28-02-2003 00:29									#31
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He's saying that increases in productivity need to be offset by increases in demand. Demand keeps increasing as population increases.

	28-02-2003 00:32									#32
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Che once again shows why he is the Secretary-General of the Communist Party of Apolyton. Good show comrade.

	28-02-2003 00:32									#33
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Demand doesn't need to increase though. People are greedy and always want more stuff. People get extra cars, computers, TVs, additions to their houses, new houses, vacations, and all sorts of things. You don't need population growth to suck up the produce of capitalism. Pure simple greed will do just fine.

	28-02-2003 00:39									#34
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quote: Originally posted by Felch X We seem to have a fundamental difference of opinion. I believe that the produce of capitalism is less than what people want. That's why people want more money. More money means more stuff.

So in other words what you are saying is: the the ability to purchase existing products is limited by purchasing power. In other words, capitalism is producing more than can be consumed. Just because people want more things doesn't mean that they have the ability to consume them. I want a car, but I don't have the money to buy one. Therefore, I'm not in the market for a car. I was in the market for a car, then my job got cut and my purchasing power contracted. Multiply this effect by millions and you can see how it can damage an economy.

Shi, it's not the numbers, but the fact that the population will begin dropping that creates the problem. When your markets shrink, so do your profits. However, your debts won't shrink, and expenditures you've already made can't be undone. The only way to cut costs will be at the expense of labor, which will further contract the market.

Big C, I'm glad you mentioned this, because it totally slipped my mind. You're absolutely right, new markets can be opened up by new technology. The computer revolution is one such market. Biotech is the next big thing. But up to now, all of these "revolutions" occurred in the context of expanding markets.

I also forgot to mention the effect of credit on expanding a market. Credit, however, has limits, and these are being reached in the US. Thus we see the expansion of easy credit into areas where it wasn't considered a good idea before, like college students and bad credit risks. Once that limt is reached, however, debt begins to contract people's ability to purchase, since they're paying off the things they've already purchased.

	28-02-2003 00:40									#35
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quote: Originally posted by Big Crunch Che, are you saying that markets are solely or predominantly defined by the population open to purchase goods? What about situations where new markets are made by new goods?

That's what I was getting at. I think that the system depends on both the opening of markets for new goods and the continued exploitation of more and more labor markets. If either of those stops the system will collapse. So I think both Che and I are correct. It's just a matter of which comes first.

	28-02-2003 00:41									#36
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quote: Originally posted by DuncanK He's saying that increases in productivity need to be offset by increases in demand. Demand keeps increasing as population increases.

Yes. In other words, when supply outstrips demand, the economy tumbles. Since a declining population means demand is going to contract, that creates a problem for future capitalism.

	28-02-2003 00:45									#37
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quote: Originally posted by Felch X Demand doesn't need to increase though. People are greedy and always want more stuff. People get extra cars, computers, TVs, additions to their houses, new houses, vacations, and all sorts of things. You don't need population growth to suck up the produce of capitalism. Pure simple greed will do just fine.

Demand doesn't have to increase? Felch, increases in productivity mean people lose jobs. Demand has to increase so that those people can be rehired.

	28-02-2003 00:46									#38
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The population isn't declining though Che. It's increasing. Just not by as much as it used to. And you are incorrect Che, increases in aggregate supply increase economic welfare irregardless of what is happening with demand.

	28-02-2003 00:47									#39
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quote: Originally posted by Felch X You don't need population growth to suck up the produce of capitalism.

Yes you do, and this is why. In capitalism, people produce far more than they can ever hope to use. You act like this doesn't happen. It does, every seven to ten years. We call it a recession. Supply, i.e., production, has exceeded the demand of the market. Companies can't make their sales and then can't make their debt payments, and then cut workers to try and stay afloat, thus further contracting demand. Some companies go out of business. Once supply shrinks enough to meet demand, growth begins again.

	28-02-2003 00:50									#40
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But Che you didn't respond to my claim that most of the production is aimed torward the core, not the periphery. I don't think the economy would collapse just because US exports fell.

	28-02-2003 00:51									#41
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quote: Originally posted by chegitz guevara So in other words what you are saying is: the the ability to purchase existing products is limited by purchasing power. In other words, capitalism is producing more than can be consumed. Just because people want more things doesn't mean that they have the ability to consume them. I want a car, but I don't have the money to buy one. Therefore, I'm not in the market for a car. I was in the market for a car, then my job got cut and my purchasing power contracted. Multiply this effect by millions and you can see how it can damage an economy.

If a company is producing a product that nobody can buy, then it will go out of business. That's pretty elementary. Nothing catastrophic about it. Instead of making cars that no one can afford, the company should have been making products that people can afford to purchase.

quote: I also forgot to mention the effect of credit on expanding a market. Credit, however, has limits, and these are being reached in the US. Thus we see the expansion of easy credit into areas where it wasn't considered a good idea before, like college students and bad credit risks. Once that limt is reached, however, debt begins to contract people's ability to purchase, since they're paying off the things they've already purchased.

I agree completely on this. The rapid expansion of credit is silly and bad business sense.

quote: Yes. In other words, when supply outstrips demand, the economy tumbles. Since a declining population means demand is going to contract, that creates a problem for future capitalism.

When supply outstips demand, prices fall. Prices will continue to fall until the demand and supply are equal. If the price is too low for the company to make a profit, then they won't produce as much.

	28-02-2003 00:51									#42
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quote: Originally posted by Shi Huangdi The population isn't declining though Che. It's increasing. Just not by as much as it used to. And you are incorrect Che, increases in aggregate supply increase economic welfare irregardless of what is happening with demand.

You missed the critical part of the essay, Shi. Population growth is slowing, and will peak aruond the year 2050, at which point global population will begin to decline.

And supply is menaingless without demand. The US destroys massive amounts of food each year simply because there's no market for it. In fact, the US has to pay farmers not to produce. And yet, millions starve elsewhere in the world. And tens of thousands of American farmers go out of business each year, because they are too productive.

	28-02-2003 00:54									#43
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quote: Originally posted by Shi Huangdi The population isn't declining though Che. It's increasing. Just not by as much as it used to. And you are incorrect Che, increases in aggregate supply increase economic welfare irregardless of what is happening with demand.

Are you serious. No one believes that anymore. The Great Depression should have put that theory to death.

	28-02-2003 00:56									#44
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quote: Originally posted by Felch X When supply outstips demand, prices fall. Prices will continue to fall until the demand and supply are equal. If the price is too low for the company to make a profit, then they won't produce as much.

You act as if this has no other effect. The goods were already produced at a certain cost. In order to recoup that cost, the product has to be sold at a profit. Yes, elementary stuff. If, in order to sell the products, the company loses money, it has to cut costs elswhere. The bank still has to be paid. So the workers get cut.

Now if it was just one company, the effect would be small enough that the economy could practically ignore it. But in a general contraction of the market, it's many companies. And many companies laying off workers means there are a lot more workers whose demand just dropped, meaning supply is still too high.

	28-02-2003 01:00									#45
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quote: Originally posted by DuncanK Demand doesn't have to increase? Felch, increases in productivity mean people lose jobs. Demand has to increase so that those people can be rehired.

Demand doesn't have to increase because it always outpaces production. People always want more than they can afford, and are always striving to get more.

quote: Yes you do, and this is why. In capitalism, people produce far more than they can ever hope to use. You act like this doesn't happen. It does, every seven to ten years. We call it a recession. Supply, i.e., production, has exceeded the demand of the market. Companies can't make their sales and then can't make their debt payments, and then cut workers to try and stay afloat, thus further contracting demand. Some companies go out of business. Once supply shrinks enough to meet demand, growth begins again.

Natural (i.e. unrelated to war or other disasters) economic cycles are a part of capitalism. It's just like you said, companies make mistakes, produce things that no one is willing to pay for, and those mistakes are gradually corrected.

quote: And supply is menaingless without demand. The US destroys massive amounts of food each year simply because there's no market for it. In fact, the US has to pay farmers not to produce. And yet, millions starve elsewhere in the world. And tens of thousands of American farmers go out of business each year, because they are too productive.

America shouldn't be in the farming business. It's that simple. If we can't sell what we produce, we shouldn't do it.

Che, the problem is that you are looking at specific products and saying, "The demand for this has a limit." Nobody is saying there is an infinite demand for individual products. Instead there is an infinite variety of goods, potential and realized, that there is a vast demand for. Companies do go out of business if they don't change. Capitalism is dynamic and competetive, and there are losers in it. But it's not doomed simply because the population isn't rising.

	28-02-2003 01:01									#46
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No, Che, you have it wrong. It's basic macroeconomic theory that aggregate supply is good(unless Adam Smith/Roland or one of those people want to correct me). When the Aggregate supply curve shifts to the left, meaning a decrease in productivity, we get stagflation. This happened during Jimmy Carter's administration when both unemployment and inflation went up. When the aggregate supply curve shifts to the right, inflation is pushed down and ouput is pushed up(along with a decrease in unemployment). Too much demand isn't good either, once it gets beyond it certain point it stops increasing economic welfare and merely causes inflation.

	28-02-2003 01:02									#47
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The Market for pharms that treat cystic fibrousis (spelling?) is really low. The company that makes the pharm does not make a profit on that product, yet still does, and compensates the cost to other products it makes.

I know this is worthless info. but it is a good though when thinking about supply and demand in regards to profit.

quote: And supply is menaingless without demand.

and demand is meaningless without supply... You can't buy what they don't make, and you can't make what they aren't buying... at least not for long.

	28-02-2003 01:02									#48
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quote: Originally posted by chegitz guevara You act as if this has no other effect. The goods were already produced at a certain cost. In order to recoup that cost, the product has to be sold at a profit. Yes, elementary stuff. If, in order to sell the products, the company loses money, it has to cut costs elswhere. The bank still has to be paid. So the workers get cut. Now if it was just one company, the effect would be small enough that the economy could practically ignore it. But in a general contraction of the market, it's many companies. And many companies laying off workers means there are a lot more workers whose demand just dropped, meaning supply is still too high.

But in the end it's still a simple case of a market correction. It's natural, and it happens all the time. It's not perfect, but it's not going to fail simply because the population declines.

	28-02-2003 01:02									#49
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quote: Originally posted by Felch X Demand doesn't have to increase because it always outpaces production. People always want more than they can afford, and are always striving to get more.

But that's not demand. Wanting something isn't demand. You must have purchasing power in order to be considered demand. And purchasing power is limited.

	28-02-2003 01:05									#50
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quote: Originally posted by Felch X When supply outstips demand, prices fall. Prices will continue to fall until the demand and supply are equal. If the price is too low for the company to make a profit, then they won't produce as much.

Prices are sticky folks, especially wages. This is proven throughout history. Get with the times. Why do you think we intervene in the economy now days with monetary policy.

	28-02-2003 01:06									#51
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Purchasing power is limited by wealth. If wages rise (going way back in the discussion) because productivity rises, then the demand increases.

I'm sorry for misusing demand. I mean wanting something, and being able to eventually afford it. I represent demand for a giant plasma TV. I can't afford it right now, but that's not to say that I won't ever be able to. Since we're talking about the future and long-term economic forcasting I twisted the meaning of the word a bit.

	28-02-2003 01:08									#52
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Well, my SO demands that I work on her website, so my supply of disucssion is going to diminish for now.

	28-02-2003 01:09									#53
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quote: Prices are sticky folks, especially wages. This is proven throughout history. Get with the times. Why do you think we intervene in the economy now days with monetary policy.

Prices are as sticky as people want them to be. Capitalism is based (ideally) on mutual agreements for exchanges of goods or services. The prices can be renegotiated anytime, if one side feels unsatisfied.

	28-02-2003 01:10									#54
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Have a good day, Che. It was nice talking.

	28-02-2003 01:12									#55
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quote: Originally posted by Shi Huangdi No, Che, you have it wrong. It's basic macroeconomic theory that aggregate supply is good(unless Adam Smith/Roland or one of those people want to correct me). When the Aggregate supply curve shifts to the left, meaning a decrease in productivity, we get stagflation. This happened during Jimmy Carter's administration when both unemployment and inflation went up. When the aggregate supply curve shifts to the right, inflation is pushed down and ouput is pushed up(along with a decrease in unemployment). Too much demand isn't good either, once it gets beyond it certain point it stops increasing economic welfare and merely causes inflation.

Shi,

When AS increases prices must fall in order for the market to clear. Economist agree that prices don't ever fall enough for the market to clear. This is because of the stickyness of wages. Instead an increase in AD is needed to offset the increase in AS

	28-02-2003 01:17									#56
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quote: Originally posted by Felch X quote: Prices are sticky folks, especially wages. This is proven throughout history. Get with the times. Why do you think we intervene in the economy now days with monetary policy. Prices are as sticky as people want them to be. Capitalism is based (ideally) on mutual agreements for exchanges of goods or services. The prices can be renegotiated anytime, if one side feels unsatisfied.

No they can't. It's a matter if the price always falls to clear the market of not. In fact it doesn't unless there is an increase in demand to offset it.

	28-02-2003 01:19									#57
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Shi and Felch X,

Your theories are pre Great Depression.

	28-02-2003 01:20									#58
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Is there any evidence to suggest that a falling population leads to a decline in overall purchasing power?

	28-02-2003 01:24									#59
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quote: Originally posted by Big Crunch Is there any evidence to suggest that a falling population leads to a decline in overall purchasing power?

Population is considered a determinant of demand, just like income. When it increases demand increases and when it falls demand decreases.

	28-02-2003 01:30									#60
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quote: Originally posted by DuncanK Shi and Felch X, Your theories are pre Great Depression.

You're right. Our theories date back to the 18th century. Your theories date back to the 19th century. It just so happens that our theories actually work, and capitalism continues to thrive, while communism has gone the way of the condor, existing only in isolated pockets.