Economics 101: Supply and Demand (workers, investment, inflation, economy)

[hitpausebutton2]

Originally Posted by Thatsright19

You think professional athletes work 10 hours a week? Ok.

His talent produces more than entertainment. It creates value. For the parking companies, broadcasters, food vendors, shoe companies, bats/restaurants, security people, merchandisers, manufacturers, the owners. The list goes on.

You let me know when 20,000 people pay to see that plumber do his job and broadcasting companies pay to stream it to millions more.

It’s funny when people will say their companies billionaire owner is greedy and won’t pay the employees anything. Yet somehow, these athletes have “tricked” these same billionaires into giving them millions. Or perhaps, the market rewards value creation.

Less than 1000 people in the world can operate at an NBA level. The top 1000 in any profession are paid well. Lawyers, engineers, doctors, dentists.

You apparently lack the fundamental understanding of economic value versus value to society.

No lacking anything when it comes to paying for entertainment vs a job occupation that makes the world go round.

Companies use his image and persona to sell things, much like tiger woods does golf. They drop him like a wet towel when he was no longer relivent and moved on. They only care about their image and what can sell.
I bet you can put labron name on toilet paper and idiots would think its better TP then Charmin is, and put $5 more on it. That is all he is good for, marketing, and the are on the job when they are on the court. Anything outside the court should be on his own time and activities.

Mean while, that EMT that just saved a girl live gets paid 15$ hr.. vs some jocky making 10mil.. yea priorities are not inline for sure.

[verybadgnome]

Originally Posted by hitpausebutton2

No lacking anything when it comes to paying for entertainment vs a job occupation that makes the world go round.

Companies use his image and persona to sell things, much like tiger woods does golf. They drop him like a wet towel when he was no longer relivent and moved on. They only care about their image and what can sell.
I bet you can put labron name on toilet paper and idiots would think its better TP then Charmin is, and put $5 more on it. That is all he is good for, marketing, and the are on the job when they are on the court. Anything outside the court should be on his own time and activities.

Mean while, that EMT that just saved a girl live gets paid 15$ hr.. vs some jocky making 10mil.. yea priorities are not inline for sure.

But that is the great thing about capitalism: you as a consumer don't have to contribute a cent* towards LeBron's $35M salary as no one is forcing you to buy basketball tickets or embroidered teepee. How can you quibble about a system that gives you these choices, while also skimming (aka taxing) LeBron's salary for the public good? If your neighbor wants to buy season tickets for the Lakers to help old LeBron out how does that (1) negatively affect you; or (2) how is it even any of your business how your neighbor spends his discretionary income? Would it somehow be preferable to live in a country without professional sports teams so people like you can feel smug and egalitarian? If anything this thread have made me more adamant in my beliefs as the motivations and arguments of the naysayers seem to be arising from envy and lack of understanding how markets work than anything approaching a workable system.

As far as the $15/hr EMTs are concerned that is an issue, but not one that has anything to do with LeBron. It is not a zero sum game where every extra dollar LeBron makes is somehow taken away from EMTs. It has more to do with the health care industry so that is probably where you want to do your inquiries.

* - Unless your local city council decides they want to subsidize the stadium he will play in, but that is where the voting booth comes into play

[hitpausebutton2]

Originally Posted by verybadgnome

But that is the great thing about capitalism: you as a consumer don't have to contribute a cent* towards LeBron's $35M salary as no one is forcing you to buy basketball tickets or embroidered teepee. How can you quibble about a system that gives you these choices, while also skimming (aka taxing) LeBron's salary for the public good? If your neighbor wants to buy season tickets for the Lakers to help old LeBron out how does that (1) negatively affect you; or (2) how is it even any of your business how your neighbor spends his discretionary income? Would it somehow be preferable to live in a country without professional sports teams so people like you can feel smug and egalitarian? If anything this thread have made me more adamant in my beliefs as the motivations and arguments of the naysayers seem to be arising from envy and lack of understanding how markets work than anything approaching a workable system.

As far as the $15/hr EMTs are concerned that is an issue, but not one that has anything to do with LeBron. It is not a zero sum game where every extra dollar LeBron makes is somehow taken away from EMTs. It has more to do with the health care industry so that is probably where you want to do your inquiries.

* - Unless your local city council decides they want to subsidize the stadium he will play in, but that is where the voting booth comes into play

1. Doesnt affect me directly, but affects his pay checks and the sports team attendance. If they dont show up, then they dont get paid. So still lies the issue of being paid millions for a 2 hour game..

2. No but yes in a way. Personally i would spend it on something that will value the community, then some 2 hour entertainment. Its those that want the lowest price to get something fix, but still pay a premium for entertainment. Guess if it benefits them, they dont care but if it benefits somebody else pay check that is providing a service to the community, they picket the line. If i had a choice of season ticket vs a upgrade in say metal vs plastic piping and close the same price, i'll chose the metal piping. The metal piping will last me longer and less maintenance vs a 2 hour game and still have a leaky pipe.

[gwynedd1]

Originally Posted by hitpausebutton2

No lacking anything when it comes to paying for entertainment vs a job occupation that makes the world go round.

Companies use his image and persona to sell things, much like tiger woods does golf. They drop him like a wet towel when he was no longer relivent and moved on. They only care about their image and what can sell.
I bet you can put labron name on toilet paper and idiots would think its better TP then Charmin is, and put $5 more on it. That is all he is good for, marketing, and the are on the job when they are on the court. Anything outside the court should be on his own time and activities.

Mean while, that EMT that just saved a girl live gets paid 15$ hr.. vs some jocky making 10mil.. yea priorities are not inline for sure.

You should make it a priority to know the difference between value and utility.

[Mircea]

Originally Posted by hitpausebutton2

Living in same world as you. Just if your going to raise prices for everything, then raise prices on wages too. Not doing this, creates huge wage and retail gaps. If inflation is up %2, then why isnt your check up %2 to keep up with the inflation.

Originally Posted by hitpausebutton2

How am i being overpaid? Doesnt matter where you work, you should get a COL increase no matter what. If market is up %x then you should get a pay check increase same %x is all i am asking. Many, many reports ( on here) that proves today salaries are far from being on par with adjust inflation.

It would probably help if you understood Economics.

Paying 32 Million Marks for a loaf of bread in the Wiemar Republic was not an issue. If you were a printing press operator being paid 980 Million Marks/hour --and that's what they were paid at one point -- then 32 Million Marks for a loaf of bread was nothing. People actually went to work on pay-day carrying suitcases so they could carry all the money the received in wages.

I mention that, because contrary to your assertion, which is based on your lack of understanding of all things Economic, wages do rise, but only when two forms of Inflation -- Monetary Inflation or Wage Inflation -- exist.

Wage Inflation is rare. It only happened twice in US history, once from 1939 to 1942 when FDR levied Wage & Price Controls, and again in the period 1968-1970, when Nixon implemented a Wage & Price Freeze.

Wage Inflation occurs when wages rapidly rise in certain specific industries or sectors of the economy. This is not the result of a general Demand for Labor. This is a sub-set of workers, maybe 10% to 25% of the work-force is affected. The other 75% to 90% of workers are not seeing their wages rapidly rise.

Wage Inflation generally results in rapidly rising prices for many, but not all, goods and services.

Both FDR and Nixon erred. The correct course of action was to freeze prices only, and allow wages to rise until the peaked and then declined (which is exactly what happened anyway).

FDR's error was more egregious, because that is how your employer got control of your health plan coverage.

For all intents and practical purposes, it is impossible for Wage Inflation to happen again in the US. There are only two possible scenarios that would lead to Wage Inflation. One is a military conflict necessitating the draft, and it would require a least 12 Million to 15 Million workers to be removed from the work-force under the draft to cause Wage Inflation (and military conflict is what caused Wage Inflation from the period 1939-1942).

The only other possible scenario is the introduction of totally new technology -- a technology so radically different from all existing technology in every way, shape and form that it would fundamentally alter Society, and would create an extraordinary demand for workers to produce that technology, workers to install, service and maintain that technology, and workers as operators or end-users of that technology. That is what led to Wage Inflation in the period 1968-1970.

Wages do rise when Monetary Inflation exists, and wages rise at the same rate as Monetary Inflation.

Wages have risen in response to Monetary Inflation.

You might point out the federal minimum wage has not increased, but then not only do you not understand Economics, you don't understand the United States.

Iceland, with a population of 379,000 people, has one economy, one labor market, one uniform Cost-of-Living.

The United States has a population of 320 Million; has 1,538 separately functioning economies; has more than 5,000 labor markets; and has 3,007 different levels of Cost-of-Living.

If you haven't figured it out, there is no uniformity in the US, nor could there ever be for any number of reasons.

In some of those 5,000+ labor markets, no one is paid the federal minimum wage. Everyone earns more than the federal minimum wage, because the Laws of Economics have produced a situation where the lowest labor cost exceeds the federal minimum wage, and because Monetary Inflation has resulted in wage increases.

However, in some of those 5,000+ labor markets, the real cost of wages as determined by the Laws of Economics is less than the federal minimum wage, but those workers are paid the federally mandated minimum wage, which is higher than the real labor costs.

In some of those 5,000+ labor markets, the real true minimum wage is $4.65/hour, while in others it is $5.43/hour and in others it's $6.70/hour and still in others it's $7.11/hour.

Over time, changes in the labor market due to the Supply & Demand of Labor, Monetary Inflation and changes in Cost-of-Living due to Cost-push Inflation and Demand-pull Inflation result in the real true minimum wage rising. And it will rise until it meets the federally mandated minimum wage, and then ultimately, it will exceed the federal minimum wage, as it already does in some of the 5,000+ labor markets.

While Monetary Inflation causes both wages and prices to rise, Demand-pull Inflation results only in price increases.

When the government reports "Inflation" it makes no distinction between Monetary, Demand-pull or Cost-push Inflation, and aggregates them.

That's a very bad practice. In fact, the Federal Reserve's misinterpretation of Inflation data caused the 1952-53 Recession. Inflation was running at 10+%, but the Federal Reserve ignored the fact that it was 1% Monetary Inflation and 9+% Demand-pull Inflation and started increasing interest rates. That put the brakes on business operations and expansions, but it had no affect on prices, which continued to rise until the cease-fire went into effect July 1953.

If you read CPI-U or CPI-W for June, you'll find that gasoline prices increased, while electric energy, home heating oil and natural gas prices decreased. That's irrefutable proof of the absence of Monetary Inflation, because if Monetary Inflation existed, then all prices would rise at the same rate as Monetary Inflation. Prices increased, remained unchanged or decreased for food, clothing and dozens of other items, which again proves the absence of Monetary Inflation.

What you're actually seeing is Demand-pull Inflation, not Monetary Inflation.

The CPI-U/W only surveys 83 of the 1,538 separate economies in the US, and it is an average, meaning that some of those 83 economies experienced higher rates of Demand-pull Inflation, while others experienced lower rates.

To suggest that everyone should get pay increases is totally absurd, because not everyone is experiencing Demand-pull Inflation, and some are actually seeing price decreases.

It's absurder still, because Demand-pull Inflation is a built-in safety mechanism in the Laws of Economics.

Demand-pull Inflation results in rising prices, which forces people to curtail their consumption.

The fact that you can't afford things you previously could tells me the inviolable Laws of Economics are working exactly as they should, and you would know that, if you understood Economics.

Demand-pull Inflation protects resources from being depleted, and stops the overuse or over-consumption of goods and services.

Wage increases only accelerate the depletion of resources and the overuse or over-consumption of goods and services, resulting in continual price increases that get bigger and bigger at faster rates. No matter what you do, eventually price increases will out-pace wage increases, and then you'll reach a point where you won't be able to increase wages, but prices will still rise.

If you don't like it, then increase Supply to exceed Demand, so that price increase halt, and prices start to decline.

If you're not willing to do that, then grow your own food, make your own clothes and assemble your own cell-phone and TV from parts you make, because you're not entitled to anything.

[hitpausebutton2]

Originally Posted by Mircea

Wage increases only accelerate the depletion of resources and the overuse or over-consumption of goods and services, resulting in continual price increases that get bigger and bigger at faster rates. No matter what you do, eventually price increases will out-pace wage increases, and then you'll reach a point where you won't be able to increase wages, but prices will still rise.

If you don't like it, then increase Supply to exceed Demand, so that price increase halt, and prices start to decline.

If you're not willing to do that, then grow your own food, make your own clothes and assemble your own cell-phone and TV from parts you make, because you're not entitled to anything.

Problem is we have more supply in things then the demand, but yet still price thing far reach for many. If prices increase and pay doesnt, then nothing moves. I get it you want to conserve things, to protect the product from depleting.

Still boils down too, if retail/cost of things goes up, then your check needs to follow, other wise your just expanding the gap between the "well off" and "the working poor". What i could afford today, and i cant afford it tomorrow because you want to make another dollar to buy a new house, then what excuse is this?

[Bp25]

Originally Posted by hitpausebutton2

Problem is we have more supply in things then the demand, but yet still price thing far reach for many. If prices increase and pay doesnt, then nothing moves. I get it you want to conserve things, to protect the product from depleting.

Still boils down too, if retail/cost of things goes up, then your check needs to follow, other wise your just expanding the gap between the "well off" and "the working poor". What i could afford today, and i cant afford it tomorrow because you want to make another dollar to buy a new house, then what excuse is this?

I know you rant a lot about this very topic in different threads and you chose to live in Austin, the most expensive city in Texas. What prices are really increasing in real term? If you consider that the monetary base was expanded more than 2x since 2008 recession (there is more than $2 in the economy today for each $1 that was there in 2008), everything should be twice as expensive. Did everything go up in price that much? Not even close. Even housing is not twice as expensive in Austin. Food and clothing are roughly the same price as before. Gas price went up and then came down. If you consider other areas of US where housing prices did not recover, their prices have effectively gone down because they are now paying with today's dollar which has half the value of 2008 dollar.

I know that wages have not gone up and everyone complains about it. But at individual business level, how are they getting and keeping employees without raising wages? There must be enough supply of workers. In IT, H1B workers kept supply stable so there was no salary increase. Will salary increase if you stop H1B program? Maybe in the short term but then business will try to move the operation to a cheaper area of the world. Until all the qualified people in the world who can do that work are exhausted and refuse to work for your current salary, why will the employer raise your salary? By the way, a lot of people in China and India will be willing to do that work from their location for a lower salary because their cost of living is lower than yours.

Which really means you are in the wrong profession for an area like Austin. No amount of ranting will change that. Either you move to a lower COL area or increase your level of education/training to get a higher paying job. It's as simple as that.

Having said that, if automation and AI take all our jobs then we have a problem that needs to be solved at policy level. We are not there yet and your problem is not related to that.

[Supposn]

Originally Posted by ddm2k

Don't you just hate when people keep saying this? There should be a fine assessed.

The aforementioned is the first sentence of your initial post, "Don't you just hate when people keep saying", (what's) "this"?
Was part of the sentence truncated and lost?

[Bp25]

Originally Posted by Supposn

The aforementioned is the first sentence of your initial post, "Don't you just hate when people keep saying", (what's) "this"?
Was part of the sentence truncated and lost?

I assume OP was referring to the title of the thread "Economics 101: Supply and Demand"

[Larry Caldwell]

One of the greatest times in American economic history was the great leap in productivity following the invention of the assembly line. There was rapid inflation of wages coupled with rapid deflation in consumer goods. Unfortunately, it turned out to be too much of a good thing. Like 2007, people were convinced the good times would roll forever, so they overextended their debt in an attempt to get rich. With no bank regulation, the whole economic structure collapsed and took a long time to recover.

In our current economy, our great leap in productivity has not accrued to the workers, because of the vast oversupply of capital. The assumption is that money will make money, and labor won't. Instead of investing to produce more, investment is oriented to reduce labor.