Is this the end of liberalism?

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If we refer to what Civman was saying, the argument seemed to be that it was a political choice to train apparently excessive amounts of blacksmiths/engineers in the expectation that jobs would appear for them as a result. That would seem to make it a supply side problem. Which was his point as for as I can see. Current growth rates would seem to bear out his analysis, although I would say that the dominant political and economic paradigm is a stagnating factor he has not considered as a confounding variable. You could also point out that in reality there are not just unemployed engineers but everyone else as well... so the issue is one of general lack of demand, which could again be attributable to flaws in the prevailing wisdom putting friction in the way of potentially available growth.
 
You only had one question: how does college education contribute to economic growth? I was very excited to get us to that point! ... Kaitzilla already called our conversation interesting after our pause so please consider that we're speaking to an audience and not just to each other.
I'm interested in this too Hygro! So let me just answer on civman's behalf :)... You said:
The economy is made up of 3 things:
people (labor or "human capital")
stuff (physical capital, infrastructure, goods, resources)
money (the agreement with which we organize the people and the stuff)... So in your model, what's preventing the job market from accommodating the extra 300 engineers?
and the response was:
An excess labour supply does not grow an economy, or increase wages.
I interpret that as him saying that the problem is the lack of money... "recession" as you put it. The 200 engineer "excess" is being caused by a lack of money to pay them... that lack being caused by the lack of "demand" for their engineering services... in turn caused by a lack of money to buy the things that you need engineers to develop... again the recession, right? So does the government borrowing money from the Fed Reserve to pay off the engineers' student loan debt also somehow create money to pay the engineers' salaries?
 
That there's a lack of demand in this hypothetical is evident - there are 200 out-of-work engineers. Hygro's question though was where exactly this lack of demand was coming from.
 
I rather thought i'd answered that. There were 200 engineers in Civman's scenario and a further 300 were trained in the belief that the number of engineering jobs would increase. His question seems to be where will the demand for those extra jobs come from, responding by asking why there is a lack of demand seems obtuse.
 
In the case of engineers it's pretty simple: they each keep inventing things the other engineers want; they all pay for each others' productions and inventions with their own products and inventions.
After thinking about it a little more, it seems like we either would have to:

1. Borrow the money to pay off the engineers' student loans and then borrow the money to pay them a low salary that was just high enough for them to do some participating in the service economy (through retail shopping) or;
2. Borrow the money to pay the engineers a high enough salary that they could simultaneously pay their own student loans and participate in the service economy.
 
Hip-hop artist, ‘Na-Ledge’, released a song on YouTube titled "F*** Paris / Na-Ledge from Slave 2 a King"

The hip-hop artist, who goes by the name ‘Na-Ledge’, released the track on YouTube yesterday, in which he raps, “The way I’m feeling right now, I feel like f*** Paris.”
The rapper explained the reasoning behind the song, commenting, “I say this Because of the MAJOR participation of the SLAVE TRADE FRANCE was involved in. Hate to see the lose of life, yet my ANCESTORS souls are still crying over there PAIN.. And I am to.. France turned 4 times as many slaves as the Americas and used further brutality if that is even fathomable.”

The #F***Paris hashtag began to pick up steam yesterday when it was tweeted by a number of #BlackLivesMatter supporters who were upset that the Paris massacre had taken media attention away from protests at the University of Missouri.
 
What is this thread about, anymore?
Hip-hop artist, ‘Na-Ledge’, released a song on YouTube titled "F*** Paris / Na-Ledge from Slave 2 a King"

The hip-hop artist, who goes by the name ‘Na-Ledge’, released the track on YouTube yesterday, in which he raps, “The way I’m feeling right now, I feel like f*** Paris.”
The rapper explained the reasoning behind the song, commenting, “I say this Because of the MAJOR participation of the SLAVE TRADE FRANCE was involved in. Hate to see the lose of life, yet my ANCESTORS souls are still crying over there PAIN.. And I am to.. France turned 4 times as many slaves as the Americas and used further brutality if that is even fathomable.”

The #F***Paris hashtag began to pick up steam yesterday when it was tweeted by a number of #BlackLivesMatter supporters who were upset that the Paris massacre had taken media attention away from protests at the University of Missouri.

Well, there's this:

Javaad Alipoorn said:
On 17th October 1961, members of the Algerian community in Paris, who were already under curfew, organised a peaceful march in solidarity with the struggle for freedom in their country of origin. Over the course of the day up to 300 Algerians were murdered in a massacre that the French state did not even begin to admit for nearly 40 years. From a recent anniversary article; “The most memorable- and vicious- atrocities saw policemen herding panicking crowds on to Paris’s bridges, where many were tossed into the Seine…Others died in police stations, or in nearby woods, where their mutilated bodies testified to truncheon and rifle-butt injuries.”

The next day graffiti appeared by the Seine “This is where we drown Algerians”, whether a protest by those of the red, or a warning from the red white and blue, is difficult to say.
 
I rather thought i'd answered that. There were 200 engineers in Civman's scenario and a further 300 were trained in the belief that the number of engineering jobs would increase. His question seems to be where will the demand for those extra jobs come from, responding by asking why there is a lack of demand seems obtuse.

I think the answer has been given or at least hinted at. I presume the assumption is that people will always want stuff as long as they have money, which is fair enough. Increase someone's income and you will almost definitely see an increase in spending, albeit with some diminishing returns. However, there is also a macroeconomic multiplier effect, in that giving some people more money will cause them to spend more, which gives other people more money, causing them to spend more, and so on. When people are buying stuff, you need people to make stuff. When you pay people to make stuff, they will have money to spend on buying stuff - it's again a cycle that goes on until all the unemployed engineers are employed to make stuff and you need more engineers to make more stuff to continue the cycle.

So it comes back to the idea that barring supply shocks (which are usually quite obvious), the fact that a few hundred engineers are out of a job is probably down to a demand-side problem. People are not spending money either because there is a recession so there's not enough money going around to be spent, or because they are withholding spending for whatever reason, typically in anticipation of a recession. So to answer the question, the demand can come from solving the demand-side problem, which usually involves giving people money to spend.

Feel free to correct me if I'm wrong.
 
The interesting thing that struck me is that the multiplier effect and any Keynesian-inspired economics basically imply that money isn't and shouldn't be owned by anyone but should constantly be cycled to promote spending and economic growth.

So if we understand wealth to be something that is owned, what constitutes wealth, then? I guess not money, but the stuff that we have/own. And measuring the value of the stuff we have by their money value seems too circular to me. It's probably better to value the stuff we have by how much use or satisfaction we get from them, which is pretty much in line with what Marx said (i.e. use value and all that).
 
Feel free to correct me if I'm wrong.
Well I for one think you're exactly right (which is rare :p)... I do want to see what Hygro has to say though, because I thought there was some argument on how paying the engineers student loans (or giving them 100% State funded degrees) would increase demand... Maybe I am mis-stating the position?
 
Uh, you seem to be a liberal, which means we agree on about 75% of popular topics, at least. This forum is way too focused on personal antagonisms and politeness.

But paying the engineers' student loans is essentially the same as giving them money, and it's like a reverse investment because you're saving them the interest they would otherwise have to pay.
 
If we refer to what Civman was saying, the argument seemed to be that it was a political choice to train apparently excessive amounts of blacksmiths/engineers in the expectation that jobs would appear for them as a result. That would seem to make it a supply side problem. Which was his point as for as I can see. Current growth rates would seem to bear out his analysis, although I would say that the dominant political and economic paradigm is a stagnating factor he has not considered as a confounding variable. You could also point out that in reality there are not just unemployed engineers but everyone else as well... so the issue is one of general lack of demand, which could again be attributable to flaws in the prevailing wisdom putting friction in the way of potentially available growth.
The political explanation is insightful but but doesn't escape the logic-circle. What defines "excessive"? Why is aggregate supply not pushed out by the extra engineers? What are the physical limits preventing the financing of the extra engineers into more engineering work? Is there not more software to be coded? Are there not more bridges to be repaired? etc.

I know of two endogenous growth models, one by Paul Romer and one by Robert Lucas. Both model how the talent of labor effects growth. Romer was trying to pin down growth's x-factor, Lucas was trying to understand why capital flowed back to the core and not always to where labor is cheaper. i.e. why is economics 101 useless to explain growth (let alone wages, seriously).

Both demonstrate that growth comes from the development of your human resources. In Romer's model, every person you put towards ideas reduces current output but increases your rate of growth. In Lucas's model, you can only expect to grow your economy by doing steps that educate your workforce into what you're trying to grow into. You need to have your people learn each step that takes you from your populace's current expertise (say working simple machinery) to future expertise (complex, software based machinery, etc).

So you have 300 engineers unemployed. That's 300 people whose knowledge base is closer to the edges of human knowledge, so obviously if we don't want to put them toward production we put them towards advancing ideas, via entrepreneurship (which they would do on their own, they are engineers after all), science, or art, and all in all, new technology.


I'm interested in this too Hygro! So let me just answer on civman's behalf :)... You said:
and the response was: I interpret that as him saying that the problem is the lack of money... "recession" as you put it. The 200 engineer "excess" is being caused by a lack of money to pay them... that lack being caused by the lack of "demand" for their engineering services... in turn caused by a lack of money to buy the things that you need engineers to develop... again the recession, right? So does the government borrowing money from the Fed Reserve to pay off the engineers' student loan debt also somehow create money to pay the engineers' salaries?
This demand model is the more compelling story, especially absent wage-depressing inflation. Your example demonstrates how that could work.

The Federal Government "borrows" in so far as it is just printing money that is legally called debt. The Jackson in your wallet is just a $20 promissory note, a legal device saying that the Federal Reserve owes you $20. All money is debt, with different types of debt having different rules.

Federal student loans are a strange thing because its money printed for student loans, that get paid back with interest, which means money printed at the time of the loan and unprinted at the time of repayment. Why anyone thought it was smart to have the government run a tax surplus on students baffles me, because it's literally sucking money out of the economy forever.

You could indeed pay their student loans and they'd be freer to do whatever they felt, some more productively, some less.

But you could also just hire them, or adjust aggregate demand's conditions (taxes, spending) so that others hire them, or that they even hire themselves.
After thinking about it a little more, it seems like we either would have to:

1. Borrow the money to pay off the engineers' student loans and then borrow the money to pay them a low salary that was just high enough for them to do some participating in the service economy (through retail shopping) or;
2. Borrow the money to pay the engineers a high enough salary that they could simultaneously pay their own student loans and participate in the service economy.
There's no borrowing in the mortgage or credit card sense, but yes. It's more like reaching into your pocket of infinite money to close the money gap.

I think its a good question. I don't know if Hygro was trying say that it comes from the other engineers?:confused:
I was.

The interesting thing that struck me is that the multiplier effect and any Keynesian-inspired economics basically imply that money isn't and shouldn't be owned by anyone but should constantly be cycled to promote spending and economic growth.
If maximum economic output is the goal, then yeah.
 
The political explanation is insightful but but doesn't escape the logic-circle. What defines "excessive"? Why is aggregate supply not pushed out by the extra engineers? What are the physical limits preventing the financing of the extra engineers into more engineering work? Is there not more software to be coded? Are there not more bridges to be repaired? etc.
There is, but historically growth is a few percent per annum, maybe into the teens. That strongly suggests that a 150% expansion in demand for engineers within a relatively short time-frame (the handful of years it takes to train them) is an unrealistic projection and that therefore much of our 300 extra is excess to the possible growth of demand. No logic circle, just historical evidence. There is a massive worldwide glut of coders right now, many of them work for nothing in the hope of getting a break.

Edit: fans of growth make much of the fact that economics is not a zero sum game. But in reality it tends towards being zero sum in short time frames because growth is typically very slow.
 
Historical growth rates are 0.1%. Using capital to free labor to invent things is a new process that has bumped growth rates up to 1%, then 2%, then 3%, with some ebb and flow, over the past 300 years.

It doesn't matter though. Growth economics is not employment economics.

Demand is a measure of how efficient we are distributing supply. If you are surplussed 300 trained engineers, you have shifted the aggregate supply curve out by 300 engineers, ergo you are short 300 engineers of demand, which is bridged by financing their labor, and the labor needed to provide them physical capital.
 
If you are artificially inflating both the supply of and demand for engineers, how can the capital invested in financing their labour etc. have any likelihood of producing a return? Are you not at high risk of creating an investment bubble?
 
Maybe if they're all chasing the same money by trying to make the same product and Wall St is betting on all of them and then selling the bets off, while the rest of the economy is underperforming.

If you just have more people who know how to make complex things, there's no reason to be concerned with a bubble. Perhaps you might get a greater ROI graduating more liberal arts majors but there's no reason having more engineers than fewer has an opportunity cost worth fretting.

Not sure what you mean by artificial in this context.
 
By artificial I would mean a deliberate change, specifically one outside the range of normal variation.

Again, we both accept that growth can occur, but is there evidence suggesting that a very large increase in the supply of engineers in a very short space of time has a low opportunity cost? That a large amount of inefficient employment would not result?
 
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