Last edited by MildSteel; 01-13-15 at 09:14 PM.
Except in a bubble type situation, over production really never exists to the degree that it could significantly harm our economy. Businesses strive to maximize profits, and over producing goods and filling up warehouses doesn't maximize profits. Most producers can ONLY produce the goods and services that they have current orders for. Like a barber can't cut any more heads of hair than actually show up at his shop, and the toaster oven manufacturing company will not produce any more toaster ovens than their retailers order. Even stock brokers don't buy and sell any more stocks than their clients place buy/sell orders for. And certainly most steak houses only cook as many steaks as people order.
The typical Econ 101 definition of inflation is "too much money chasing after too few goods", but economics can be boring, and most students zone out after hearing the first few words. The part they miss is "too few goods". The amount of money chasing goods doesn't cause inflation, only the failure of producers to meet demand causes inflation, "overproduction" is certainly not the same as "failure to produce".
Working hard and not having to spend an arm and a leg to get yourself educated so you can make more money.
"We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying ten percent of his salary, and that’s crazy." -Reagan
I think the problem, at least how it is typically put forward in economics is that the increase in wages leads to an increase in demand. When demand increases, prices increase as well as supply. As a result of the increase in supply, there is eventually over production. As a result of this overproduction, people must be laid off, which leads to a decline in demand, which results in downward pressure on wages, which leads to a further decline in demand, etc. Something like that. Let me know if you think I got something wrong.
Inflation is caused by insufficient supply to meet demand. It's not caused by any particular demand level.
Businesses work hard not to over produce, and when they do over produce, it's a temporary thing, they cut back production as soon as they realize that inventories are rising. Any miscalculation doesn't happen with every producer in ever industry at the same time, it's staggered.As a result of the increase in supply, there is eventually over production.
Not if there is no over production. But even if there was a temporary decline in demand for a particular product, there would also be a corresponding decline in price as producers sought to clear out excess inventory, which would cause the quantity demanded to rise until the over production was absorbed. And yes, if this did happen there would likely be layoffs, but only in the particular industry/employer who had miscalculated demand.people must be laid off, which leads to a decline in demand, which results in downward pressure on wages, which leads to a further decline in demand, etc. Something like that. Let me know if you think I got something wrong.
I think you focus way too much on overproduction. You have to remember that most producers don't produce anything until an order is placed. If all they are doing is meeting those orders, then they are meeting demand, no more and no less.
Think about Walmart, or any other retailer. They determine what the optimal quantity of a particular product is to have in stock in their stores. They don't exceed that quantity, and they only order more units when they sell more units, and they only order the amount of units sold.
Factories only produce the number of units that they have orders for, and typically they warehouse far fewer goods than they used to. The last time I had a real job, I worked in a plant that made tennis balls. We had a sales manager and a production manager, and these people met daily to determine the number of units that we needed to produce that day, and the number that we needed to schedule during the up-coming weeks. Everything that we produced was shipped to the distribution centers, or even individual stores, with 24 hours of it being produced. The minute that sales started to become week, or that we had more than a few days of production on hand, we would cut back a shift, and the minute that we had customers complaining that we weren't shipping fast enough, we would add a shift. Inventory shortages and inventory overages of established products in a mature market are corrected within days.
About the only time when this doesn't happen is when it is a new product, and producers have no clue how many they will sell, or in the case that some odd external factor significantly effects demand (like a couple of years ago, idiots thought that Obama was going to take away their guns, so they flooded to the gun stores to purchase more). In this case, there may be shortages or excess production which can't be cleared in a matter of weeks, but that doesn't really effect our entire economy, only those specific producers.
Our economy is pretty much self healing, which is why we always recover from recessions. Economic cycles only occur due to irrational bubbles, such as the dot.com bubble or the sub-prime mortgage bubble, or due to temporary artificial shortages, such as the OPEC embargos of the 1970's and early '80s. If we could eliminate these irrational bubbles and artificial shortages, we could have growth at a constant rate...forever.
Sure, then there are plenty who don't work at all. The reason they have to work two or three jobs to survive is because they never got an education when they had an opportunity, they made horrible life decisions and ended up with minimal marketable work skills. You'd think that these parents would pass along these life lessons to their children but generation after generation, these people make the same mistakes over and over and over. Why is that?Are you not aware that there are people in poverty that work two, sometimes three jobs to survive?
That's a nice statement, but why do you think so? Sure, elected officials have a responsibility to provide an opportunity for the poor to better themselves, they are not responsible for forcing the poor to take those opportunities seriously. Corporate CEOs have no responsibility toward the poor at all, they have a responsibility to their shareholders. You act like there's something wrong with greed. There is not. Everyone is greedy. Everyone should be greedy. It's how people get ahead.Are you not aware that people in positions with power and leadership have a responsibility to see to it that everyone has the opportunity to access the resources of nature so that they can survive? People with power and in positions of leadership also have choices. If they choose to be greedy and merely usurp the resources of the world so that they can live a life of excess and degradation, of course there will be poverty.
Because it's not from the top down, it's from the bottom up. We need to provide opportunities, which the poor already have, they simply misuse and ignore those opportunities and raise their children to misuse and ignore those opportunities. You cannot force anyone to succeed. The poor have a culture which teaches them to fail. It is the job of the poor to change their culture. It is not the job of the government to force them to do so. Only a complete moron would think otherwise.Yep we need to start with the basics no doubt. The basics is that leadership comes from the top down. I really don't know how anyone can be so stupid as to not realize that.
“The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman
We are actually training some segments of our society to feel entitled, and also to not strive for a higher income because they will lose freebie benefits if they do achieve a higher income.