28-02-2003 01:34									#61
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quote: Originally posted by Felch X 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.

I'm talking about Keynes here, not Marx. If you think that anyone believes in equilibrium economics then can you tell me why everyone uses monetary policy?

	28-02-2003 01:53									#62
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Many economists today disagree with Keynes now and instead agree with Supply Side or neo-classical theory. Sticky Wages can keep prices up for awhile, but during certain times of retraction they can fall. They did fall during the great depression, and they can fall when under stiff pressure of competition. Moreover, when the population falls, that tends to put a corresponding leftward pressure on the AS curve anyway as there is less population then.

	28-02-2003 02:04									#63
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quote: Originally posted by Shi Huangdi Many economists today disagree with Keynes now and instead agree with Supply Side or neo-classical theory. Sticky Wages can keep prices up for awhile, but during certain times of retraction they can fall. They did fall during the great depression, and they can fall when under stiff pressure of competition. Moreover, when the population falls, that tends to put a corresponding leftward pressure on the AS curve anyway as there is less population then.

This is nonsense. You are talking about politicians and obscure economists that aren't taken seriously. There is one particular price that I'm talking about, that's wages. Wages didn't fall during the depression. That's why there was unemployment. Wages don't fall, businesses just close down and put everyone out of work. Shi, your being ridiculous by saying that economists believe in self-correcting markets. It's just rhetoric to argue for political policies to favor the rich. It's crap.

	28-02-2003 03:11									#64
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Wages do fall. Why are companies hiring younger people for less money? Simple example - in the NFL it is acceptable to release older players who have either higher minimum salaries (veterancy) or demand too much and draft a young player who will play for less money. This happens in the corporate world as well.

	28-02-2003 03:15									#65
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That is a false comparison. You have to compare like with like I would think.

i.e are NFL starting salaries increasing or not?

	28-02-2003 03:24									#66
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quote: Weren't both the Hutus and the Tutsis mostly Catholic?

Frogger, yes. The predominant religion in Rwanda is Roman Catholicism. No religious division exists between the Hutus and the Tutsis.

Lancer:
Increase Filipino immigration.

Che, and the other commies:

Interesting. We might be in agreement that population declines hurt capitalist economies.

What will we do without an increase in workers and consumers?

	28-02-2003 03:49									#67
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quote: Originally posted by MacTBone Wages do fall. Why are companies hiring younger people for less money? Simple example - in the NFL it is acceptable to release older players who have either higher minimum salaries (veterancy) or demand too much and draft a young player who will play for less money. This happens in the corporate world as well.

Nominal wages no not fall. Real wages can fall over time. We are talking about the case in the short run where there is a shortfall in demand which cuts into profits. Instead of paying their employees less companies lay people off. In fact, with the minimum wage laws in every developed country it would be illegal to pay many of the people less money.

As far as firing people who are getting paid more than another person would for doing an equal job, that is something different. That is just a correction that a company makes when they realize that they can hire someone better. This is completely independent of a decrease in demand for their product.

	28-02-2003 03:51									#68
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Every year the minimum for rookies increases, from NFLPA.org(the NFL player's association)-

quote: Minimum Salaries Minimum salaries will no longer be increased each year by the percentage increase in DGR to a maximum of 10%. Instead, Paragraph 5 Minimum Salaries are set at the following specific amounts for the years indicated ($ in 000's): Credited Seasons ||||||2002 |2003 |2004 |2005 |2006 |2007 0 |225 |225 |230 |230 |235 |235 1 |300 |300 |305 |305 |310 |310 2 |375 |375 |380 |380 |385 |385 3 |450 |450 |455 |455 |460 |460 4-6 |525 |530 |535 |540 |545 |545 7-9 |650 |655 |660 |665 |670 |670 10+ |750 |755 |760 |765 |770 |770

This is also happening in the corporate world. Say I have an employee who's been here 20 years, because of those years the market dictates that I pay him for his experience (the same as the NFL) but I realize that I can hire a young graduate (rookie) for less even though they can perform the same job (linebacker). Now, in the short term I will be paying less and there may be a short drop off in production (young players take time to adjust) but it is more cost-effective to pay someone less for a slight reduction which will soon not be an issue as the new employee gains experience.

I'll go look for a news article I saw.

	28-02-2003 04:00									#69
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MacT,

Companies are always reevaluating their employee costs. Occasionally they will see an opportunity to fire a particular employee because their performance is not as good as it used to be, and hire someone else. That's completely different from what we are talking about.

	28-02-2003 04:02									#70
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We call it a recession.

No, you call it a Republican government. Of course, Libertarians would cause the free market to collapse so fast that you wouldn't have time to say "laissez faire".

	28-02-2003 04:10									#71
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I'll try and find a regular news source. This one has been accurate about everything I've seen, but I understand your need for the news to come from a major outlet.

ProFootball.com

quote: AGE THE NEXT HOT ISSUE? As the NFL focuses more heavily upon addressing criticism resulting from the historic absence of minorities in key coaching and front-office positions, there's a new concern that slowly is emerging in league circles. Specifically, an increasing number of white, middle-aged assistants, scouts, and other team personnel worry that, as teams attempt to hire more African-Americans and to save money by bringing on younger (i.e., cheaper) employees, older staffers might be left standing around when the music stops. The phenomenon is common throughout corporate America. An employee is hired young, and the boss gives him a raise every year, in order to keep him happy. Twenty years or so later, the boss realizes that those annual raises have resulted in a fortysomething worker who can be replaced with a newbie, at half the expense. Federal law prohibits discrimination against employees over the age of 40, and many states have similar protections against discrimination on the basis of age. Still, age discrimination remains a real problem throughout America, especially as companies continue to obsess over strategies for cutting costs. As a practical matter, we doubt that there will be much of an outcry for change in this regard -- unless Matlock and the old dude from Picket Fences decide to start sending some rambling Grampa Simpson letters to the league office. Without someone who's sufficiently motivated to expose this problem as it grows, it'll most likely be ignored.

	28-02-2003 15:57									#72
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Much to think about here. The commies have made many good points, but I still think their conclusions are wrong. Their assumption is that a fall in population will lead to a fall in demand, which will lead to a fall in wages, which will cause demand to fall more, etc. However, this assumption is flawed because it does not take demographics into account.

As the population starts to shrink, the proportion of workers to elderly nonworkers grows. The population of pensioners will continue to demand products, and their demand will exist and even grow, no matter what the wage and employment situation is. In addition to the basic goods and services that anybody demands, the demand for more and better health care will continue to increase, easily offsetting the increase in productivity.

It has long been known that taxes must increase in order to support this growing population of nonworking pensioners. An ever greater proportion of the output of workers and companies will be redistributed by the government. This means that the productivity and efficiency gains inherent in technological growth and the system of capitalism will not lead to an excess of supply as long as pensioners are given enough money to suppory their lifestyle.

Basically, a declining population trend will result in demand increasing and supply decreasing, as the proportion of workers to nonworkers decreases. Ironically, socialistic government pension systems may be the just thing that saves capitalism from collapse.

	28-02-2003 16:48									#73
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quote: Originally posted by Richard Bruns Much to think about here. The commies have made many good points, but I still think their conclusions are wrong. Their assumption is that a fall in population will lead to a fall in demand, which will lead to a fall in wages, which will cause demand to fall more, etc. However, this assumption is flawed because it does not take demographics into account.

A fall in population (forgetting demographic) also leads to a fall in the available workforce. With a smaller workforce won't labour demand increase, and so wages not fall?

	28-02-2003 16:54									#74
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A socialistic healthcare system in a capitalist society is not going to work with the working population declining contiuously while the population of pensioners keeps rising. The only exception will be if the rise in productivity more than negates the decline in workers. That is a very big if, however.

It seems that the quantity of life (e.g toys, etc.) will decrease as population decreases. I do not see retirees demand more services and products than before they retire. On the whole, they are going to consume less since they will be spending much time at home or in the nearby community.


BD,

"Many economists today disagree with Keynes now and instead agree with Supply Side or neo-classical theory."

This doesn't matter. As the joke goes if you ask ten economists you will get ten answers. Another factor you need to consider is the fundamentals of classic economic theory were formulated in a time where there wasn't an enormous concentration in capital, when mobility was low and when the closing of a company didn't have a major impact on the society as a whole.

	28-02-2003 19:54									#75
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quote: Originally posted by Urban Ranger This doesn't matter. As the joke goes if you ask ten economists you will get ten answers.

Eleven answers.

	28-02-2003 20:06									#76
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When talking about marxist theory on the business cycle you have to focus on profit. Normal profit is a profit that is 'normalized' after businesses move into new booming industries. Economic profit is more than normal profit. Only businesses with monopoly power and businesses that start up new industries get this type of profit. Marxist theory of the business cycle is focused on economic profit. When economic profit is high the economy is growing and when it is low the economy is shrinking.

Also according to Marxist theory capital gets more and more concentrated with every business cycle. Eventually, this leads to revolution, because the is downward pressure on wages and you get massive unemloyment.

I'm not sure what Che is predicting with respect to wages if world population decreases. He may be saying that wages would decrease. This would be due to falling demand. However, I think UR is right, that wages would increase due to decreased supply of labor, especially since demographics would shift.

Che is focusing on demand for goods. True, this could cut into profits, but its not what Marx himself focused on. Marx was definitely focused on the supply side. This isn't to say that Che is wrong. Marxist business cycle theory was the first theory of the business cycle and no one knew that recessions could be caused by falling demand. We know now that most recessions are caused by falling demand.

I think there is something to what Che is saying, but probably due to other reasons than Che. While Che might be predicting that wages will fall, I think wages would rise. Corporations are taking advantage of cheap labor right now. As world populations fall the supply of labor will be cut back causing wages to increase. This will cause a severe cut into profits. So while Che is saying that a decease in demand for products will cause a decrease in profits, I think an increase in costs will caues a decrease in profits. The result would be the same however. Businesses will fail and people will then become unemployed.

	28-02-2003 21:33									#77
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This thing depends on the elasticity of demand for labor. There are two questions to answer. One, how much will wages increase? Two, will the result be more unemployment or a tightening in the job market?

If demand for labor is very inelastic we will see much higher wages and very low unemployment. However, there would be severe inflation. Two kinds of inflation would be coupled together, demand push and supply pull. I think this would not cause much business consolidation or a decrease in profits as long as the economy stayed stable, but stability could be difficult because of the supply shock. I believe that demand for labor is inelastic, but it could be elastic.

If demand for labor is very elastic wages will only increase a very small amount and there will be very high unemployment. There would probably not be inflation unless fiscal and monetary policy were used to combat unemployment at the expense of inflation. I don't think that's likely unless unemployment gets very bad. This would cause a lot of business consolidation and recession.

If the demand for labor is unit elastic, that is the ratio of the change in wage is equal to the change in employment, aggregate demand won't change. Income from wages would remain constant. There would be a small amount of inflation and some loss in profits. I don't think this would be catastophic unless monetary policy made the situation worse.

It's most likely that demand for labor is inelastic. The result could be an exageration of the supply shocks of the 70s. It's likely that the world banking system would actively fight inflation at the expense of employment and that would cause unemployment to swell greatly. That would be catastophic. There is the outside possibility that the banking system will combat unemployment at the expense of inflation, but that would create a danger of hyperinflation.

Of course, if population only decreases slightly I don't think there will be much consequence at all. This is all considering that the drop in population would be very significant.

edit: typos

Last edited by DuncanK on 28-02-2003 at 21:49

	28-02-2003 21:54									#78
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Actually, I'm sure demand for labor is inelastic.

	28-02-2003 22:04									#79
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Communists lecturing us on the reasons Capitalism will fail....uh huh.....

-=Vel=-

	28-02-2003 22:13									#80
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I have been saying that we were in trouble pop wise for years

and no one beleived me (all said we ahd too much, and were growing too fast), people who want to kill the human race

get ****ing people (with life partners of course)

Jon Miller

	28-02-2003 22:19									#81
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get ****ing people

Yes, Sir!

	28-02-2003 23:09									#82
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this looks like good news to me (to the original article)

I am dismayed by India's estimates. They need birth control over there or something.

China looks good, but I fear to think that those rumours are true what they due to extra kids over there.

	28-02-2003 23:49									#83
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quote: Originally posted by Big Crunch A fall in population (forgetting demographic) also leads to a fall in the available workforce. With a smaller workforce won't labour demand increase, and so wages not fall?

Yup. Consider what happened after the Black Death in Europe. Population fell by about one third, reducing aggregate demand. But real wages rose. Why? The same amount of productive capital was spread among fewer workers, so capital per worker rose. With more capital per worker, workers became more productive, leading to a rise in real wages.

	01-03-2003 01:37									#84
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After the Plague there was a complete restructuring of the economy after a collapse. In the long run wages became higher. The short run can not be examined. There is no way to tell from that experience how such and event would effect a modern economy. That is, short run problems can end up as long run problems if they are not managed well. If the problem in the short run can be managed properly the result would be higher wages in the long run and a higher standard of living.

	01-03-2003 01:40									#85
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quote: Originally posted by Adam Smith Yup. Consider what happened after the Black Death in Europe. Population fell by about one third, reducing aggregate demand. But real wages rose. Why? The same amount of productive capital was spread among fewer workers, so capital per worker rose. With more capital per worker, workers became more productive, leading to a rise in real wages.

It wasn't the increase in productivity that caused wages to go up it was the decrease in labor supply. An increase in productivity decreases the demand for labor which tends to decrease wages.

	01-03-2003 01:46									#86
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The reulting changes from the Black Death led to the demise of feudalism. Higher wages led to the stirring of capitalism. Sure, it took a few hundred years for capitalism to break free from the shackles of feudalism, but it happened nonetheless.

Workers will demand higher wages since they are in shorter supply (and to cover the taxes that will be increased in order to take care of the elderly). But companies won't be able to meet that demand.

	01-03-2003 02:00									#87
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I would argue that the black death postponed the end of feudalism by centuries. If you look at the 13th century, states all over Europe were freeing serfs. Land was in low supply and labor was in high supply, so freedom became more profitable than serfdom. Then came the Black Death, which completely upended the situation. Land was in high supply, and labor in low supply. So it became necessary to re-enserf peasants, take away their rights, tax the hell out of them, etc., etc.

Capitalism thrives during population explosions and falters during population declines.

	01-03-2003 02:01									#88
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quote: Originally posted by DuncanK It wasn't the increase in productivity that caused wages to go up it was the decrease in labor supply.

The population decline, taken alone, causes a proportionate decliine in both the supply and demand for labor.

quote: Originally posted by DuncanK An increase in productivity decreases the demand for labor which tends to decrease wages.

An increase in labor productivity increases wages. If I produce more I get paid more.

	01-03-2003 02:06									#89
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quote: Originally posted by Adam Smith The population decline, taken alone, causes a proportionate decliine in both the supply and demand for labor. An increase in labor productivity increases wages. If I produce more I get paid more.

That would be true if workers were paid for how much they produce, but they aren't. They are paid according to how long they work. Granted that in cottage industries those who increased their productivity increased their pay, but an over all increase in productibity brings that compensation back to subsistance.

	01-03-2003 02:09									#90
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I am dismayed by India's estimates.

Actually, India's population growth is much healthier than China's--it's very even from one age group to another. (Much more even than the United States, which will become fairly even over time.) This is good, since their ratio of workers to retirees will continue to be reasonable.

China is going to have a problem spending money on all of its retirees in only a couple of decades. India will not likely have this problem.