[wolfyx]

Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

No, it's not. Profit motive is the mechanism by which wealth created through cooperative social effort is accumulated and as a result, sequestered. You can be intentionally obtuse all day long or your entire life if you wish, your choice. What I posted was that one motivation should be primary and the other secondary, and then clarified by stating that this simply meant a strict prioritization, whereby the first should be emphasized at the potential expense of the other. Here's a question for you; if social organization and commercial enterprises aren't devised for the purpose of service to society and to enhance the lifestyle of the populace, what is the purpose? At the end of the day all I'm saying is exactly what I've been saying; our economic philosophy should emphasize the financial health of the populace over the financial health of the institutions ostensibly created to serve it. That philosophy is the only hope we have for ever employing a capitalist type system in a manner that promotes stable, evenly distributed economic growth. Humanity represents both production and consumption, it's not as if these two things are actually separate, they arise from the exact same group of people.

Great post! I completely agree with you.

Traverser and INTelliJent are a bit like Beavis and Butt-head on this forum. I've met them before backing each other up in another thread and they were not brilliant there either...

[Clueless]

Thanks. I don't think either are stupid, they're just so wrapped up in their own understandings that they cannot open their minds to consider the subject from a different perspective.

Continually rehashing variations of the exact same flawed understanding of market economics and how it should be managed to serve society (whether Keynesian, Austrian, Chicago, whatever) is the very definition of insanity. There are certain elements of validity in all these philosophies, but they also all share a single glaring flaw. They each overlook the exclusionary nature of the system itself which inevitably results in increased production efficiencies at the direct expense of purchasing power. Anytime there's an increase in efficiency there's a corresponding drop in demand.

That's the disconnect. There's no mechanism inherent in market systems to correct for that.

[scorpiomover]

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	The currency is a reflection of the economic power of the country.

You're tying economies to their currency.

I lived in Israel for a while. Israel's currency used to be the Shekel. The Shekel was nose-diving. The economy was stable.

Right now, I'm in the UK. The currency is stable. The economy collapsed recently. It's still plummeting, and hardly anyone knows how to stop it. The political elite are cutting everything, and it's still in pretty bad shape.

If you try to rely on monetary inflation to solve your fiscal problems, THEN your economy can be tied to your currency. But only because you are CHOOSING to tie the survival of the economy to the success of the currency.

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Germany for example grew immensely and they still have a huge trade surplus because they have in Euro a highly undervalued currency.

West Germany united with East Germany in the 90s. It took a major hit. They've managed to integrate both countries into a single currency, and now they have been able to build.

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	The South European countries, like Spain, that have a different (less efficient) economy and fiscal system are getting completely suffocated by the overvalued currency. They cannot possibly compete with Germany, so they end up with a staggering 25% unemployment and a completely unplayable debt.

Greece has the same problem as the UK. They tried to solve their social problems, by massively over-inflating their public sector. They would then need to rely on the private sector, to bankroll the public sector. That in turn means an over-reliance on private sector industries. However, Western manufacturing has mostly moved to Asia. That in turn has only left the stock markets and banking sector to rely on. That put too much pressure on the stock markets and banking sector to generate fiscal income from the people. Eventually, the pressure was too much, and then they ended up collapsing.

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	The Euro will crush, because of the inevitable bankruptcy of the South Europe, unless a real fiscal union and a federal economic system is created.

And then the fiscal union inherits all the problems of the countries it absorbs. The federal economic system inherits the problems of the fiscal economies and the industries of the countries it absorbs as well. All this has already been happening in the EU and the Eurozone. Local problems were previously been handled by local solutions, that differ between countries, according to the subjective factors in each country. They now have to be handled on the federal level, and so there is 1 solution for all the countries, and so many of the previous solutions, no longer work. That in turn puts the pressure of the problems of MANY countries, on ONE system. Eventually, that pressure results in an entire collapse of both systems, and the inevitable political and economic power vacuum, result in wars between the member states of the union.

It's already on the cards. It's only a matter of time.

Try to use more Ne. It's the INTP method for testing against objective evidence.

[Daoist]

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	(sigh) Surpluses are merely misallocations of resources that result in supply being above its demand. Ultimately in a free market, surpluses are bad only in the sense that producers could had served the consumer better by making other more desirable products.

That's a good summary - with the exception of the word "only."

To put this in context, "Austrian macroeconomists" like to use the term "malinvestment" to denote investments that didn't meet demand, and therefore should never have been made. That doesn't mean they have no benefit, just that they didn't meet the market hurdle rate of return. Even going with certain of their assumptions about the macroeconomy and malinvestment (which I won't get into here), these investments could still get 99 cents of return on the (risk-adjusted, time-adjusted, whatever) dollar.

Oversupply, on the other hand, gets zero cents on the dollar - by definition. So it's a much bigger problem.

Mind you, surplus goods are great for consumers because they're priced cheaper, but bad for producers given their wasted efforts to maximize profits. Even if one overproduced bananas, far too many for the world to consume before some of it spoils, the consumer still wins because the utility of a banana is infinite. The imagination runs wild when we have plenty of something. Yet the consumer loses because in place of bananas, he could had gotten something more precious were it not for the fallibility of the producer in question. Hence, surprluses are not desirable, but the market as a whole still prospers in spite of it. Thanks to the free-floating price system and the imagination of humanity, we're able to turn losses into profits really quickly. It's only in matters of fraud and theft where we discover that surpluses are a net negative, as thieves do not produce anything for what they take, whereas the consumer must be a producer first in order to purchase anything at all.

There are also knock-on effects to demand. China is a very good example of this: companies aren't used to selling in China, so they never learn what marketing, or even customer service are. They never pressure the government to loosen its laws on everything to give the markets more of a chance. Chinese consumers never learn what value is, and therefore never develop a press capable of thinking in these abstract terms - with other knock on effects.

The situation in Germany isn't quite that dire, but they clearly have some leadership issues of their own as well.

	Originally Posted by scorpiomover To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Quite the opposite. The rules for entering the Euro, were researched extensively, and the rules were quite harsh, just to get in. ... In other words, no contingency planning for domino effects and for countries only thinking about their interests.

soo...

[wolfyx]

Originally Posted by scorpiomover To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

You're tying economies to their currency. I lived in Israel for a while. Israel's currency used to be the Shekel. The Shekel was nose-diving. The economy was stable. Right now, I'm in the UK. The currency is stable. The economy collapsed recently. It's still plummeting, and hardly anyone knows how to stop it. The political elite are cutting everything, and it's still in pretty bad shape. If you try to rely on monetary inflation to solve your fiscal problems, THEN your economy can be tied to your currency. But only because you are CHOOSING to tie the survival of the economy to the success of the currency.

When you have the same currency as your trading partner you need to have the same economic power. Otherwise you end up in a trade deficit that grows exponentially as you are becoming more and more noncompetitive (your industries collapse).

It's as simple as that and the reason why the Euro-zone is unsustainable.

	West Germany united with East Germany in the 90s. It took a major hit. They've managed to integrate both countries into a single currency, and now they have been able to build.

They just became a "bigger and stronger country" and East Germany was brought up to speed pretty quick. (It sound so bad when you use the "they".. "They" who? "They" what?)

Greece has the same problem as the UK. They tried to solve their social problems, by massively over-inflating their public sector. They would then need to rely on the private sector, to bankroll the public sector. That in turn means an over-reliance on private sector industries. However, Western manufacturing has mostly moved to Asia. That in turn has only left the stock markets and banking sector to rely on. That put too much pressure on the stock markets and banking sector to generate fiscal income from the people. Eventually, the pressure was too much, and then they ended up collapsing.

The banking and finance sector is a leech for the world economy. When the leaches will be cut of from their blood source, the systems that relay on the banking and finance will collapse.But I will develop that idea in a thread I will start when I will have time.

And then the fiscal union inherits all the problems of the countries it absorbs. The federal economic system inherits the problems of the fiscal economies and the industries of the countries it absorbs as well. All this has already been happening in the EU and the Eurozone. Local problems were previously been handled by local solutions, that differ between countries, according to the subjective factors in each country. They now have to be handled on the federal level, and so there is 1 solution for all the countries, and so many of the previous solutions, no longer work. That in turn puts the pressure of the problems of MANY countries, on ONE system. Eventually, that pressure results in an entire collapse of both systems, and the inevitable political and economic power vacuum, result in wars between the member states of the union.

You sound so "nationalistic" is hurting. What systems are you talking about? It makes no sense. A good system (lets say a German model) implemented at a federal level will create a very powerful economic union in Europe because it will create economic values in the regions ("countries") that previously were incapable of creating much "value".

	Try to use more Ne. It's the INTP method for testing against objective evidence.

Thanks for the advice but as much as I respect some of your post about psychology I find your "pro-nationalism" rather peculiar...

[scorpiomover]

	Originally Posted by Daoist To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	soo...

So, whatever economic factors pushed for the dominoes to be laid out, in precisely the arrangement that allow them to fall in a cascading effect, coupled with whatever economic factors pushed for countries to not step in and stop the dominoes in their reach, cause the collapse. Not the Euro itself, but the way that the economic system is being driven.

[hide="Fuller explanation"]

Domino effect:

The dominoes are connected by interdependence of lots of companies. Domestic and international interdependence has resulted from high levels of productivity and quality, that resulted in lots of companies offering the same goods, and so over-competition results. That in turn pushed companies to look farther afield, driving into other countries and other markets, tying the same company to a number of companies in different industries and different countries. Rules between countries that normally keep them separate, slow that process severely. The result is market pressure on governments to relax economic rules, and bring about greater trade between countries. So over-production leads to over-competition, which leads to over-globalisation, which in turn leads to greater and greater interdependence.

The result is like plants that are growing too fast, and are having to grow over and between other plants. Eventually, they are all inter-linked. When one plant collapses, the plants that rest on it, have nothing to stand on, and collapse as well, under the weight of all the plants on top of them. As well, the plants that it has grown with, are so inter-linked, that one cannot fall, without the others bing pulled with it. The weights of all the plants end up making enough pressure that the whole thing collapses from within.

That doesn't always happen. Sometimes, the plants can hold together, and support the plant that collapsed. But eventually, as they grow, more and more plants collapse, and so the total collapse is almost inevitable.

Self-interest of companies:

The over-competition also results in individual units thinking of themselves. Larger organisations, like large corporations, and governments, start thinking about the needs of themselves and their sub-units, the companies in their countries and the subsidiary companies owned by the large corporations. When things start going bad, they are so big, that they fear they could be brought down. So they turn inwards, to protect themselves.

Causes:

Corporations have been swallowing up small companies like crazy, in order to feed expansion. Governments have only been thinking selfishly about the companies of their countries, while they were part of a collective union, because they only joined the union to be at the top, to give them room to expand into the other countries. Over-production has also been the result of expansionism. So really, we can tie this all down to everyone trying to expand as much as possible.

Normally, companies would have good reason to worry about expanding too much. But everyone has been working on the presumption that science will solve all our problems. However, scientists study things in general, without looking at the companies or industries in detail, to understand all the factors in the situation. Thus, scientists have lots of theories, economic theories, political theories, psychological theories for advertising, theories for increasing mass production, genetic theories on how to increase production from animals and plants, and much more. But they are general theories, without specific application. Application is left to anyone who can, with no consideration for the consequences, because again, everyone is leaving that to the scientists. So scientists are being expected to solve the problems of deleterious consequences of application, while they are still only dealing in generalities, and so cannot be expected to deal with subjective phenomena.

[/hide]

[u]Summary:

We've all been doing whatever we can, to make as much money as possible, and expecting science to solve all the answers for us, as if by magic, when the very way our scientists study science, means they are very likely to not be able to solve all our problems soon enough to save us from economic ruin. All that has done, is delay the inevitable, and allowed us to dig a very, very deep hole.

Time to wise up. Nothing is perfect. Not science or anything else.

---------- Post added 06-28-2012 at 04:42 PM ----------

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	When you have the same currency as your trading partner you need to have the same economic power. Otherwise you end up in a trade deficit that grows exponentially as you are becoming more and more noncompetitive (your industries collapse). It's as simple as that and the reason why the Euro-zone is unsustainable.

I am personally unsure of that. That would depend on whether the countries would be working together, or in utter competition, with no care about how their actions affect the whole.

Even if what you say was established, that would be a major problem, because in any sub-division of any union, whether that be a country in a union, or a state in a country, or even a city in a state, some will have more power than others. You can't expect to get total uniformity and retain it for that long. Hitting 50% has odds of 100-to-1. Maintaining 50% has far lower odds, for the longer that you hold it.

What you describe, is ultimately about 2 areas in a larger body, fighting for their needs, above the needs of the whole body, even when it puts the body at risk. That's what cancer tumours do. At best, you're hoping for 2 tumours fighting each other equally, to maintain the balance. That can't last for long. Eventually, one tumour will get slightly bigger than the other, and that advantage will give it the opportunity to take more, and get bigger, and take more, and get even bigger. The bigger tumour then absorbs the smaller tumour. Eventually, you just end up with one massive tumour, that eats all the good stuff, and dumps its toxic waste products into everything that is left. Then the body is too toxic and it dies. As the tumour is not self-sustaining, and acts parasitically, when it's host dies, so does the tumour.

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	They just became a "bigger and stronger country" and East Germany was brought up to speed pretty quick.

Not that quick. I was in my 20s. It was a big deal at the time, and took years. In the meantime, a lot of people worried that the result would be another German attempt to take over the world. That in turn worried Eastern Europe, that those who had backed the Germans in WWII, would do so again, and those who had suffered under the Germans, would do so again. The result was that both sides went to war, before the Germans could invade. Hence, the Yugoslav Wars.

All that could have been averted, had Germany integrated and stabilised quickly enough, or at least given confident reassurance that they were not going to repeat the past, that everyone would buy.

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	(It sound so bad when you use the "they".. "They" who? "They" what?)

I'm a programmer by profession. Keeping track of hundreds of variables in a single page, is what I would do all day long.

	Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	The banking and finance sector is a leech for the world economy. When the leaches will be cut of from their blood source, the systems that relay on the banking and finance will collapse.But I will develop that idea in a thread I will start when I will have time.

The banking sector, and the finance sector, are developments that were established to help trade flourish. That is their purpose. Banks were there to lend to businesses that had opportunity and desire to grow, but lacked the capital to do so. The markets stemmed from the Derivative markets, that were established primarily to ensure that corn farmers would get a stable price for their corn, irrespective of whether the harvest was a bumper year, or a bad year. You might as well say that medicine is a leech on the desire for life.

All of this is about doing whatever fulfils your desires, and leaving the consequences for others to sort out, which is exactly what many people are doing in the forums.

Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

You sound so "nationalistic" is hurting. What systems are you talking about? It makes no sense. A good system (lets say a German model) implemented at a federal level will create a very powerful economic union in Europe because it will create economic values in the regions ("countries") that previously were incapable of creating much "value". Thanks for the advice but as much as I respect some of your post about psychology I find your "pro-nationalism" rather peculiar...

I find this ironic. I am anything but nationalistic. I'm not federalist either. I believe in moderation, and thinking out the consequences of your actions. Extremes usually lead to harm. So does being too optimistic about your own beliefs.

Anyway, when I say "system", I mean just that. I wasn't being specific, because I was talking about how systems operate in general. The same thing happens on a country-wide level. The only reason why it didn't with Germany, was that the Germans were playing safe and cautious, and pushing for things running on time, which in this case, would mean making sure that it works, the same way they tend to be with everything.

The problem with Germany in the EU, was that Germans were not thinking about themselves as a small group in a larger system, being Europeans, and instead were still thinking of themselves as being Germans instead. So were the French, and most countries.

I'm a Londoner. I need to to think about the needs of Londoners. But only so far as the budget allocated to London applies. But when it comes to votes that apply to Britain as a whole, I need to think about the needs of Brits as a whole, or I'll vote the wrong way, and you get a lop-sided and unbalanced system, that will destabilise Britain, and thus what is in it, including London.

For the EU and/or the Euro-Zone to work, then members need to realise they are both members of their countries AND members of the union. They have to vote for what will work for BOTH. In such situations, competition has to fly right out of the window. If you have a need or desire that conflicts with the needs and desires of other member states, you HAVE to work it out by compromise. Otherwise, you get divided actions. There is an old saying "United we stand. Divided we fall." There is a reason why "Divide and Conquer" is known to be one of the most successful strategies in military history.

[Daoist]

Originally Posted by scorpiomover To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

We've all been doing whatever we can, to make as much money as possible, and expecting science to solve all the answers for us, as if by magic, when the very way our scientists study science, means they are very likely to not be able to solve all our problems soon enough to save us from economic ruin. All that has done, is delay the inevitable, and allowed us to dig a very, very deep hole. Time to wise up. Nothing is perfect. Not science or anything else.

It's an odd time to be writing an eulogy for science, given that the two most mainstream schools of macroeconomics (Keynesianism and monetarism) both predicted that the Euro zone wouldn't survive its first major recession.

[Clueless]

If anyone here can logically contradict the following over-simplified explanation I'd love to read it.

Production=undertaken by humans in the form of employees

Consumption=undertaken by humans in the form of consumers

Humans= A single group which represents both the ability to produce and the need to consume

Production costs= encompass many things but the key variable is the portion attributable to employee wages

Wages=translate directly to purchasing power which represents demand

Increased production efficiency=the ability to produce more products at lower production costs (including lower employee wages)

So if we employ a system which strives for ever-increasing production efficiency, (including ever-decreasing total employee wages relative to total production) does this not translate directly to an environment in which total production capacity inevitably will surpass total demand reflected by those wages? How can it not?

Where's the natural mechanism by which a market economic system replaces demand lost through increases in production efficiency? That's the key question.

[Daniel86]

Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

If anyone here can logically contradict the following over-simplified explanation I'd love to read it. Production=undertaken by humans in the form of employees Consumption=undertaken by humans in the form of consumers Humans= A single group which represents both the ability to produce and the need to consume Production costs= encompass many things but the key variable is the portion attributable to employee wages Wages=translate directly to purchasing power which represents demand Increased production efficiency=the ability to produce more products at lower production costs (including lower employee wages) So if we employ a system which strives for ever-increasing production efficiency, (including ever-decreasing total employee wages relative to total production) does this not translate directly to an environment in which total production capacity inevitably will surpass total demand reflected by those wages? How can it not? Where's the natural mechanism by which a market economic system replaces demand lost through increases in production efficiency? That's the key question.

Increased efficiency leads to lower inflation meaning higher real wages, as well as higher profits which are paid to shareholders, directors and governments, or are reinvested. the profit that is not reinvested or paid to governments, can used to consume immediately by shareholders and directors, or saved as reserves and drawn-up in the downturn of a business cycle. The problem is when there are a lack of mechanisms to give people the confidence to invest as has happened with this credit crunch. Likewise governments may take pro-cyclical measures for ideological reasons (both spending when the economy is going well, and excessively cutting when the economy is in a downturn)

What is the alternative to a market economy?

[Daoist]

	Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Where's the natural mechanism by which a market economic system replaces demand lost through increases in production efficiency? That's the key question.

Creativity. Easiest to see its absence. See my post #54 ("There are also knock-on effects to demand...")

[Clueless]

	Originally Posted by Daoist To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Creativity. Easiest to see its absence. See my post #54 ("There are also knock-on effects to demand...")

What's the impetus necessary to spur creativity?

---------- Post added 06-28-2012 at 11:30 AM ----------

	Originally Posted by Daniel86 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Increased efficiency leads to lower inflation meaning higher real wages

Please provide a real-world example of this.

[Daoist]

	Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	What's the impetus necessary to spur creativity?

A number of things. A non-clueless leadership is one thing, as I mentioned above. Also, education and the opportunity to self-educate. All of these are basically tied to "leisure" time.

But really, ask yourself that. It's an internal sort of question.

[Clueless]

But I'm not asking about creativity at the individual level. I'm asking what is the impetus to spur creativity at the collective level?

[Daoist]

In addition to the 'micro' factors that work the same on all levels, the only other thing I'd point to is a government and society that allow and reward free thought.

[Clueless]

We've gone off on a tangent. Lets exchange the word "innovation" for creativity.

[Daoist]

Then you're moving to the supply side. Creativity is the ability to appreciate useless things - we'll call that "art," ignoring its potential for real utility. Your question was what happens to all the people unemployed by increasing productivity. My answer is an "art" economy.

[Clueless]

	Originally Posted by Daoist To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Then you're moving to the supply side. Creativity is the ability to appreciate useless things - we'll call that "art," ignoring its potential for real utility. Your question was what happens to all the people unemployed by increasing productivity. My answer is an "art" economy.

Cool. Good answer, now I follow. Do you disagree though, that the presence of such creativity in individuals is unevenly distributed and resulting much less from economic circumstance than from other social, cultural, perhaps even genetic factors?

If so, it's not very logical to assume a natural progression toward an art economy because the loss of non-creative opportunities cannot be managed to coincide and thereby be off-set by creatively gifted individuals.

[scorpiomover]

	Originally Posted by Daoist To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	It's an odd time to be writing an eulogy for science, given that the two most mainstream schools of macroeconomics (Keynesianism and monetarism) both predicted that the Euro zone wouldn't survive its first major recession.

Economics seems to be treated as if it was a science. You are quite welcome to inform economists that they have nothing in common with scientists.

[Daoist]

Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Cool. Good answer, now I follow. Do you disagree though, that the presence of such creativity in individuals is unevenly distributed and resulting much less from economic circumstance than from other social, cultural, perhaps even genetic factors? If so, it's not very logical to assume a natural progression toward an art economy because the loss of non-creative opportunities cannot be managed to coincide and thereby be off-set by creatively gifted individuals.

So, some of these people who have been made redundant will become artists' assistants, rather than artists themselves. In any case, the economy is one very important factor, so there should be a strong enough relationship on average.

Also, 'art' is defined very broadly (to include sports, for example.) Defined appropriately, and also assuming optimal economic conditions, I imagine there are few people (who would have commanded a high enough salary in the 'real' economy for innovators to have bothered making them redundant) without any sort of latent talent.

[MechanicalSun]

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[thod]

	Also, 'art' is defined very broadly (to include sports, for example.)

Wealth as public acclaim. A world of vanity. I shall pay for your art with my applause, have three claps on the house, I have an infinite number of them.

[Daniel86]

	Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Please provide a real-world example of this.

Inflation is a rise in prices as measured by a given index of goods. Improved productivity=lower average costs=lower inflation.

[Clueless]

	Originally Posted by Daniel86 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Inflation is a rise in prices as measured by a given index of goods. Improved productivity=lower average costs=lower inflation.

Yes I understand the theory. Please provide a real-world example of such a meaningful occurence.

[Daniel86]

	Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Yes I understand the theory. Please provide a real-world example of such a meaningful occurence.

It is so central to our system that it's taken for granted. For example the cheapness and availability of all mass produced goods, from consumer goods to food. A car used to be inaccessible to all but the elite, now most families have two.

To look at it another way, when productivity is interfered with for any reason - eg a drought affecting agricultural products - prices go up.

Regarding wages it is much the same, as you can see higher wages means lower productivity per worker, and therefore inflation. Obviously some inflation is desirable in a growing economy, but if it gets too high (above 3% for the sake of argument) then it will mean lower real wages.

[wolfyx]

Originally Posted by Daniel86 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

It is so central to our system that it's taken for granted. For example the cheapness and availability of all mass produced goods, from consumer goods to food. A car used to be inaccessible to all but the elite, now most families have two. To look at it another way, when productivity is interfered with for any reason - eg a drought affecting agricultural products - prices go up. Regarding wages it is much the same, as you can see higher wages means lower productivity per worker, and therefore inflation. Obviously some inflation is desirable in a growing economy, but if it gets too high (above 3% for the sake of argument) then it will mean lower real wages.

Exactly! Economy made simple.
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This is the essence and everything else is just "smoke" to confuse the "outsiders".

- What does it mean "good life" from an economic point of view? Being able to afford the goods.

- How can you make affordable goods? By producing more goods, increasing productivity.

- How do you increase productivity? By applying a system that encourages productivity and innovation.

The financial sector has way too much power at the moment and they are pulling way too many strings. It has gone way over its intended attributes as a servant of the industrial sector. It’s simply an aberration that the "countries" that focus on finance are richer than the ones with strong industries and that a job in finance is more prestigious a better paid then one in the industrial sector. The finance sector is simply producing 0 value, it is just sucking value. It's an aberration that at the moment the real economy is more hurt by the "financial crises" than by real natural disasters.