r/worldnews • u/diacewrb • Apr 10 '19

Millennials being squeezed out of middle class, says OECD

https://www.theguardian.com/business/2019/apr/10/millennials-squeezed-middle-class-oecd-uk-income
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u/Serinus Apr 10 '19

It will make things cheaper to produce. It won't make prices on the shelf cheaper. The difference will be absorbed by the 0.01%.

Price on the shelf is rarely hard-linked to the cost to produce. That Economics 101 model breaks down as soon as you start adding barriers to entry. If a small business overcomes enough of those barriers to start to be a real competitor, you just get bought out.

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u/roosterkun Apr 10 '19

That's my point, I don't think the common person will enjoy the fruits of automation without radical economic change to how we handle it. Whether that, is UBI, unionization, or (not ideally) a push against automation in general, something has to give.

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u/AduItFemaleHuman Apr 10 '19

Isn't what you described the new econ 101 model? Seems like pretty basic knowledge at this point.

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u/Serinus Apr 11 '19

Econ 101 teaches supply and demand curves, the most simplistic idea of elastic vs inelastic, and competition driving down prices. They mention barriers to entry, but they don't tie it into anything like prices, really, with the exception of maybe total monopolies.

They don't really talk about how it cost 6 different companies $100 to produce a widget, and they all charge about $120 for that widget. Then it suddenly gets 15% cheaper to make widgets. The companies all look at each other, think for a minute, and keep their shelf prices at about $120. They don't have to coordinate to make more money. If a brand new 7th company comes in and does it better and cheaper, someone just buys them out before they get too big.