc.
Yes, but that's only going to happen in the one dimensional world of economics. But our economy isn't run by economists, it's run by politicians, and these people don't make decisions based on the newest research paper on how to distribute money most effectively.
So why not just make pragmatical decisions that will actually help someone instead of the the same "hey I'm in the supply - side camp / hey I'm a Keynesian" stuff over and over again.
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On February 03 2014 05:38 FabledIntegral wrote:Show nested quote +On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc.
No. It is just the most efficient use of ressource, but it says nothing about the distribution of the wealth created (all distributions are pareto optimal).
That's why economists use other optimum to think on the distribution of wealth (except for utilitarists who only use pareto optimal) - the maximin, or the kaldor-hicks efficiency for exemple.
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Cayman Islands24199 Posts
On February 03 2014 05:38 FabledIntegral wrote:Show nested quote +On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc.
in the long run equilibrium. but really, the obsession with equilibrium makes economics look like a 2nd rate science
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On February 03 2014 05:51 WhiteDog wrote:Show nested quote +On February 03 2014 05:38 FabledIntegral wrote:On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc. No. It is just the most efficient use of ressource, but it says nothing about the distribution of the wealth created (all distributions are pareto optimal).
Actually yes, the models typically do depict the distribution of wealth on where the surplus ends up.
On February 03 2014 05:50 Nyxisto wrote:Show nested quote +On February 03 2014 05:38 FabledIntegral wrote:On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc. Yes, but that's only going to happen in the one dimensional world of economics. But our economy isn't run by economists, it's run by politicians, and these people don't make decisions based on the newest research paper on how to distribute money most effectively. So why not just make pragmatical decisions that will actually help someone instead of the the same "hey I'm in the supply - side camp / hey I'm a Keynesian" stuff over and over again.
I still, after numerous of your posts, am failing to see your points. Just because the "economy" isn't run by economists, which a large part of our economic structure actually is mind you and decisions ARE in fact based on research (ie. the Federal Reserves unemployment model currently being used was created by the theories of a French economist currently teaching in California), that doesn't mean we should change things?
Just because it isn't visible to you doesn't mean things aren't happening...
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Cayman Islands24199 Posts
On February 03 2014 03:19 FabledIntegral wrote:Show nested quote +On February 03 2014 03:11 oneofthem wrote:On February 03 2014 02:18 FabledIntegral wrote:On February 03 2014 02:08 oneofthem wrote:On February 03 2014 02:05 FabledIntegral wrote:On February 03 2014 00:45 oneofthem wrote:
when you say le supply and demand it implies the wage is a product of natural forces. it's really not. different strategies of development taken by employers, employee leverage (unionization, laws, reserve pool of workers) and various factors affecting reservation wage positive and negative.
let's put it this way, looking at the world, you'll see the basic employer employee relationship without a chain (which apparently makes libertarians jump up in rage, rather than the more powerful and simple power of starvation) producing wages so low that it would seem to be barely worthwhile for an american minimum wage worker. why is the american minimum wage worker earning more than a bangladesh teenager, or why is the american worker today earning more than she was during the glory days of children in mines and factories?
the answer has quite a lot to do with politics. not recognizing this basic fact is just to shut your mind with ideology. it's pretty stupid I'm not really sure how I find your post to be relevant in this case... they're still all pretty much market forces when it comes down to it, just in a really broad sense. the market mechanism is always there. so when supply and demand in one situation leads to drastic different results from supply and demand in another situation, then it's not the central analysis anymore. Of course it is... barriers to entry are the direct result of the market wage gap between Bangladesh and the American minimum wage worker, which is a market force. These barriers prevent a more globalized economy. As globalization has become much more significant in the past 30 years, barriers have fallen and this is the exact reason why you see so many things being outsourced the and the U.S. losing the majority of it's status as a manufacturing powerhouse. this is a richer analysis than 'supply and demand' and does not make the situation seem like the product of natural forces. to put more meat on the issue, you can assign some portion to technology and some portion to political actions by specific factions and people. there are many comparative econ studies from for example an anthropological or sociology perspective. It's exactly supply and demand... From Wikipedia, it's the 2nd thing listed on basic premises for a perfect competition marketplace to function... one could hardly call this a "rich" analysis as opposed to the very basics you learn in your first econ class.... Show nested quote +
Basic structural characteristics
Generally, a perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. Specific characteristics may include:
Infinite buyers and sellers – An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
No barriers of entry and exit – No entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
Perfect factor mobility – In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions.
Perfect information - All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
Zero transaction costs - Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
Profit maximization - Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
Homogenous products - The qualities and characteristics of a market good or service do not vary between different suppliers.
Non-increasing returns to scale - The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
Property rights - Well defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
Rational buyers - buyers capable of making rational purchases based on information given
No externalities - costs or benefits of an activity do not affect third parties
you have to distinguishb etween internal and external factors. the political stuff are external to the market, and aer usually called external shocks
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On February 03 2014 06:00 FabledIntegral wrote:Show nested quote +On February 03 2014 05:51 WhiteDog wrote:On February 03 2014 05:38 FabledIntegral wrote:On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc. No. It is just the most efficient use of ressource, but it says nothing about the distribution of the wealth created (all distributions are pareto optimal). Actually yes, the models typically do depict the distribution of wealth on where the surplus ends up.
The model depict the distribution of wealth, but does not say that the distribution of the wealth is optimal. Optimal allocation of ressource is what it say it is - the most efficient way to use the ressources in order to produce or achieve a specific goal (maximizing utility).
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On February 03 2014 06:10 WhiteDog wrote:Show nested quote +On February 03 2014 06:00 FabledIntegral wrote:On February 03 2014 05:51 WhiteDog wrote:On February 03 2014 05:38 FabledIntegral wrote:On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc. No. It is just the most efficient use of ressource, but it says nothing about the distribution of the wealth created (all distributions are pareto optimal). Actually yes, the models typically do depict the distribution of wealth on where the surplus ends up. The model depict the distribution of wealth, but does not say that the distribution of the wealth optimal. Optimal allocation of ressource is what it say it is - the most efficient way to use the ressources in order to produce or achieve a specific goal (maximizing utility).
Ok, I can agree with that. Doesn't mean things can't be implied from it.
On February 03 2014 06:03 oneofthem wrote:Show nested quote +On February 03 2014 03:19 FabledIntegral wrote:On February 03 2014 03:11 oneofthem wrote:On February 03 2014 02:18 FabledIntegral wrote:On February 03 2014 02:08 oneofthem wrote:On February 03 2014 02:05 FabledIntegral wrote:On February 03 2014 00:45 oneofthem wrote:
when you say le supply and demand it implies the wage is a product of natural forces. it's really not. different strategies of development taken by employers, employee leverage (unionization, laws, reserve pool of workers) and various factors affecting reservation wage positive and negative.
let's put it this way, looking at the world, you'll see the basic employer employee relationship without a chain (which apparently makes libertarians jump up in rage, rather than the more powerful and simple power of starvation) producing wages so low that it would seem to be barely worthwhile for an american minimum wage worker. why is the american minimum wage worker earning more than a bangladesh teenager, or why is the american worker today earning more than she was during the glory days of children in mines and factories?
the answer has quite a lot to do with politics. not recognizing this basic fact is just to shut your mind with ideology. it's pretty stupid I'm not really sure how I find your post to be relevant in this case... they're still all pretty much market forces when it comes down to it, just in a really broad sense. the market mechanism is always there. so when supply and demand in one situation leads to drastic different results from supply and demand in another situation, then it's not the central analysis anymore. Of course it is... barriers to entry are the direct result of the market wage gap between Bangladesh and the American minimum wage worker, which is a market force. These barriers prevent a more globalized economy. As globalization has become much more significant in the past 30 years, barriers have fallen and this is the exact reason why you see so many things being outsourced the and the U.S. losing the majority of it's status as a manufacturing powerhouse. this is a richer analysis than 'supply and demand' and does not make the situation seem like the product of natural forces. to put more meat on the issue, you can assign some portion to technology and some portion to political actions by specific factions and people. there are many comparative econ studies from for example an anthropological or sociology perspective. It's exactly supply and demand... From Wikipedia, it's the 2nd thing listed on basic premises for a perfect competition marketplace to function... one could hardly call this a "rich" analysis as opposed to the very basics you learn in your first econ class....
Basic structural characteristics
Generally, a perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. Specific characteristics may include:
Infinite buyers and sellers – An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
No barriers of entry and exit – No entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
Perfect factor mobility – In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions.
Perfect information - All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
Zero transaction costs - Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
Profit maximization - Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
Homogenous products - The qualities and characteristics of a market good or service do not vary between different suppliers.
Non-increasing returns to scale - The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
Property rights - Well defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
Rational buyers - buyers capable of making rational purchases based on information given
No externalities - costs or benefits of an activity do not affect third parties
you have to distinguishb etween internal and external factors. the political stuff are external to the market, and aer usually called external shocks
Market forces are always present, the market will simply readjust based on external factors, such as a price floor on wages in our current economy.
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On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy.
Well, why would you want to be sub-optimal 
It should be noted that market forces include laws, regulations and a whole host of societal norms and conventions. At the same time there's a lot at play in there, so trying to engineer a desired outcome is fraught with unintended consequences and disagreement over just what those consequences are.
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United States44448 Posts
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy.
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United States41117 Posts
NEW BRUNSWICK, NJ—NBC New York broke the story last night that embattled NJ Governor Chris Christie appropriated $4.8 million in Hurricane Sandy relief funds to help build a luxury highrise building in New Brunswick.
The revelation makes the 16-story project, currently under construction between Somerset and Condict Streets, the second such use of Sandy funding called into question this week.
The building, to be named Somerset Mews, has already received a city tax abatement and was approved by the city's Planning Board eight months before Sandy struck. In the planning stages for years, it is seemingly unrelated to the superstorm that devastated the Jersey Shore and coastal areas like Hoboken.
Its city-based developer, Boraie Development LLC, has strong political ties to the Governor and new US Senator Cory Booker. As we reported in April 2012, the Boraie family and its companies have been among New Brunswick's most generous political contributors over the past several decades.
The Boraies are also among the most powerful property owners in the 5.5-square-mile city, with several office buildings and retail establishments, at least 77 rental units at 23 different addresses, and a 23-story luxury condominium building in their portfolio.
New Brunswick was listed as the 188th hardest-hit town by Hurricane Sandy in a Rutgers University survey, hardly making it a leading contender for the rebuilding funds.
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