Is this the end of liberalism?

[jackelgull]

Go on

Pray tell how we are richer with 200 engineers engineering instead of 500 engineers engineering in our modeled economy.

Civman seems to be operating on a simplistic model of supply and demand, theorizing that the job market is relatively stable, and that of those 500 engineers, 300 will remain relatively useless, and bump down the wages of the other 200, when in fact that job market is volatile, and next month, there might be a big construction project requiring 200 engineers.

 

[civman110]

Go on

Pray tell how we are richer with 200 engineers engineering instead of 500 engineers engineering in our modeled economy.

edit: I see you have "200 jobs available" in there, so perhaps you can explain how that limitation exists when there are 500 engineers available.

I thought my example was pretty self-explanatory...

If the demand for engineers exceeds the supply of engineers - wages go up.
If the supply of engineers exceeds the demand for engineers - wages go down.

Civman seems to be operating on a simplistic model of supply and demand, theorizing that the job market is relatively stable, and that of those 500 engineers, 300 will remain relatively useless, and bump down the wages of the other 200, when in fact that job market is volatile, and next month, there might be a big construction project requiring 200 engineers.

Wages are still dictated the same way. It doesn't matter.

This is economics 101.

 

[Hygro]

Supply creates its own demand. Or rather, aggregate supply gives us the limits/potential of aggregate demand. Matching the limits of aggregate supply with aggregate demand is a full employment economy. Either your economy is 300 engineers recessed, in which case their's a shortage of money which we can print for free, or there's 500 jobs relative to the technological and resource levels in the economy.

 

[JollyRoger]

This is economics 101.

We are trying to graduate you up to at least economics 201.

 

[Hygro]

It's actually week 2 of economics 101, and only week 2 (week 1 is production possibilities frontier).

 

[civman110]

We are trying to graduate you up to at least economics 201.

I already have my degree.

Supply creates its own demand. Or rather, aggregate supply gives us the limits/potential of aggregate demand. Matching the limits of aggregate supply with aggregate demand is a full employment economy. Either your economy is 300 engineers recessed, in which case their's a shortage of money which we can print for free, or there's 500 jobs relative to the technological and resource levels in the economy.

That makes no sense. It has nothing to do with what we are talking about.

 

[jackelgull]

Supply creates its own demand. Or rather, aggregate supply gives us the limits/potential of aggregate demand. Matching the limits of aggregate supply with aggregate demand is a full employment economy. Either your economy is 300 engineers recessed, in which case their's a shortage of money which we can print for free, or there's 500 jobs relative to the technological and resource levels in the economy.

This makes me wonder- won't we ever hit the limit of real work an engineer can do? I mean, let's take architectural engineers. Right now, we still have space to build more buildings and highways, but one day all the infrastructure will be built, and all that's left is to maintain it. Or do you think even then, we will find some way to create more jobs?

 

[JollyRoger]

I already have my degree.

I am beginning see why you are dismissive if the value of a college education.

 

[Hygro]

That makes no sense. It has nothing to do with what we are talking about.

If you have 500 engineers growing your economy then your buying power, i.e. your time spent in exchange for stuff, i.e. your wages, is going to be higher than if you have 200 engineers growing your economy.

If you have 500 trained engineers but the current setup only accomodates 200, either you are in a recession, since you are recessed 300 engineers worth of potential output, or your economy is actually limited (say there's a food shortage) in which case expect your 300 engineers to facilitate economic growth such that in the long run, there will be an economy expanded to accommodate 500 engineers.

This makes me wonder- won't we ever hit the limit of real work an engineer can do? I mean, let's take architectural engineers. Right now, we still have space to build more buildings and highways, but one day all the infrastructure will be built, and all that's left is to maintain it. Or do you think even then, we will find some way to create more jobs?

Technology growth is accelerating, and that process accelerates technology growth further. While the concept of "system death" is real, i.e. a collapse could happen when we approach some external resource limit, short of that we'll only come to "the end" if we choose to.

 

[civman110]

If you have 500 engineers growing your economy your buying power, i.e. your time spent in exchange for stuff, i.e. your wages, is going to be higher than if you have 200 engineers growing your economy.

If you have 500 trained engineers but the current setup only accomodates 200, either you are in a recession, since you are recessed 300 engineers worth of potential output, or your economy is actually limited (say there's a food shortage) in which case expect your 300 engineers to facilitate economic growth such that in the long run, there will be an economy expanded to accommodate 500 engineers.

University degrees do not grow an economy. That is why this has nothing to do with what we are talking about.

How exactly are these unemployed engineers suppose to grow the economy?

 

[Hygro]

"University degree" is a stand in for "university educated"....

 

[civman110]

"University degree" is a stand in for "university educated"....

So how do unemployed engineers grow an economy?

 

[Hygro]

What's causing their unemployment?

 

[civman110]

What's causing their unemployment?

The labour market is saturated because we have an excess of engineers.

 

[Hygro]

What is the limitation causing the labor market to be engineer-saturated?

 

[civman110]

What is the limitation causing the labor market to be engineer-saturated?

An excess of engineers graduated from university and saturated the labour market. Now we have a bunch of unemployed engineers and wages for engineers has dropped because of the excess supply of graduates.

 

[JollyRoger]

Or too many capitalists sitting on their cash.

 

[Hygro]

An excess of engineers graduated from university and saturated the labour market.

Yes, but what makes it an "excess"? What is the economic circumstance that prevents us from employing all 500?

 

[civman110]

Yes, but what makes it an "excess"? What is the economic circumstance that prevents us from employing all 500?

I already told you several times.

It's clear you're not going to answer the question.

 

[jackelgull]

I already told you several times.

It's clear you're not going to answer the question.

Here's a hint civman- it is a lack of capital. In a sense that's the only "real" barrier to economic growth barring lack other external resources such as land or building supplies.