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Three Arguments

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Jul 12th, 2011
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  2. *It has come to my attention that many people think the reason that there aren't more jobs is that companies are not doing well.*
  4. This is one of the main oppositions to increasing wage for lower amounts of work. It therefore follows that people should support a <b>DECREASE</b> in the average wage for permanent employees working full time, if they are given the option of instead working part-time at the original wage rate (or even a higher wage rate if full-time employees get the reduced rate). Wages would eventually equalize anyway, but apparently people don't realize that.
  6. Please contact the White House via the contact form to encourage this policy to reduce unemployment, if doing so is in your interests.
  10. --
  13. <b>What does "low consumer demand" really mean?</b>
  15. From : 'That is why so many companies identify their number one problem as "lack of customers".'
  17. But as helpfully pointed out to me,
  18. "<i>of course that is utterly and 100% meaningless and stupid.
  19. It is like sayng the number one problem of cancer researchers is they have not found the cure. It is a given that no business has too many customers and no researchers have too many cures for cancer. OMG!!!!</i>"
  21. More specifically, this means businesses would not increase profits by lowering their prices, because the slight increase in sales would not make up for the loss in per-unit profit, even if their product is significantly cheaper than others on the market.
  24. Decreasing the cost of a car from $35k to $25k will not make a rich person buy it instead of a $200k luxury car, because they don't care about saving $10k. In other words, companies that are NOT profitable enough are the ones who feel like they have problems from lack of customers.
  26. Companies that are profitable don't feel like they have a lack of customers because they are profitable, even if they could make more profit for every new customer.
  28. This lack of competition is the same as described [here]: http:/ and <b>derives from the very slightly higher amounts of utility of the more expensive goods</b>, even if the utility is only "having a brand that people will recognize". This is what lack of customers really means, that the low-end companies have problems not the high-end ones, and is exactly what changing the wage system would fix by lowering profits for the high-end companies and increasing demand for products of the low-end ones.
  32. --
  37. "<i>The argument that we are on a permanently lower growth path is an argument that there's nothing we can do, nothing we need do, and nothing we should do (except, perhaps, measures such as sharing the jobs we have more broadly). This is the new normal and you may as well get used to it.</i>"
  39. An analogy (aka a lie):
  41. Jens, Kirsten, and Niloufar constitute an economy. It doesn't matter what they make. Each sells to the other two.
  43. Enter William, who sells iPods. Jens wants an iPod, so he starts buying less from Kirsten and Niloufar. Eventually he has most of the money in the economy, and buys an iPod.
  45. William now has most of the money, Jens has an iPod but no food, and Kirsten and Niloufar are selling less than half what they used to (mostly to each other).
  47. Now, they could all reduce their prices to prevent Jens from starving to death, but they are too stubborn since after all it's Jen's fault no one has any money, and if he wants food he can make stuff for them (which they can buy only slowly because most of the money is gone). Anyway if they did lower their prices, they'd never get their money back from William after Jens gave it all away.
  49. But William just likes collecting money, and only spends what he needs to survive... and before he completely runs out, Kirsten decides she needs an iPod too.
  51. ^ You are invited to ponder the solution to that situation before proceeding.
  53. ***
  54. Yay I love replying to my own comments. For those who don't know how to fix this simple economy of four persons: make Jens, Kirsten, and Niloufar all do some of the work of assembling iPods, so William has more time to spend money and has to pay the other three to make the iPods that they want to buy.
  56. Again, except people think companies are doing badly so the correct action is to reduce average wage for full-time work, but give the option to work part-time at the original wage **which is an offer which should be taken disproportionately more frequently by those working at profitable companies making iPods**.
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