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#1
Old 12-30-2017, 06:30 AM
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Does consumer selectiveness perform a useful function for the economy in itself?

Suppose you have an economy where you have 3 groups of people.

Underclass, workers, aristocrats. The underclass are people who don't have a skill in demand at the moment, or who are unable to work. The workers do all the work for companies owned by the aristocrats. The aristocrats mainly enjoy their trillion dollars fortunes, though a few of them are self-made and are working on things like Mars colonies.

Since the underclass have access to weapons, a welfare system transfers money from the aristocrats to the underclass. The workers pay taxes to, but receive about the same lifetime benefits or more vs what they pay in.

The underclass thus have a finite amount of money on their cards every few weeks, and will select the consumer products that provide the most marginal benefit. So very cost efficient products, from foodstuffs made with the fewest expensive ingredients for the max taste, to cell phones made at the lowest cost to still be reliable, to large flat panel displays made for similar optimal cost points get picked.
The companies making these products do better in the marketplace, more workers are employed, and technology is advanced from this need to optimize for lower cost.

So even though the underclass are just 'takers', they are providing an information processing function by selecting for better products. Sort of how males in animal species who do not contribute food for their offspring still provide an information processing function by delivering genes to the females for the strongest predator in a given area. (by fighting off all the rivals, the male who gets to mate is being tested by the environment, function-testing his genetic code)

The flaw in my thinking is I don't know what happens if you leave the same money with the aristocrat class. Do they spend it? If every aristocraft has an extra million dollars a year in income, will they increase the economy's production of hand-built Bughatti automobiles and tickets to outer space, providing the same increase in consumer spending and the same information processing?
#2
Old 12-30-2017, 07:55 AM
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Quote:
Originally Posted by SamuelA View Post
The flaw in my thinking is I don't know what happens if you leave the same money with the aristocrat class. Do they spend it? If every aristocraft has an extra million dollars a year in income, will they increase the economy's production of hand-built Bughatti automobiles and tickets to outer space, providing the same increase in consumer spending and the same information processing?
If I'm understanding your post correctly, I think you're still going to hit a wall on your economy. Consumption is an activity so it uses time as well as money. A billionaire might have huge amounts of money to spend but he has less than nine thousand hours each year to spend it in. Due to this, a million people are generally going to consume more than one millionaire; they have more man-hours to work at it.

Last edited by Little Nemo; 12-30-2017 at 07:56 AM.
#3
Old 12-30-2017, 11:49 AM
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Of course they won't, strictly because of numbers. One trillionaire can't possibly buy as much stuff as 100 members of the underclass. Fewer customers means less production which means fewer jobs for workers. Less production means less competition which tends to increase prices and reduce innovation.

Let's say the world has 1,000 superrich people who control everything. Those 1,000 people buy 1,000 hand-built Bugattis for $10 million each, totaling $10 billion. Great for Bugatti, but meanwhile General Motors goes bankrupt, laying off 225,000 employees. Tesla also goes bankrupt, and research and development of electric vehicles grinds to a halt. Meanwhile, Bugatti focuses on making their 1,000 customers happy and concentrates on things like softer leather for their seats instead of self-driving cars. And since there aren't any inexpensive cars being made, poor and working-class people can't afford to have a car, so Uber and Lyft never get started.
#4
Old 12-30-2017, 12:24 PM
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Originally Posted by kunilou View Post
Of course they won't, strictly because of numbers. One trillionaire can't possibly buy as much stuff as 100 members of the underclass. Fewer customers means less production which means fewer jobs for workers. Less production means less competition which tends to increase prices and reduce innovation.

Let's say the world has 1,000 superrich people who control everything. Those 1,000 people buy 1,000 hand-built Bugattis for $10 million each, totaling $10 billion. Great for Bugatti, but meanwhile General Motors goes bankrupt, laying off 225,000 employees. Tesla also goes bankrupt, and research and development of electric vehicles grinds to a halt. Meanwhile, Bugatti focuses on making their 1,000 customers happy and concentrates on things like softer leather for their seats instead of self-driving cars. And since there aren't any inexpensive cars being made, poor and working-class people can't afford to have a car, so Uber and Lyft never get started.
I mean the trillionaire can. He could buy 'space cars' at 1 billion each or something. Custom buggies for driving around the Mars colony. I think you're right, I'm just wondering because technically a single person can spend arbitrary amounts of money.

Plus, if you raised taxes on the trillionaire, who 'deserves' all that money because he/she or a distant ancestor earned it, you're stealing from the producers just to give it to the 'lazy'. Clearly you should leave the money with the trillionaire, he might create jobs for fan wavers or grape droppers.
#5
Old 12-30-2017, 12:35 PM
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Originally Posted by SamuelA View Post
I mean the trillionaire can. He could buy 'space cars' at 1 billion each or something. Custom buggies for driving around the Mars colony. I think you're right, I'm just wondering because technically a single person can spend arbitrary amounts of money.
A trillionaire (assuming there was such a thing) might be a hundred cars. He might even buy a thousand cars. But he's not going to buy a hundred thousand cars. If you want a real economy, you need millions of people buying millions of cars. No individual or small group is going to outbuy the masses.

Quote:
Originally Posted by SamuelA View Post
Plus, if you raised taxes on the trillionaire, who 'deserves' all that money because he/she or a distant ancestor earned it, you're stealing from the producers just to give it to the 'lazy'. Clearly you should leave the money with the trillionaire, he might create jobs for fan wavers or grape droppers.
If trillionaires have the ability to create jobs then we need to give them an economic incentive to do so. We need to adopt a confiscatory tax policy that takes away the fortune they've already earning and forces them to go out and earn a new fortune, which according to your theory will involve creating a lot of jobs.
#6
Old 12-30-2017, 12:46 PM
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The rich didn’t get that way by spending large sums of money. They’re a lot more likely to use any extra money they have by saving it rather than spending.
#7
Old 12-30-2017, 01:16 PM
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Originally Posted by Little Nemo View Post
If trillionaires have the ability to create jobs then we need to give them an economic incentive to do so. We need to adopt a confiscatory tax policy that takes away the fortune they've already earning and forces them to go out and earn a new fortune, which according to your theory will involve creating a lot of jobs.
I think you're right, I'm just parroting the theories of the present majority political party.

Last edited by SamuelA; 12-30-2017 at 01:16 PM.
#8
Old 12-30-2017, 01:27 PM
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Originally Posted by SamuelA View Post
I think you're right, I'm just parroting the theories of the present majority political party.
It just shows that like a lot of conservative theories, it can't stand up to ten seconds of critical thought.
#9
Old 12-30-2017, 01:39 PM
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Originally Posted by FlikTheBlue View Post
The rich didn’t get that way by spending large sums of money. They’re a lot more likely to use any extra money they have by saving it rather than spending.
Hmm, yes, but "saving" doesn't necessarily mean "stuffing under a mattress", or even "storing at the bank". It can also mean "investing in promising companies" if the ROI seems higher. And then the money trickles down, or so the theory goes.

Of course, highly-automated companies (with few employees) and overseas companies (whose employees have low wages) have a higher ROI...
#10
Old 12-30-2017, 04:55 PM
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Let's not forget human nature. You assume the underclass "will select the consumer products that provide the most marginal benefit." Marginal benefit to whom? IRL, people are using EBT to buy cases of water that they dump out so they can exchange the bottles for cash to used for contraband like drugs. There have been a number of merchants arrested in 2017 for EBT fraud, exchanging EBT for cash. No one with sense could think drugs are of "marginal benefit" to anyone but the criminals who produce or sell them.
It seems to be common knowledge that wealthy people are looking to get more money, and while many give away much, they are hardly making a dent in their fortunes.
The worker class will see themselves working with no hope of real advancement or creating wealth in your system. What do you think "the pursuit of happiness" in the Declaration of Independence means? Educated people want freedom and prosperity.

Communism and Socialism have the same problem. People do not want to work while others take the fruit of their labor. These systems only work when leaders have the power to force everyone to accept what they are allowed to have. And in practice, leaders of these systems enrich themselves while everyone else must have an equal share of misery and poverty.
#11
Old 12-30-2017, 04:55 PM
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Originally Posted by Heracles View Post
Hmm, yes, but "saving" doesn't necessarily mean "stuffing under a mattress", or even "storing at the bank". It can also mean "investing in promising companies" if the ROI seems higher. And then the money trickles down, or so the theory goes.

Of course, highly-automated companies (with few employees) and overseas companies (whose employees have low wages) have a higher ROI...
And any ROI higher than inflation means a continuous increase in wealth inequality. The haves keep getting more of the pie.
#12
Old 12-30-2017, 06:07 PM
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Quote:
Originally Posted by SamuelA View Post
The flaw in my thinking is I don't know what happens if you leave the same money with the aristocrat class. Do they spend it? If every aristocraft has an extra million dollars a year in income, will they increase the economy's production of hand-built Bughatti automobiles and tickets to outer space, providing the same increase in consumer spending and the same information processing?

Difficult to say without knowing the size of the populations. But generally speaking, vast amounts of wealth tied up in savings with the aristocrats doesn't help the economy. Some level of redistribution gives purchasing power to the underclass, spurring economic growth and increasing demand for workers.
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