What is ‘Productive’?

In a commodity-backed money system, a common currency union, or a fiat-money system with a fixed or pegged exchange rate, external undemocratic constraints are imposed on governments which limit their freedom to use fiscal policy for public purpose. A consequence of this is that governments – and wider communities – become constrained in what they can do by unnecessarily erected financial constraints that have nothing to do with real resource limits. The provision of health care, education, infrastructure, and other goods and services, can fall far short not only of what is desirable but of what is possible given the availability of doctors, nurses, teachers, engineers, construction workers, etc., because of a lack of money.

A government that is the issuer of its own fiat currency, in contrast, can never be short of money unless it voluntarily imposes such squalor on itself. It is a topsy-turvy view of things to imagine that at a time of high unemployment and excess capacity it is “unaffordable” to employ these workers or put idle resources to work. It is only unaffordable within the voluntarily constructed constraints governments have imposed on themselves to limit net expenditure to arbitrary proportions of national income.

To take just one of many possible examples, when people in need of medical treatment but without the means to pay for it are being left untreated at the same time as qualified medical practitioners are unemployed, how could it be unaffordable to employ the medical practitioners to attend to the patients? Neoliberal mythology would suggest it is unaffordable, because the government is “short of money” and sufficient private demand (backed by private income) is lacking. But the government is unconstrained in its capacity to pay for these health services.

Net financial assets increase when the government undertakes such net expenditure, but so too does productive activity, unless somebody wants to argue that attending to the sick is socially unproductive. Actually, that is what neoliberal logic suggests. It implies that the expenditure is unproductive because the source of demand was not private. The patients were too poor to pay, so meeting their needs was unproductive.

In a society of individuals, it is arbitrary to privilege private demand over public demand in this way and is simply a reflection of the ideological bias of neoliberalism and the class-interested motivations involved. What is productive? That question is answered socially. A market is a social institution. A market assessment of whether an activity is productive is merely one social construction of productiveness. Since the market assessment depends on private incomes and preferences, the market assessment will change with every alteration of the distribution of private income. Unless somebody wants to argue that there is one ‘natural’ distribution of income, and that the one we have right now happens to be it – just like the one we had yesterday used to be it! – there is little to recommend such an assessment of productiveness over any other.

An alternative evaluator of productiveness is democracy. If, as a society, we deem caring for the sick to be a productive activity, we may vote or campaign for the government to spend some of its freely created money on training more medical practitioners. Whether the assessment of productiveness is through a market, democracy or some other mechanism, it is always and everywhere a social construction. To attach an aura of ‘naturalness’ to one mode of social construction – the market – is a superstitious act. It attaches god-like qualities to something that has – and could only ever have – been created by us. There is nothing natural about the current distribution of income, nor any measure of productiveness that hinges on that distribution.

Those who suggest that mass unemployment and idle capacity reflect a lack of productive uses for available resources may as well argue that we have run out of things to do with ourselves. No one with any imagination could think there is a lack of ways to improve our lives. No need for activities that help to preserve or regenerate the environment. No reason to develop alternative energy. No scope to invest in education, research and development, and technical innovation. No need to improve health care, public transport systems or other social infrastructure. No way to make our cities, towns and communities more liveable. No benefit to providing more personalized care for the elderly, better childcare, services and facilities to enhance physical, mental and social well-being. No point in enhancing facilities for social, creative or sporting pursuits. No point using our brains to think of anything worthwhile to do at all.

39 thoughts on “What is ‘Productive’?

  1. Much needed article!

    The topic about low productive government spending stealing scarce capital from private investors is pushed all the time in our faces.

    All Austrians out there should read it!

    Is it really productive to cut government spending for health care because government ran out of money and can’t employ more personnel?

    Should we relay on a miracle like in Roger Waters’ song:

    “…A doctor in Manhattan
    Saved a dying man for free
    It’s a miracle
    Another miracle
    By the grace of God Almighty
    And pressures of marketplace
    The human race has civilized itself…”

  2. Peter,

    Does this article pertain to “Social Value” theory that you had mentioned over at A.D.?

    Regardless, I was, as I am wont to do, considering Austrian shortcomings and the primacy they place on the market. I had come to the conclusion that there were other ways of determining “value” rather than just profitibility. Voting appears to be another means of individuals expressing preference however, it is a method that does not involve a monetary exchange. IMHO, within this simple observation, the seeds of the Austrians destruction are sown. For if people were desiring an Austrian based economy they would vote into power representatives who would fulfill these desires. A praxeological interpretation of this would need to conclude that because the actions of US citizens have not caused an Austrian government to be created this must be evidence that this goal is not of sufficient importance to the rational individual agents. In Austrian circles it is well known that preference can only be expressed through action thus the democratic process has highlighted the shortcomings of their theories.

  3. brinn: Good point.

    Regarding the America’s Debate thread, there I was simply pointing out that in neoclassical theory there is a distinction between social benefit/cost and private benefit/cost. The two diverge in their theory due to externalities. My point in that context was simply that it is not just heterodox economists who point out that market value can diverge from social value. The orthodoxy has a method of analyzing when this occurs, too.

    But here my point is, more broadly, that value in the normative sense is something ultimately determined by a society of individuals. If we object in sufficient numbers to a market determination of value in some instances, that is part of the social determination of value. There is no natural law that says markets are the only legitimate determiner of value. As you point out, voting is one process contributing to the social construction of value.

    rvm: Very nice musical reference! I think we need more song references here at heteconomist. 🙂

  4. Peter,

    Thanks for the clarification.

    P.S.
    You’ve become one of my “must read” daily stops alongside Mosler, Mitchell and Roche. Thanks for your efforts!

  5. Peter, very nice post. I too, doubt the legitimacy of market value as our sole measure of value, and have also written quite a bit on measuring social value more broadly and in non-monetary terms. I agree with brinn. Your site is becoming a regular stopping place for me.

  6. brinn, Joe: I have become an avid reader of your contributions as well (brinn in the MMT thread at America’s Debate and Joe at Corrente’s). brinn you seem to have started one of the longest threads in history. Also, until recently I hadn’t connected the Fiscal Sustainability Teach-In with Corrente. I watched all videos there of the conference presentation. It is a fantastic resource.

    Thanks to both of you for your words of encouragement. This blog is derivative of the leading ones and an attempt to provide material that complements them. There will be times when I struggle to keep up a decent rate of output due to other time commitments or lack of ideas. Sometimes it can be hard to think of something to say that is sufficiently different from the last thing. 🙂

  7. Peter,

    Then you repeat yourself.

    People believe things based on how many times they’ve heard it, not whether it is right.

    Hence the prevalence of ‘we need to cut the deficit’.

    Here’s a few stock phrases we need to start repeating ad nauseam.

    – ‘If we cut unemployment the deficit will cut itself’
    – ‘Bond interest is just government benefits for feckless and idle corporates. Why aren’t we cutting that?’.

  8. Outstanding post Peter

    I agree with Neil, we need to find some mantras to repeat adnauseum. Neils suggestions are good ones.

  9. “Unless somebody wants to argue that there is one ‘natural’ distribution of income, and that the one we have right now happens to be it – just like the one we had yesterday used to be it! – there is little to recommend such an assessment of productiveness over any other.”

    The difference is that everyone engages in the market and that it is a reflection of the actual preferences of all the people who engage in it. The “public” demand you argue for represents the demand of a small elite group of people – not the public at large. And they acquire their “demand” out of thin air as opposed to voluntary exchange.

    “Those who suggest that mass unemployment and idle capacity reflect a lack of productive uses for available resources may as well argue that we have run out of things to do with ourselves.”

    There is no such thing as idle capacity. There is only affordable capacity. If resources are not being utilized, then it is because the price of using those resources is too high. The supply is higher than demand. The logical thing would be for price to fall.

  10. Stephen,

    Treating people like the market for cattle gives you one problem. With people you can’t really send the excess to the abattoir to be converted into a higher value product like a meat pie.

    People need an income to live. If there are more people than jobs than the clearing price is zero and people starve to death. That is only ever acceptable to those who live in ivory towers isolated from the real world of real people suffering. The suffering of several cities worth of real people.

    And you can identify those heartless individuals when they use the word ‘resources’ to describe real human beings.

  11. “And you can identify those heartless individuals when they use the word ‘resources’ to describe real human beings”

    Amen Neil. Yes you can. The dehumanization of the economy is the thing that is at the core of our problems. One thing that does have a limit is how long someone will let you treat them like a subhuman. I’m amazed we havent had an Egypt moment here YET! (No Tea Partiers you are not like the Egyptian people)

    Its coming.

  12. Neil,

    “Treating people like the market for cattle gives you one problem.”

    People aren’t cattle. They are actors in the market with individual motivations and preferences. In a world of scarce resources, markets are limited by reality. Distributing those resources efficiently requires relying on supply and demand – not your bourgeoise sensibilities of what constitutes value.

    “People need an income to live.”

    And the government cannot provide that to anyone. Sure, the central bank can type in any number they want into everyone’s bank account – but that is just nominal income. The government cannot create an increase in real purchasing power.

    “And you can identify those heartless individuals when they use the word ‘resources’ to describe real human beings.”

    If that is how you want to term it, I would rather be “heartless” than “brainless.” When you make decisions with your heart instead of your brain, you are bound to allow for consequences contrary to your intentions.

  13. Stephen

    Distributing the resources efficiently? Ill take distributing them efficaciously
    Efficiency is doing things “right”, efficacy is doing the right thing.

    Yes it is about scarce resources isnt it. Although not all resources are scarce. Water is, and since everyone needs it to live it should be rationed and not left to the free market to own and profit from. Food is not scarce until we use all the aerable land for other things, but we arent there yet. Land is not scarce at all. The entire population of the world could live within the borders of Texas and have about 1000 sqft per person. We are not running out of space. We are not running out of materials to build housing.

    We are running out of fossil fuels and thats a big one, but we can develop renewables if we’d just allow oil to get to its real price and stop the big oil subsidies. Actually we CAN develop them even without removing the subsidies but the POLITICAL environment will resist it. We arent close to running out of people who know how to take care of sick folks.

    So what exactly is it thats real important that is scarce? Water. The other thing that is lacking is empathy.

    You know, your idea that you think with your brain and others think with their heart is wrong. We ALL think with our hearts. Its actually been well demonstrated with neurobiology. We make decisions with our heart and ex post justify them with our head. Its our moral compass.

  14. “Distributing those resources efficiently requires relying on supply and demand”

    It also requires free and fair markets where no actor has any more power than any other.

    And there are very few of those markets in the real world – certainly not the labour ‘market’.

    “The government cannot create an increase in real purchasing power.”

    And that’s where you fall down. No demand, no investment, no production. Simple as that.

    Once you create nominal demand – people with money to spend – and there is the sniff of a profit then you will get real activity.

    One of the solid areas of activity at the moment in the UK? Micro-generation of electricity. Why? Government sponsored feed-in-tariffs.

    Which then leads to the obvious solution that you use a ‘post-fund if required’ policy.

    It is powerful to be able to say “We intend to introduce a Job guarantee scheme funded by the state and we expect that the economy will be able to expand its output to absorb this extra spending. However we reserve the right to increase Corporation Tax by up to 3% to compensate should it feed through to demand inflation. Obviously we want to avoid that so over to you Mr Entrepreneurs to create the necessary economic expansion.”.

    It’s pragmatic, it provides a clear incentive backed with money and it targets help at real people who are suffering today.

    ‘bubble up’ is so much more powerful than ‘trickle down’ for the fairly obvious reason that poorer people have a higher propensity to consume.

  15. “It also requires free and fair markets where no actor has any more power than any other.”

    Why? What do you deem as “more power”? Do you mean more demand? Well if we are talking about free markets, then more demand is a consequence of more production. A person is able to demand more goods and services because they also produce more. If we have a primitive barter economy, the person who has the most demand is the guy who collects the most coconuts or who nets the most fish. The person who adds the most to the overall economy also has the most demand. Now if you are going to counter that some people receive their money illegitimately (subsidy, theft, whatever) – then your qualm isn’t with free markets, it is with bad policy.

    “And that’s where you fall down. No demand, no investment, no production. Simple as that.”

    You have it completely backwards. Where does demand come from? Is it just imagined into existence? Is there a limit to what everybody wants? Does creating money create demand? The answer is that demand comes from production. Your demand is compensation for your production, usually in the form of wages. When you go to work, you receive a salary. That salary represents your demand. But what it really is is an exchange. Your labor and your production is being exchange for the labor and production of others. This is expressed through the medium of exchange – money.

    “Once you create nominal demand – people with money to spend – and there is the sniff of a profit then you will get real activity.”

    It doesn’t create real activity, it diverts real activity. If the people who spend the newly created money didn’t add any production to the economy – then they are just bidding up the price of the existing pool of resources. It is just like if I was an astute counterfeiter out of my basement. The money I spend doesn’t create new production. It diverts production. I don’t add anything to the economy but I extract resources from it. Eventually prices reflects this reality as I consume without the requisite production.

    “‘bubble up’ is so much more powerful than ‘trickle down’ for the fairly obvious reason that poorer people have a higher propensity to consume.”

    Is there a greater example of tickle down economics than government directed distribution of resources? Spending isn’t economic growth. We spend as a result of economic growth.

  16. Stephen,

    Demand comes first, supply second.
    Businesses don’t know how much of their product they will sell.
    The demand will show them after .
    After the sale businesses will know exactly to the penny how much their income is, did they sell less or did they sell everything they had produced, could they have sold even more than what they produced. Now they can make decisions using their brains how much to produce next time.
    The demand leads them. Government in fiat monetary system through its fiscal policy can manipulate aggregate demand.

  17. “Demand comes first, supply second.”

    No, demand comes from supply. Demand is a representation of production – of your labor. Money =! Demand. If you increase demand without the requisite increase in production, you just bid up the existing supply of goods and services. It would be like if you were a counterfeiter in your basement and you just made dollar bills and spent it without working. You are adding nothing to the economy, yet you are consuming resources.

    “Businesses don’t know how much of their product they will sell.
    The demand will show them after .”

    This is all true – supply and demand push back and forth in an economy – but in the end, supply must come first. It is the only logical position – especially when we break down the economy to its most primitive, barter form. The principles remain as we become more complex and modern.

  18. supply and demand push back and forth in an economy – but in the end, supply must come first. It is the only logical position – especially when we break down the economy to its most primitive, barter form. The principles remain as we become more complex and modern.

    That’s the difference between supply siders and demand siders. Chicken and egg. We can have this argument all day.

    According to the demand siders, where the supply siders go wrong in their argument is reducing the economy to its primitive barter state and presuming that money is neutral and a veil (Say). Demand siders hold that money is neither neutral nor a veil. I believe Schumpeter was the first to articulate this view, early in the 20th century. Post Keynesians reject money as neutral veil.

    Here’s a short post summing up the kerfuffle: Money is not a Neutral Veil

  19. Neil nailed it. 🙂

    Stephen, let’s say you are a business owner, and you see half of your production was unsold due to weak sales .

    You did your best to supply, but the demand had different opinion and didn’t follow your supply.
    On the other hand supply always is happy to meet demand’s demands.

    That’s why even if you want supply to be first you can’t make it happen.
    Only the government in fiat monetary system can do so that demand always covers the supply and no goods and services are left unsold.

  20. Tom Hickey,

    “That’s the difference between supply siders and demand siders. Chicken and egg. We can have this argument all day.”

    It is not a chicken or the egg argument. It is a simple logical argument. I provided a simple example – the basement counterfeiter. Does this person add to the economy? Does someone who consumes without producing add to economic wealth and well-being? I would say absolutely not.

    “According to the demand siders, where the supply siders go wrong in their argument is reducing the economy to its primitive barter state and presuming that money is neutral and a veil (Say). Demand siders hold that money is neither neutral nor a veil. ”

    I think you are confused. I am not advocating the neutrality of money but rather the direct opposite.

    Neil Wilson,

    “Not in any business in the real world. No sales, no business case, no investment.”

    You are confused as to the implications of my argument. To a businessman, he wants demand for his product. This much is clear. But your definition of demand is fallacious. Demand comes from production, it comes from your labor. I am able to demand products BECAUSE I have a job that pays me wages as compensation for my labor. The production must come first. If I consume goods without adding any production to the economy, I am just bidding up the prices of the existing supply of goods and services. The businessman believes that the demand he receives is real – meaning that it is based on the actual market prices. This is the moral hazard! When artificial money creation increases aggregate demand, at first the businessman believes that this is due to an actual uptick in demand for his product – so he reinvests in more production to meet the rising demand. It is only as the new money works its way through the system that it has shown that it did not create new production but it diverted production. The demand wasn’t real because it wasn’t a result of an increase in the production of goods. It was just an increase in paper. So eventually, the businessman has shown to over invest in his product because the “demand” was due to monetary inflation and not actual production.

    rvm,

    “Only the government in fiat monetary system can do so that demand always covers the supply and no goods and services are left unsold.”

    Makes no sense. If supply exceeds demand, then all that means is that the price needs to come down.

  21. Stephen, an extreme case:
    a person who is handicapped and cannot work. Wants to buy a widget and cannot (no income). Somebody (charity, government, whatever) comes and gives this person money. The person buys a widget. Was this (artificially created) demand “real” or not?
    Note that the widget doesn’t have to be a luxury item – it could be a basic item like food.

  22. If supply exceeds demand, then all that means is that the price needs to come down.

    Except wages and prices are sticky and what actually happens is that inventories build and suppliers cut back on production, not by cutting prices and wages but by layoffs and reduced production Then, the economy contracts, an output gap opens and unemployment rises due to lagging demand (according to demand siders).

    Stephan this is the essence of a debate that has been raging for a very long time in economics. Most people that know anything about economics are familiar with the opposing positions and that there is no resolution at present.

    Simply asserting these well-worn views here is a waste of time. Since the economics profession is still in disagrement over this, we are not likely to find resolutions here either. Since this is a fundamental disagreement that we are not going to settle on this blog, arguing it here is basically a waste of time.

  23. “Stephen, an extreme case:
    a person who is handicapped and cannot work. Wants to buy a widget and cannot (no income). Somebody (charity, government, whatever) comes and gives this person money. The person buys a widget. Was this (artificially created) demand “real” or not?
    Note that the widget doesn’t have to be a luxury item – it could be a basic item like food.”

    It is a transfer of demand from someone who earned it to someone who didn’t earn it. Children don’t work and have no income. They receive money from their parents. How did their parents get money? They worked for it. They received compensation for their labor. So when the child is given an allowance, he is not exercising newly created demand – he is exercising demand on behalf of the parent who voluntary gave it to him/her.

    When you create paper money out of thing air for the purpose of increasing demand – you just bid up the existing supply of resources. You don’t add wealth, your divert wealth.

    The question is just so fundamental that it is a wonder we have disagreements on it. What is demand? I believe it to be pretty straightforward that demand is just a representation of our production. Like my primitive island example, the guy who collects the most coconuts or nets the most fish is able to express the most demand because he has more goods to exchange in the marketplace. Money is just a representation of your production.

  24. Cool, Stephen, let the handicapped people starve.
    Are you for real? Do you not see grey, only black and white?

  25. Tom Hickey,

    “Except wages and prices are sticky and what actually happens is that inventories build and suppliers cut back on production, not by cutting prices and wages but by layoffs and reduced production Then, the economy contracts, an output gap opens and unemployment rises due to lagging demand (according to demand siders).”

    Which is an effect and not a cause. The cause is when prices are inflated due to earlier cheap credit policies. Entrepreneurs commit to overinvestment in some industries and malinvestment in others. When the reality of the situation takes hold (the demand was never real in the first place) it requires economic contraction so that resources can be reallocated.

    “Simply asserting these well-worn views here is a waste of time. Since the economics profession is still in disagrement over this, we are not likely to find resolutions here either. Since this is a fundamental disagreement that we are not going to settle on this blog, arguing it here is basically a waste of time.”

    I respect your opinion but disagree. I think it is useful to use logical arguments to hash out these dilemmas.

  26. “Cool, Stephen, let the handicapped people starve.
    Are you for real? Do you not see grey, only black and white?”

    Is that what I said Peter D? Really? Please leave the strawmans and hyperbole at home. I was making a clear logical argument for what demand is. Your obfuscations about “letting the handicapped people starve” has absolutely nothing to do with the question of what demand is. Could you please address the sentences that I actually wrote instead of embarking on your sensationalist rants?

  27. On logical ground there is no difference b/w boosting demand (however “unreal”) for handicapped persons and boosting demand for laid off people. Both groups are victims of events beyond their control (in most cases.) If you’re OK with helping handicapped people then you should be in principle OK with helping unemployed people. Even if it “distorts” pure market outcomes. Again, it becomes a matter of degree, not principle.

  28. Stephen, did I make the same point clear re: Constitution on the other thread? That personal preference regarding allowing the government to meddle in economic activity is a matter of degree, not of principle?

  29. I think it is useful to use logical arguments to hash out these dilemmas.

    Stephan, these things have been hashed out ad nauseam by economists. Please excuse me if I respectfully agree to disagree with your logic and premises.

    When I was in grad school in philosophy, I attended a school that was unusual in that most schools of thought were represented at a time when most university philosophy department were representative of a single school of thought. I sked one of the profs why the professors never debated with each other since they obviously disagreed. He said, “Oh we did that some time ago and argued back to fundamental premises over which we disagreed, and we agreed to disagree. Now we just talk about the weather.”

    Economics is much like philosophy in this regard. Different ideologies clash with each other, and politics determines which gets the upper hand in the marketplace. Supply siders and demand siders are never going to agree with each other because they see the world through different lenses.

  30. Peter D,

    “On logical ground there is no difference b/w boosting demand (however “unreal”) for handicapped persons and boosting demand for laid off people. Both groups are victims of events beyond their control (in most cases.) If you’re OK with helping handicapped people then you should be in principle OK with helping unemployed people. Even if it “distorts” pure market outcomes. Again, it becomes a matter of degree, not principle.”

    Has nothing to do with what we were arguing. This is yet another example of your attempt to change the subject. If we are talking about demand and where demand comes from – how do we then get into “well, the government should care for sick people”? Two completely unrelated questions that you are trying to conflate. I put it to you – what is demand? I think you are conflating demand with money and I provided my reasons why. I made it clear that I felt that supply must come first when talking about supply and demand – and gave my reasons why. You on the other hand brought up complete red herrings about sick and unemployed people which have nothing to do with the main point of contention. If, as I believe, your conception of demand is incorrect – then all of your other points about wealth creation, wealth redistribution, and economics in general are suspect. There is no point in engaging you on specific policy if we cannot agree on cause and effect. Boosting aggregate demand does not create wealth. It never has and never will. If such was the case, then poverty would have been eliminated eons ago. The truth is that demand is a consequence of production. People produce, add wealth to the economy, and are then able to exchange their production for other’s production in the marketplace. Boosting the supply of paper dollars does not increase overall demand. It just redirects where the demand comes from.

  31. Yeah, we’re arguing about different things here. I continue to argue against you assertion that your position is based on solid logic. You say “Demand comes from production, it comes from your labor” therefore demand coming from a handicapped person can only be a transfered, “unearned” demand. Why would you be making such a distinction? Is this demand less worth satisfying? If you said “yes”, then I’d agree that you’re consistent within the parameters of your paradigm. But if you allow for satisfaction of such unearned demand on emotional (or whatever) grounds, then you’re stepping outside of you paradigm. Which is also what I think happens when you agree to taxes to pay for the military but not to pay for Social Security.
    So, yeah, I was continuing to argue the argument from the previous thread.

  32. To be clear, by “your position” I refer to comments you made here:
    “You are trying to pass off the point that “sometimes government works, sometimes it doesn’t” as a moderate, reasonable position just because it is in the middle of what you arbitrarily set up as the two extremes. There is logic and then there is the absence of logic.”

  33. Stephen

    If you wish to go back and examine what we “are” in the context of a barter economy, I think you would have to phrase it differently than you do. What we all are, in our basest form, are consumers. We are primarily consumers NOT producers. We created production after we organized out of huntergatherer groups through the development of agriculture and other technologies.

    Once we created societies where only a portion of the people were needed to produce food for all the members of the group then we started developing monetized markets and such. The driving force was consumption though. What can I sell that others want to consume? People had time then to sit around and make things but the only things they could sell were things that others DEMANDED. If there is no consumption there is no production.

  34. “When you create paper money out of thing air for the purpose of increasing demand – you just bid up the existing supply of resources. You don’t add wealth, your divert wealth.”

    Maybe, depends on many factors, but even if true the main point is not the price of something but how many people can afford it. If people are out of the market because they have no money then any money they get, however they get it will increase their participation some and thus improve their outcome. You contend this comes at someone elses expense. SO? In your view of the economic world every game we play is a zero sum game. There can never be a new participant who isnt taking from someone else. You wish to put labels like productive or lazy or worthy on some in order to justify them not having access to their basic needs.

    In our monetized economy, some cannot afford basic food shelter and health care. And its not simply because they are lazy, uncreative or stupid. Its because the system has been deliberately designed the way it is. Its not an accident or natural, its all man made and man can make it differently if we wish.

    The primary difference in my position and yours as I see it, is that I, knowing the abundance of real wealth we possess in this country (world really) think that until you have nutrition needs met, healthcare needs met and shelter needs met you are not living, you are simply surviving. We can provide ALL with basic living conditions (including access to an income), you prefer the floor of existence to be simply survival mode; naked, hungry and on the brink of death (all because you simply………. “Chose poorly”). You think we are animals I think we are humans.

  35. The current state of affairs did not come to life in a vacuum. Capital is accumulated during millenniums (the most important of it being creativity and knowledge).

    In an industrial production economy demand is what drives supply mostly. Entrepreneurs will seek new market niches and exploit them, then they create demand because of supply. Both sides are correct, and both sides of the argument are needed to manage the economy.

    However supply will always flourish, and indeed it will flourish even more in a buoyant economy because there will be ample financial capital for investment and more risk appetite (here some austrians are completely wrong with their liquidationist agenda, does not work that way in the real world, they are just making up causality). But in the larger context of a modern economy demand is what matters the most macro and microeconomically.

    Innovation will always flourish as always has, meanwhile keep demand up and for this you need money to flow, specially to the larger consumer base. Inflation in some assets will trigger competition & innovation to lower costs or eventually suppress demand by itself.

    There is no real big discussion about supply vs. demand once you understand that the economy can’t be understood on simplistic assumptions made in the vacuum. The history of the stocks & flows is what matters, and once you are past a certain point demand is what mostly drives economic activity, and supply will follow thereafter.

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