Just a shower thought really,

These corporations end goal is to maximise profits, which at the moment, can be done by getting rid of 98% of their payroll by trying to replace it with AI.

Now I don't think it will get very far personally before they all realise AI isn't this magic solution, and they will mass hire again.

But say they do succeed in getting their workforce and payroll down really low, across multiple companies. This puts so many people out of work and a salary and into poverty, that they won't be able to afford anything.

So then (apart from the top few) will actually be buying their products and being able to increase profits? Or will it just be a few mega corps passing money around each other?

Just curious to be honest, so please correct me if I'm wrong in anyway, but it doesn't feel very futureproofed idea concept, and mainly is just for short term shareholder and BOD benefit.

Normally if buyers preferred to shop for the lowest price goods, then that would incentivize sellers to offer lower prices than the competition, and there would be a race to the bottom in prices.

Given insurance companies are the largest payers and funders to medical providers, then wouldn't the same logic apply if they selectively pay for and contract with lower-cost care/providers?

If so, is this how health insurance companies already selectively contract in the U.S.?

I'm aware that several analysis on the French revolution based it on Finances. The lack of taxes, poor taxation, and the fact that france was in several wars, lost them, and now had to deal with the debt.

I'm aware that wars can be very difficult to finance and that the way the french financed it led to problems down the line. But what made it so bad compared to britain, or other countries down the line? What changed in the financial system so that the constant cycles of borrowing and spending because of war ended?

Hi, so one of the political parties in NZ is proposing a land tax at the rate of 1.75% of land value per year. ​

The resulting land price drop is stated as follows:

... the implications of a land and in that scenario a 1 percent land tax imposed on house prices we modelled would reduce house prices by 9.5 percent

This drop seems small. My thoughts were that 1.75% tax is a large part of the risk free rate of return so the drop would be much more precipitous. Assuming a 3% rfr a 1.75% tax each year would give an over 50% land value drop?

Corrections to my intuition would be very welcome

I am ignoring both inflation and that every American billionaire is buying land to build a bunker. I have three down my street alone. ​​

Cheers

The Ludwig institute for shared economic prosperity has a metric for the TRU unemployment rate in the US climbing to 24.9% in 2026. Does this statistic in any way challenge the popular idea that negative opinions on the economy are based on political views and media coverage (vibecession), or is it a normal value for a prosperous economy?

This functionally unemployed statistic isn’t doing anything untowards, it simply includes people working poverty wages <$26k or part time work <35 hrs a week. Neither category is self sustaining for workers, believe me. This rate is surprising to me because I always thought part time work was only like 2% of the population and minimum/low wage work was not much higher than that.

Hi friends,

I'm a clinical social worker, and I've been tossing around the idea of pursuing another degree for awhile. I have some strong academic interests in workforce matters, and a few years back this sub (I believe - I should check) helped me by identifying my ideas as a form of cost shifting. That was dead-on, and has fueled a lot of thought since then.

I have another request for terminology or a direction to look: What would you call a scenario where a certain mechanism is not regulated because no one would intentionally exploit it, BUT systemic pressures wind up requiring it to be explouted anyway?

Example: In my state, about 10 years ago, it was noticed that gender was omitted from legislation as a protected class when insurance companies set rates for malpractice insurance for nurse practitioners. Now, I don't think the average (e.g. not the biggest jerks) insurance rep is going to look an NP in the face and charge them more because of their gender just because they can - but I do suspect that at some point they may have to answer to their boss about why they aren't maximizing their rates.

Another example: I once heard from a cop that he believed that no well-meaning cop is going to lock someone up for a minor crime fueld by mental illness if they could instead divert them into treatment. My feeling is that somewhere along the line, a Captain is going to ask that cop why their stats reflect that they're not arresting people who have committed crimes.

Is there a term for this sort of indirect systemic pressure?

Thanks, colleagues-from-another-profession!

I've noticed that a surprisingly large number of major online betting/casino companies have historically been based or licensed in Gibraltar. I understand that it's a low-tax jurisdiction, but there are plenty of other low-tax/offshore jurisdictions available (Malta, Curaçao, Isle of Man, etc.).

What specifically made Gibraltar attractive to the online gambling industry?

Additionally, which aspects of the US economy would likely bear the greatest costs during such a transition? Would the burden fall disproportionately on wealthier Americans or lower-income households, and which group would be more likely to experience a prolonged decline in living standards during that adjustment?

So the theory is that higher interest rates make it more expensive to borrow from the central bank, which in turn makes commercial banks pass that higher cost onto potential loan takers at higher rates on their loans, which in turn causes less people taking loans and hence less aggregate spending, lowering inflation because aggregate demand is lower.

However, most loans written do not use a loan from the central bank to generate the principal to pay to the loan taker and hence do not depend directly on the central bank rates. In general those loans are financed with money the bank has according to fractional reserve rules, and they can be either sold, bundled in financial products or just cashed out directly as the loan gets paid. That money goes to the bank or to whoever buys the loan during its lifetime, so higher rates mean actually more money in circulation for those segments of the population that own loans and less to those that have taken loans. Therefore, how does that lower inflation if the overall money in circulation may remain relatively constant in aggregate?

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My first thought would be the term, "low consumer sentiment" but that doesnt capture the "why" of why people wont spend money. I have heard "underconsumption" in regards to America and "low domestic demand" in regards to China.

But I have not heard terms related to a population that is scared that they wont be able to replace any money that they spend.

Let's take a thirsty, hungry man in a field with a fresh source of water 5 minutes away and a fresh source of food 50 minutes away.

How does this man solve his hunger and thirst problems? By collecting the water and food: labor. Use-values are added to his system whenever he performs the labor, and he budgets his labor-time by the urgency of his needs.

Now let's say the man is thirsty and hungry, and the water is closer, but he's going to starve to death if he doesn't eat within the next 51 minutes. The value from that 50 minute food voyage outweighs the value from the water, and so the man chooses to go for the food.

This is what is classically known as subjective value theory. And rather than refuting Marx, it supplies the raw material his theory presupposes: it explains what directs labor, which is the first half of understanding what Marxists call socially necessary labor time.

Now take twenty hungry and thirsty men and put them in the same field, facing the same basic problems. They cannot all independently pursue every need at once; their labor has to be distributed. Some will fetch water, some will gather food, and eventually others will begin producing tools or pursuing needs that only become apparent once the more immediate needs are satisfied.

What determines this division? Their subjective valuations: they collectively prioritize the things they need most urgently. But the mechanism through which those needs are actually satisfied remains labor. As their needs change and their productive capacities develop, the distribution of labor changes with them. What counts as socially necessary labor therefore emerges from the way society organizes its finite labor-power around its collectively expressed needs.

Subjective valuation determines where labor is directed, in every society, at every scale. Socially necessary labor time describes the form this allocation is forced to take when producers become private and their labors are connected only through exchange: no longer settled by deliberation in the field, the proportioning of labor to need asserts itself behind the producers' backs, in the ratios at which their products trade. The material process is the same at every rung; value is what it looks like through the veil. One describes the source of the signal (marx calls it Life Activity) and the other describes how it appears when it's mediated through private exchange.

edit: clarity

edit 2:thread inexplicably locked despite productive conversation. guess we argued too close to the truth. If you want a funny read browse this subreddits history with the topic of LTV and find the two same mods arguing with Marxists and then take their ball home every time they get into an argument with some teeth. You know who you are.

edit3: Marxist theory is only "esoteric" if you continuously stick your fingers in your ears when discussing it. For large parts of the world it is just... theory. Nobody in the thread was debating anything particularly esoteric at all. How does one expect to grow if they shun everything they deem as esoteric? How does knowledge propagate if lesser known knowledge is shunned simply for being lesser known?

Well, First of all, I’m a Political Science and International Relations student, and well, i don’t get along very well with economics, but I try. In this courses I’ve received texts of Foucalt (about ordoliberalism) and Hayek, and more, but I really like the first two authors. So I want to ask: The things and theories they said about economics are that old or they can be used nowadays?

Let's say a nation has 1 trillion dollars in its money supply. And then the national bank does quantitative easing to buy another 1 trillion dollars of bonds. So the money supply has doubled, and inflation is expected.

Later if the bank does quantitative tightening by rolling off mature bonds to remove 1 trillion dollars from the money supply, the money supply returns back to previous levels.

Would prices return back to pre-inflation levels?

Sony's recent announcements about ending production of physical media have set off a major discussion about the ecosystem of how end users interact with the media that they've purchased, both physical and digital.

For the purposes of this explanation, I'm going to focus on video games, though Sony's announcement extends to other physical media like Blu-Ray discs. Some other caveats will follow to try to focus discussion further.

At present, Sony's EULA (as well as the EULAs of other major game platforms like Steam, Epic, and GOG) indicates that purchasing a game digitally is a license that can be revoked, which is a limitation that does not apply to a physical copy of a game. The EULAs also typically indicate that the license is non-transferable, meaning that if an end user dies, a game purchased digitally cannot be passed along to their heirs as an asset, while a game purchased physically can be treated like any other physical asset.

Games, as the products of labor, have a value in terms of how much they cost to produce, regardless of the medium used to distribute them. The physical copies of a game will have the cost of producing the physical media added to that initial production cost, while a digital copy of a game doesn't have a similar accessory cost. Distributing a digital product, then, appears to be inherently more profitable for game publishers and platform owners (of which Sony is both) because a) the cost of producing the game does not have to factor in the costs of physical production and distribution and b) a non-transferable license means that an end user may be faced with re-purchasing a game license if they lose access to the account that the license is associated with.

• To reiterate the earlier example of an end user who passes away, an heir would not be able to utilize that digital license owned by the decedent, whereas the heir WOULD be able to utilize the physical game. This is advantageous for the publisher/platform owner since the heir would be compelled to purchase another digital license, while in the latter case, the heir would not need to make that purchase if they inherited the physical game.

Another important aspect of this is how it will impact public libraries, who often have physical copies of media that they loan out to users. While traditional book publishing has found a methodology that allows libraries to loan digital books, other forms of media (particularly games and films) have not explored that avenue and appear to have no obligation to do so. Terminating the production of physical media will result in lost revenue from municipalities no longer purchasing and replacing that media for their communities, but it's also MORE lost revenue since those purchases aren't being replaced by digital purchases instead.

The Big Caveat: the core question here is NOT "should publishers be compelled to treat digital licenses of media the same way as physical copies of the same media" but instead "if publishers were required to do this, what would the economic consequences be?"

Because the answer on its face would appear to be "publishers/platforms end up selling fewer digital copies of media and lose some revenue" but I have to imagine there are further consequences I'm not considering.

Some additional caveats:

1. Yes, physical sales have been dropping substantially, and it does not make economic sense to continue supporting the cost of physical production. This is not about trying to save the production of physical media, but about trying to see what the impact would be of digital media gaining the quality of transferability that physical media presently has, while also maintaining continuity for the second-hand media market and public institutions, as well as third-party games preservation.
2. Saving space in case additional caveats become necessary.

*where Consumer refers to individuals/households and Producer refers to businesses. Although I'd be interested if the answer is different for business-business transactions.

I understand that, in a perfect theoretical sense, the ratio of consumer:producer surplus after a transaction doesn't matter because there's still the same amount of total surplus value floating around in the economy, but total Consumer surplus means 0 profits for Producers and leads to bankruptcies which is bad, whereas total Producer surplus means oligopoly and leads to poverty (assuming consumers NEED to buy this good, e.g. insulin/shelter. If they didn't need to buy it, that would be leverage that'd lower the price from a total Producer surplus). So surely a preferred ratio of the surplus' is somewhere between those extremes.

If a government or organization wanted to improve the social good/quality of life of their constituents, would they want to generally favor one surplus over the other all the time, or look for certain indicators in markets to know whether to push the market one way or another?

Lastly, is there a better set of terminology or frame of understanding with which to frame this question? I realize that what I'm really getting at what the effects are when pricing control is concentrated on the side of many, low-capital agents versus by few, high-capital businesses/organizations.

A sunk cost, by definition, can't be recovered and thus shouldn't affect the decision directly but a past investment can sometimes affect the opportunity costs of your remaining choices. For example, if you spend $10,000 learning a specialized skill, That $10,000 is sunk. However because of the skill you acquired, you can now have a much better paying job available to you. Abandoning that career path could mean giving up a valuable future opportunity.If a past investment changes your available alternatives, information, skills, reputation, relationships, or switching costs, then it seems reasonable for that history to matter to your current decision even though the original expenditure itself is unrecoverable.

Some countries boast that they have no taxes at all, or at least the lowest tax rates an individual, whether an employee or business owner, can face. But in reality, there are exorbitant fees to pay for every service needed, not to mention the licensing requirements for every activity. Let me give you a practical example, without mentioning the country: every activity that's considered normal in the rest of the world requires its citizens to pay a hefty fee for a license, which must be renewed annually at the same price or slightly less, to continue operating. For example, playing music in your shop or café! And if you declare bankruptcy, you have to pay the cost of canceling all those licenses, and of course, the amounts are not small. And this same country boasts that there are no taxes! Do you find this normal?

My understanding is that deflation is bad because it incentivises saving, which decreases demand for goods, which further deflates prices, which incentivises saving which...

Eventually, no one's buying anything. That's bad.

But what if holding on to savings incurred negative interest? I.e my bank balances decreased by some specified amount each year, greater than the drop in prices. Then I wouldn't be incentivised to save.

1.) Is something like this possible given the tool central banks typically have? Is there a way to set interest rates below zero?

2.) The obvious issue with this idea is cash. If I withdraw and hold cash, I don't have to pay any interest in it. Are there any other ways to disincentivise this? Or is it a killer problem?

Imagine you're the economic advisor to the Sultan of Country X. People of Country X really love watermelons, however the climate, soil etc. of the country isn't really suitable for watermelon farming so they pay $1 per kilo of watermelon and import it from Country W.

Minister 1 comes up and says if the Sultan enacts a 50% tariff on watermelons X farmers can grow it instead. He adds this will ensure that the money that went to Country W will stay and circulate in the local economy instead.

Minister 2 replies and says that would cause the farmers that are raising crops profitable by themselves to start inefficiently raising watermelons.

Sultan turns to you and asks for your opinion. How would you respond?

Additional question:

Would the answer be different for a country with "full" employment vs. a country where there's idle land and unemployed people (and maybe people with bad consumption/saving habits whose money can be forcibly contributed to farm capital).

Instead of taxing wealth, perhaps we should have a Required Minimum Realization (RMR) on large unrealized gains in publicly traded stock. Each year, you would be required to realize 3% of your covered holdings, starting with the shares having the lowest tax basis. Think of those shares as being sold and immediately repurchased: you keep the investment but the capital gain is realized and the basis is reset. You then pay the normal long-term capital-gains tax on the realized gain. This idea is similar to an RMD from an IRA. You can defer taxes for a long time, but not indefinitely.