The Public Sector - A Different Perspective

[Kurt Barlow]

Kurt, let me show you an example to educate you; try to guess and I will confirm for you later on:

Oranges and apples - a Ox drawn cart for personal travel and a Haulpack for lugging ore out of a mine. - Saw a couple of them today at an ilmenite mine!

In regard to hauling mineral ores the increased size of machinery doesnt reduce overall demand as the larger equipment allows for exploitation of ores previously deemed uneconomic

Very poor analogy D-

At least with the Ox at the end of its working life you can eat it, make a coat, shoes etc out of its hide, glue (non sniffable) out of its horns.

Edited November 19, 2013 by Kurt Barlow

[Kurt Barlow]

if your longbow lasts double the time you reduce the demand by half - e.g. from 10k per year to 10k per 2 years

Or you opt for double the number of longbows.

[Damik]

Or you opt for double the number of longbows.

yes; you have an army of 10k archers, and they will carry 2 longbows instead of one; as they last double the time

I hope that they will not improve the life span of the long bow even more ..

Edited November 19, 2013 by Damik

[Damik]

Oranges and apples - a Ox drawn cart for personal travel and a Haulpack for lugging ore out of a mine. - Saw a couple of them today at an ilmenite mine!

In regard to hauling mineral ores the increased size of machinery doesnt reduce overall demand as the larger equipment allows for exploitation of ores previously deemed uneconomic

Very poor analogy D-

At least with the Ox at the end of its working life you can eat it, make a coat, shoes etc out of its hide, glue (non sniffable) out of its horns.

Kurt, you need to do more homework. It is really only a basic economics. Once again just for you:

Free markets are more than happy to improve productivity by developing larger trucks and significantly reducing demand for smaller trucks. First we had only small trucks, then we developed larger and larger one till we hit the optimum size of the trucks. Some of the companies making just the small trucks were bankrupted as the original higher demand for small trucks was significantly reduced.

And after all it is a good thing ...

[tomandlu]

if your longbow lasts double the time you reduce the demand by half - e.g. from 10k per year to 10k per 2 years

So all Apple have to do is make an Ipad that only lasts 5 minutes?

Durability can (and does) increase the demand for something, otherwise we'd all be wearing paper shoes.

You seem intent on mixing up various different things. New technology can make an old product redundant - this is not news, but it's nothing to do with more efficient production. More efficient production can lower the cost of the product being manufactured, as well as increasing output. This can increase demand. Durability is a factor in demand - there is more demand for a durable product than a flimsy one at the same price-point.

However, 'more efficient production' in most cases means 'less man hours per unit', which means an increase in unemployment unless new products and technologies create new job opportunities. That's the classical scenario for those who maintain that the current system works - that those products and technologies will never stop.

To me, this is slightly crazy. I'm very happy to see new technology and products, but to make our system dependant on them means we have committed ourselves to perpetual growth, rather than finding a way to make the gains in productivity available to all irrespective of growth. We have a system where, perversely, increased production leads to increased poverty and, eventually, an implosion of debt. To me, it seems a problem worth solving.

[Kurt Barlow]

Kurt, you need to do more homework. It is really only a basic economics. Once again just for you:

Free markets are more than happy to improve productivity by developing larger trucks and significantly reducing demand for smaller trucks. First we had only small trucks, then we developed larger and larger one till we hit the optimum size of the trucks. Some of the companies making just the small trucks were bankrupted as the original higher demand for small trucks was significantly reduced.

And after all it is a good thing ...

What has any of this got to do with the provision of public services (those with a social rather than economic value)?

Perhaps you are subtly arguing for a bigger state as this would be more efficient

[Damik]

You seem intent on mixing up various different things. New technology can make an old product redundant - this is not news, but it's nothing to do with more efficient production. More efficient production can lower the cost of the product being manufactured, as well as increasing output. This can increase demand. Durability is a factor in demand - there is more demand for a durable product than a flimsy one at the same price-point.

by productivity I mean the productivity of the product (the total business value = business value - total cost of ownership); not the productivity of the manufacturing of the product

the argument here is that free markets are more than happy to reduce the original demand by:

- increasing the total business value

- creating new demand, which replaces the old demand

such as if your car lasts 10 years instead of 5 years you can buy a new car less often

Edited November 19, 2013 by Damik

[Kurt Barlow]

by productivity I mean the productivity of the product (the total business value = business value - total cost of ownership); not the productivity of the manufacturing of the product

the argument here is that free markets are more than happy to reduce the original demand by:

- increasing the total business value

- creating new demand, which replaces the old demand

such as if your car lasts 10 years instead of 5 years you can buy a new car less often

I reckon Damiks doing his AS level in economics and come here to show off

[Damik]

What has any of this got to do with the provision of public services (those with a social rather than economic value)?

Perhaps you are subtly arguing for a bigger state as this would be more efficient

Kurt, you have a memory of a gold fish. The OP argument is:

It could be that capitalism has it's own internal contradictions that will eventually bring it down just as communism was brought down. One obvious example being the contradiction between the pressure to automate as many jobs as possible while retaining demand for goods and services.

My argument is that capitalism (meaning free markets) is quite happy to destroy the original demand and it is actually a good thing. As we have the social security system on the top to help the economical "loosers". And they will also benefit from the improved productivity.

I am OK with the public sector if there is a customer driven competition. What unfortunately often is not the case.

Edited November 19, 2013 by Damik

[tomandlu]

such as if your car lasts 10 years instead of 5 years you can buy a new car less often

Yes, which can mean that overall demand can go up. I'm still not sure what point you're trying to make or how it's relevant to the issue?

[Damik]

Yes, which can mean that overall demand can go up. I'm still not sure what point you're trying to make or how it's relevant to the issue?

demand is measured by quantity per interval

assume that 10k of families require only a single car

if the car lasts 5 years the demand is 10k cars every 5 years

if the car lasts 10 years the demand is 10k cars every 10 years

therefore reducing the demand (quantity per interval) by half

[tomandlu]

demand is measured by quantity per interval

assume that 10k of families require only a single car

if the car lasts 5 years the demand is 10k cars every 5 years

if the car lasts 10 years the demand is 10k cars every 10 years

therefore reducing the demand (quantity per interval) by half

You assume that demand is static. If cars last 10 years as opposed to 5 years, more families will buy a car.

Again, what has this got to do with the question this thread raised - can the state solve the problems created by increased productivity?

[John51]

What seems to be happening in practice is that the now more reliable cars get sold after 5 years or so and we have 10k families buying new and 10k families buying used, so double the number of cars on the road.

If the price point drops low enough, it opens up new markets.

[Damik]

1/ You assume that demand is static. If cars last 10 years as opposed to 5 years, more families will buy a car.

2/ Again, what has this got to do with the question this thread raised - can the state solve the problems created by increased productivity?

1/ no, it is the opposite; the demand will decrease; why would family buy a 2nd car? because they last longer?

2/ and my argument is that free markets have been doing this for ages and they will continue so till we end up with the society like Roman Empire with plenty of robotic slaves and no real work for majority ...

[Damik]

What seems to be happening in practice is that the now more reliable cars get sold after 5 years or so and we have 10k families buying new and 10k families buying used, so double the number of cars on the road.

If the price point drops low enough, it opens up new markets.

another example: new 2013 version of paint for house exterior costs the same but lasts twice longer (new chemical formula). does it increase or decrease the demand for this paint (purchased quantity per time)?

[tomandlu]

1/ no, it is the opposite; the demand will decrease; why would family buy a 2nd car? because they last longer?

It is not "the family" buying a second car - it is another family buying a first car, because the cost has essentially halved - better value increases demand.

2/ and my argument is that free markets have been doing this for ages and they will continue so till we end up with the society like Roman Empire with plenty of robotic slaves and no real work for majority ...

Fine, okay (although I think your understand of the economics of ancient rome might be a bit off) - now, what mechanism will allow that outcome? It clearly can't be the current one. How does someone who doesn't work gain access to the fruits of production? Citizen's income? Employed by the state? Everything's free?

[tomandlu]

another example: new 2013 version of paint for house exterior costs the same but lasts twice longer (new chemical formula). does it increase or decrease the demand for this paint (purchased quantity per time)?

It increases demand, since people will switch to this product from an inferior one (unless it costs more than twice as much overall).

[Damik]

Fine, okay (although I think your understand of the economics of ancient rome might be a bit off) - now, what mechanism will allow that outcome? It clearly can't be the current one. How does someone who doesn't work gain access to the fruits of production? Citizen's income? Employed by the state? Everything's free?

with the free robotic labour basic life necessities will be almost free; and can be provided for free; such as FreeView TV these days

and we still have the current benefits system; with the costs plummeting to almost zero; so easilly affordable

[Damik]

It increases demand, since people will switch to this product from an inferior one (unless it costs more than twice as much overall).

you are wrong again

let's assume that total UK house exterior paint demand is 1000 tonnes every year

with the new chemical formula for longer life span the total demand (1000 tonnes every year) will fall; as we do not need so much paint anymore and there is not other use for the paint

[tomandlu]

you are wrong again

let's assume that total UK house exterior paint demand is 1000 tonnes every year

with the new chemical formula for longer life span the total demand (1000 tonnes every year) will fall; as we do not need so much paint anymore and there is not other use for the paint

So this paint manufacturer had a monopoly prior to the new paint? Fine, I'm sure you can construct a scenario where the need for something falls despite it being sought-after - you might even find some examples in real-life. So what? The main dynamic remains - increased productivity = falling employment (in the absence of any other changes).

[tomandlu]

with the free robotic labour basic life necessities will be almost free; and can be provided for free; such as FreeView TV these days

and we still have the current benefits system; with the costs plummeting to almost zero; so easilly affordable

Yes, I realise that can be an outcome - the question is how do we achieve that outcome? Almost free = very expensive if you have no income. How do you persuade those who hold the means of production to give up the notion of making a profit and yet still produce?

Edited November 19, 2013 by tomandlu

[Damik]

Yes, I realise that can be an outcome - the question is how do we achieve that outcome? Almost free = very expensive if you have no income. How do you persuade those who hold the means of production to give up the notion of making a profit and yet still produce?

with the current benefit system every single person has some income; ignoring the stuff which is already free or paid by adverts

if the production can be totally automated it can not be hold and controlled by small groups of capitalists; such as mobile phones; it makes sense to built and sell mobile phones for even like £9.99

and there still will be a profit; such as mansion in central London; space ship, submarine, etc ...

[Damik]

The main dynamic remains - increased productivity = falling employment (in the absence of any other changes).

not yet as the automation is not there yet; there are still plenty of jobs; such as health care and social care

but this is a great thing; otherwise you would be looking for the food; every day; 12h or more ...

[MarkG]

with the free robotic labour basic life necessities will be almost free; and can be provided for free; such as FreeView TV these days

Uh, no.

Where do you think all the resources will come from to build those things? If production was really free, we'd run out of resources by tomorrow morning.

This is just more outdated industrial-era Marxist nonsense where all value comes from 'labour'.

[Damik]

Uh, no.

Where do you think all the resources will come from to build those things? If production was really free, we'd run out of resources by tomorrow morning.

This is just more outdated industrial-era Marxist nonsense where all value comes from 'labour'.

you need to read my posts carefully:

with the free robotic labour basic life necessities will be almost free