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scepticus

Over-Abundance Is Killing The Economy, Says Blogger

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He saying on the one hand

"Today there is too much of everything and no demand for it."

but also

"Here are the results: You can get a job but there’s nowhere you can afford to live that is anywhere near that job. "

In essence hes completely missing the point which that the problem lies with the things that are scarce (e.g. housing) not with the things that are abundant. If we had cheap housing we would all reap the benefit of all the abundant things he was ranting about but as it is any money we save is harvested by rentiers.

Edited by goldbug9999

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He saying on the one hand

"Today there is too much of everything and no demand for it."

but also

"Here are the results: You can get a job but there’s nowhere you can afford to live that is anywhere near that job. "

In essence hes completely missing the point which that the problem lies with the things that are scarce (e.g. housing) not with the things that are abundant. If we had cheap housing we would all reap the benefit of all the abundant things he was ranting about but as it is any money we save is harvested by rentiers.

Yes indeed

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I've already mentioned this on numerous threads - an extraordinary investment cycle resulted in massive demand for raw materials to increase capacity for the same materials. Now that the investment cycle has ended you have both overcapacity and reduced demand making everything pretty much valueless.

Overabundance IS the problem, as to keep the plates spinning you have to churn out volume at wafer thin margins or even at a loss. The malinvestment of the last decade, particularly in China will take decades to work through the economy.

The problem isn't in scarcity, it's in working out how to get people to be able to afford all the things we can make when those things are essentially valueless (note that this does not mean worthless). If there's no value in the goods there's no value to transfer to the people who either manufacture them or service the people who manufacture them.

Edited by frozen_out

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Some stuff you can't give it away...plenty of stuff to fill a space no space to put it, is that why storage places are doing so well...hoarding on the increase, replacing stuff cheaply, plenty of nearly new excellent condition secondhand goods about,cars,clothes,furniture,white goods,electrical etc.

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The idea that abundance is killing the 'economy' is quite odd in a way- isn't the whole point of having an economy to produce abundance?

Of course we don't really have an abundance of everything- housing being the obvious example of scarcity at present- so there is an element of special pleading here- the article seems to be expressing a particular middle class angst at the erosion of a certain strata of profitable activities that are being undermined by technology, aided and abetted by cheap capital.

With these caveats in place it's still possible to discern a genuine paradox in the way our economic system operates, that being the law of diminishing returns that kicks in once it becomes possible to manufacture and distribute a product or service at very low costs. In theory this is a good thing- this is Capitalism doing what it does best, making goods and services cheaper for everyone.

The problem is that the more cheap and easy it is to make a thing the less 'market value' that thing will command, which leads to the counterintuitive conclusion that beyond a certain point increasing efficiency in the production of goods and services does not add economic value but subtracts it.

Sounds absurd? Have we not been drilled in the idea that more efficiency= more economic value? Yes- we have- but there is an implicit assumption here that is rarely overtly stated- the assumption being that demand for any given good or service is infinite. And this is patently not true- demand for any given good or service will always be finite to some degree or another.

So the point at which increased efficiency will begin to subtract economic value is the point at which that efficiency begins to exceed the demand for whatever good or service is being offered to the market- which is actually blindingly obvious once you spell it out.

So the mantra that we can always create more and more economic value simply by enhancing the efficiency of our production and distribution is subject to a limitation in that it only holds true so long as demand keeps up with this enhanced supply- again a painfully obvious but strangely overlooked point.

Taken to extremes it's quite clear that the products of a hyper efficient production system would generate economic returns approaching zero- for the simple reason that they would be so readily available as to be virtually worthless as trade goods.

What the 'digital revolution' is exposing is the reality that at a certain level, efficiency and the creation of economic value are not synonymous but are in fact dichotomous. That being so we can see that Capitalism has a lemming like trait to seek it's own destruction in that it drives innovation ever onward in the quest for greater profit but in doing so threatens to create a degree of oversupply that makes that profit ever more difficult to achieve.

If the ultimate Capitalist wet dream is a virtually frictionless business model in which nearly all costs are eliminated by hyper efficient and labor free technologies then we are forced to conclude that the ultimate aim of Capitalism is to render itself obsolete- which may not in fact be as inconsistent as it seems, given the fact that abundance for all is the promised land toward which the Capitalists claim to be leading humanity.

Edited by wonderpup

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Well, I`ve been going to the same sunday boot sale every sunday for a year.

One thing has changed and that is that there are a good number of house clearance stalls . Charities such as the British Heart Foundation are unable to sell stiff that`s a bit iffy..

so it`s sold to dealers who sell for little or nothing. Their objective seems to be to shift a large van full on a given day, you never see the same stuff twice.

This is of course driving down prices across the board .

Being a HPC member I go for chicken vindaloo curry....3 tins for £1.( Asda)

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Some stuff you can't give it away...plenty of stuff to fill a space no space to put it, is that why storage places are doing so well...hoarding on the increase, replacing stuff cheaply, plenty of nearly new excellent condition secondhand goods about,cars,clothes,furniture,white goods,electrical etc.

Indeed an abundance of stuff. I couldn't give away a £6,000 Nathan wall unit to one charity shop, incidentally this had been left by the previous house occupants so it cost me nothing in the first place.

Stuff is a bit of a killer, it sucks your income and means you can't retire.

There is a thread going on wealth equality, but Frizzers left out the number one STUFF. Beloved of the poor and indebted, designer labels and over consumption. Many people are on a merry go round of consumption and recycling via the charity shop, skip and local refuse disposal site. It appears to consume entire lives and leaves the victim penniless. Charity shops then pray on the poor who get sucked into buyiing useless recyclables and buggering up their homes as extreme hoarders.

F55k to stuff, hello to experiences and consumables like meals out. Stuff wrecks lives period. We need an empty charity shop that sells morning coffee to help victims of charity shops.

Edited by crashmonitor

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Time is the one thing we should have an abundance of and ironically it's the one thing we are not (by and large) permitted to have an abundance of. People are just nose to the grindstone the entire time. Working pointless jobs, ticking pointless boxes to pick up a pittance.

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Time is the one thing we should have an abundance of and ironically it's the one thing we are not (by and large) permitted to have an abundance of. People are just nose to the grindstone the entire time. Working pointless jobs, ticking pointless boxes to pick up a pittance.

But they lose time by buying stuff they don't need incurring a need to earn. Stop buying stuff, stop working.

Edited by crashmonitor

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This is an excellent point from the article:-

Facebook is free. Twitter is free. Snapchat is free. Instagram is free. Youtube is free. Video game apps are free. Texting is free. Sexting is free. Skyping is free. Chatting is free. Why would you spend money on anything? Where do you think people spend their time now? Endless entertainment and content, for almost nothing.

We have so much stimulation for free. We used to cure boredom by going shopping or to the pub, now we just pick up our phone.

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This is an excellent point from the article:-

We have so much stimulation for free. We used to cure boredom by going shopping or to the pub, now we just pick up our phone.

Retail spending is still up year on year and drives the economy...60% of it. And the majority of that spending is unnecessary in a world where everything can be virtually free. All it does is enslave people into working for all that useless stuff...upgrading, designer labels, too much of everything.

Edited by crashmonitor

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It's got its good and bad sides, although the bad outweighs the good. And of course there are things where there's no overabundance, quite the opposite. The existence of still some people without doesn't prove anything I think, no matter how much and how well-organised a society there will always be a few without, even though we could do better in that regard.

The issue I've got is that I'm seeing fewer and fewer genuine benefits yet it all gets lapped up. Indeed I think the social cost is more subtle and damaging than any economic aspects. Less and less direct contact with other people (the pub part is merely one of the more obvious ones), so while the short-term convenience appeals what is the long-term effect? Economically it mostly proves how disconnected from reality various aspects of the economy have become.

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This is an excellent point from the article:-

We have so much stimulation for free. We used to cure boredom by going shopping or to the pub, now we just pick up our phone.

Technology borrowed from the future via the same thirty+ year debt ponzi that's kept asset prices inflated all around the world. It's not free, we just haven't paid the bill yet.

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We have so much stimulation for free. We used to cure boredom by going shopping or to the pub, now we just pick up our phone.

It's a good point. If the purpose of advertising is to create avoid of dissatisfaction leading to consumption then all these freely available forms of consumption must be having a deflationary impact by allowing us to fill that void without spending money.

Even on the professional level I find myself competing against people who are equipped with free software that is as good as any pro tool for most purposes, meaning that the number of competitors I have has multiplied hugely- back in the day when the tools cost a bit of money there was at least some barrier to entry.

Yes I know I sound like a disgruntled gate keeper here- why shouldn't everyone have access to the same tools after all, it's hard to argue against that I agree- but the outcome is not the one that was predicted- instead of a new renaissance of noble independent cottage industrialists we end up with a desperate scramble for scraps of work that leaves everyone worse off and more dependent than ever on the whims of those who commission the jobs.

So it turns out that the democratization of opportunity promised by digital technology ends up in a shared poverty as the very technology that delivers the tools and the platforms required to create and deliver the content make that content so ubiquitous and cheap to produce that it's ends up being virtually given away for free in a desperate attempt to leverage raw download numbers into some kind of future income stream.

The current situation is I think unprecedented- we simultaneously live in a world of true abundance in terms of access to information, creative tools and entertainment alongside increasing scarcity of basic things like shelter and job security. I have the library of Alexandria at my finger tips but am lucky if I can earn enough from my skilled labor to match the income of the guy who sweeps the road outside my rented house- and he luxuriates in a measure of job security I can only dream of. :lol:

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The current situation is I think unprecedented- we simultaneously live in a world of true abundance in terms of access to information, creative tools and entertainment alongside increasing scarcity of basic things like shelter and job security. I have the library of Alexandria at my finger tips but am lucky if I can earn enough from my skilled labor to match the income of the guy who sweeps the road outside my rented house- and he luxuriates in a measure of job security I can only dream of. :lol:

Great comment.

We are spoiled by so much free entertainment and information (through incredible technological advancements), yet struggle with the very basics of life. The struggle for affordable shelter is a manipulation well discussed here. Lack of job security is a by-product of those technological advancements. Not sure what your job is, but it sounds like it's online-related. I've been involved in website development since 1997, and have seen this service go from being something incredibly useful I could offer small businesses, to becoming something massively over-supplied since around 2010 onwards. I remember being at a breakfast meeting back in 2013 and I said I was a website developer, and one person said point-blank to me "how do you make any money?". He was right, and I was surviving (and continue to survive) on a legacy of older customers and diversifying into other areas to earn a living. But go back just 10 years and people would say "oh you're in the right industry!". But anything that can be templated and commodotised WILL be. Graphic designers, web developers, accountants - such services become templated and streamlined, then the barrier to entry is lowered, and they become massively over-supplied with suppliers earning just pennies. Even if you create something unique/bespoke that is of genuine quality, it will be hard to be heard in a saturated market. Look at musicians now - you can be a great musician writing fantastic music, but sorry pal - I already have too much free music - I just don't care enough to invest my time and money into your creations.

Edited by canbuywontbuy

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Retail spending is still up year on year and drives the economy...60% of it. And the majority of that spending is unnecessary in a world where everything can be virtually free. All it does is enslave people into working for all that useless stuff...upgrading, designer labels, too much of everything.

I read it was over 70%? Either way we are driven and consumed by consumerism. Now buy a house and the latest smartphone :lol::lol:

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Technology borrowed from the future via the same thirty+ year debt ponzi that's kept asset prices inflated all around the world. It's not free, we just haven't paid the bill yet.

Really? That statement makes no sense. How can you borrow a technology from the future outside of a bad sci-fi novel? Are we going to have to un-invent it and give it back?

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Really? That statement makes no sense. How can you borrow a technology from the future outside of a bad sci-fi novel? Are we going to have to un-invent it and give it back?

I'll take a stab at that.

Borrowing funds from the future means that investment happens now for development of technology that would otherwise be delayed by saving for it instead.

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