Nobody understands the context of this shit unless they firmly understand what a critical path is and how a scheduling network works.
What good is $1/lb rice over $3/lb rice when we have to spend an extra $8/lb to cover the social welfare costs so the farmers who formally grew the rice can afford to purchase that rice to feed their family?
You're making a false dichotomy. Go back to colonial America--yes, that recent--and even England had no notable welfare system. England implemented old-age pensions and unemployment insurance before the United States, and unemployment insurance was hotly debated because of expense--with people citing old-age pensions as having worked out fine in support; now unemployment insurance is
Our social welfare systems in America cost 1.5% of taxed AGI back in 1950--including social security. Back in 1790, such social welfare systems would have bankrupt America--not required 30% of our taxable money, but required 500% of our taxable money. That 1% income tax they levied in 1820 covered some extremely minor functions of government on a small body of people, without the costs of things like communications infrastructure, space-age military, interstate highways, ICBM launch silos, nuclear submarine programs, or military satellite systems. America's navy wasn't England's; wooden ships were expensive, but we relied on militia men and a standing army rather than infinite sea power, since well-armed galleons wouldn't stop invasion from our two fucking huge borders. A standing militia is cheap.
The fact is these systems of $1/lb rice over $3/lb rice have made enough excessive wealth for us to actually implement those social welfare programs and still come out richer. We were once a nation--once a world--of blacksmiths and farmers, with the blacksmiths mostly supporting the farmers with plows and scythes; now farmers are 0.25% of our population. We're reaching a point where our current-model welfare system--the social programs system--is growing out of control in cost, while minimum wage--a good system for the 1900s--is actually threatening to undermine the economy; and, at this point, we can implement a Citizen's Dividend system which will continuously reduce its minimum operating cost (I argue, as a matter of policy, to lock the financing sources and just let the minimum standard of living grow as our nation becomes more wealthy), eliminating both problems and completely ending homelessness and hunger forever.
That's what cheaper rice gets you. It's what every step in history has been: cheaper metal products (blacksmiths go away), automatic elevators (bellhops go away), more food from less land (lots of farmers go away), advanced low-cost materials like plastic (shipping costs drop because fuel needs go down, manufacturing labor drops, and lots of people in many sectors need new jobs), and so forth have steadily cut down the price of a T-shirt from $4,000 (479 labor-hours at $8.25/hr minimum wage, a la 1820, before the power loom entered wide deployment) to $15 (8.6 hours at $1.73/hr) and moved the labor elsewhere. That labor, moved elsewhere, does other things: we still have t-shirts, but we also have rockets that go to the moon, and social programs that keep people from starving.
This is not just (or even mostly) about unit labor costs. Rice farming in Japan is incredibly inefficient.
That's labor costs per unit. That's exactly what I said.
In a good climate with good soil, you may produce 6 tonnes per hectare of rice using a total 10,000 labor-hours. In a bad climate with bad soil, you may produce 2 tonnes per hectare of rice using a total 40,000 labor-hours. That means 1/3 as much rice, 4 times as much labor, 12 times as much labor per unit of rice produced. That labor includes agricultural workers, fertilizer manufacture, water treatment and transport for irrigation, power generation and coal mining for electricity to run the pumps, transport of fertilizer, and so forth. Reduce the amount of irrigation required and you reduce the amount of coal mined, the amount of water treated, and the amount of pumps used to pump water--reducing the labor invested. Reduce the amount of fertilizer, same deal. Get more out of the same land and these things multiply, because you're tending less land.
Again: You can't reduce costs just by reducing labor price. Kicking farmers off the dole, reducing their subsidies, reducing their working hour costs, and so forth will bring labor costs down, but only so far. If you want to reduce labor costs significantly in the long term, you must reduce invested labor hours per unit productive output.
That's what inefficient *means*.
You're right; I keep quoting that per day, but it's per week. 15-20 hours per week. Sahlin and Richard Borshay Lee did studies on modern hunter-gatherer societies to refine their historical projections. It's around 4-6 hours per day.
The USDA Census from 2012 shows 3,233,358 farm operators in the USA. With a US population of 314,100,000 and an agricultural work week of 50 hours, that's approximately 27 working hours per person per year. The fifteen hours of food acquisition per person would total 245 billion hours per year, but the US only spent 8.5 billion hours on farming in total.
That's using the low projection of 2.14 hours per day. As an agrarian society, with modern, industrial farming methods and GMO crops, we save 237 billion hours of working labor time.
In theory, that means 3.5% of our population has to go to work getting food, rather than 38%-50%; in reality, comparing to a 40 hour work week where 15 hours goes to food, it's more like 1.3% of our population has to work getting food, rather than 38%-50%. Anhtropologists argue much of the remaining time was spent on food preparation, but don't always mention things like establishing security for the mud huts, child-raising, weapons and clothing manufacture, and so forth, all much more labor-intensive then (now we have school buildings and brick walls).
I was going to call it that, but the name was taken. Due to the principle of short names (shorter-named papers get more attention and generally draw more credibility), I titled it, "The Growth of Wealth", with the subheading, "A Treatise on the Origins and Development of the Wealth of Nations."
Not really. I'm working on it.
The way to get cheaper rice is for Japan to ratify TPP, kick these farmers off the dole, and buy rice from Thailand or Louisiana for a tenth the price.
Labor may be overpriced; but you can't reduce costs by just reducing labor price. That's a large and important part of my economic theories--it's why I argue for a Citizen's Dividend to replace minimum wage (and our current welfare system), and why a progressive tax system is good--but the primary mechanism of improving wealth is decreasing labor invested in producing goods. Hunter-gatherers could only provide enough food to sustain, at an optimistic estimate, 136 million humans on earth, at a cost of 15-20 labor-hours per day per human fed; now we sustain 7 billion humans, at a labor cost of 27 labor-hours per YEAR per human fed.
In this case, it comes from neither. I comes from massive subsidies, tariffs, and artificial price supports.
That's mercantilism and protectionism, and it actually reduces wealth.
Originally, the earth could support fewer than 136 million humans. We were working 15-20 hours per one person per day as hunter-gatherers, foraging food.
Today, we work fewer than 27 hours per YEAR to obtain food for each one person. We produce more food on less land. In 1970, India produced 2 tonnes of rice per hectare at a price of $550/tonne, scaling to over $3,000/tonne by inflation in 2001; in 1995, India was producing 6 tonnes of rice per hectare, and by 2001 the rice commanded a price of under $200/tonne. That means less labor invested in producing rice--in fact, under 6% as much labor per dry weight of rice (and per calorie!).
With all this free time, we built giant fucking rockets and sent men to the moon.
The total buying power of an arbitrary economy (including the whole universe, although we can theorize a single country like the U.S.) is the total productive output. This makes sense: you can only trade what is produced; and each thing requires labor-hours to produce. It eventually comes down to the minimum cost of labor, with a theoretical bound of however much it costs to keep that labor alive and functioning. That means the cost of labor required to produce food, shelter, clothing, and so forth, whatever your society has provided as "minimum standard of living", is your minimum labor cost.
Currencies hold the same buying power as total productivity. In the case of hard currencies--gold, silver, copper--the labor required to obtain more at any given time compares to the total productivity, which can radically destabilize the buying power of currency when gold mines open up (gold prospectors during the California rush were dropping sizable nuggets for picks and shovels). Fiat currencies are more stable and easily dealt with: they pay for labor, and come into issue by debt or central bank minting. The increase of currency in greater proportion than the increase in production is inflation; a slower currency increase than productivity increase is deflation.
The amount of currency in play is income. If you have $100 trillion but you only make business income and pay wages to the tune of $12 trillion in one year, the amount of currency is, essentially, $12 trillion. Income includes business profits and individual wages.
The buying power of currency, thus, is the total income divided by the total productivity. This lags because it's not a hard feature: it's an elastic market behavior which self-corrects, and so is prone to distortion (e.g. west-coast high prices, low suburban prices) and influence (e.g. cheap shipping means west-coast high prices become west-coast low prices as competition with east-coast cheap products delivers at lower labor costs or lower profit margins than west-coast products). It's also inherently arbitrary: although it self-corrects over time, we can most easily discuss it in more general terms such as the production and income of a fiscal year. You'll always have meaningful numbers, but never absolute, concrete numbers; understanding that limitation is critical.
The total wealth, on the other hand, is the total buying power divided by the total population--the per-capita buying power. Because of constant, absolute economic behaviors, this *always* increases. For one thing, if productivity can scale linearly with population--if 10% more labor-hours worked means 10% more of everything produced--then you can increase population without diminishing wealth. On the other hand, if you hit a super-linear cost situation--10% more labor-hours worked means 5% more of everything--people become poor, and the lowest laborers starve or require more buying power (not just more income, but income worth more labor). Raising the cost of low-end labor creates a sort of feedback loop which slows, then erodes, the economy, and so will tend to force people downward in living standard and put a firm psychological and financial halt to population expansion. This limit on growth is partly "So it is, so it's always been", but also will eventually prevent the system from supporting its existing, critical economic structures, e.g. eventually you can't have roads, internet, and freight shipping; the slightest broad impact as such would immediately halt the expansion, leaving any additional population to face poverty.
When the total wealth increases, we become more capable of supplying luxuries. Not just telephones, Internet, smart phones, cars, planes, and so forth; we can also provide welfare. The cost of living shrinks, and the taxes required to provide for survival take a smaller proportion of the total buying power (and total income). Our societal capabilities increase.
All that happens by reducing labor required to accomplish things. That means unemployment and underemployment, feeding the buying power of the displaced worker back into the large consumer market, leaving them with more buying power, thus allowing expansion of niche product production, which then requires labor, reclaiming displaced labor. When we pull things like India, making more with less and finding ways to produce more in total with our total resources and with slower labor scaling, we reduce scarcity, both drastically cutting costs (and, eventually, prices) and increasing amount of product available by eliminating *lots* of involved labor. That allows for expansion, creating jobs as the population is now able to scale.
This expansion needs to occur at a certain pace. If it comes too fast--if we eliminate 50% of human labor in a few short years--the mass unemployment destroys the consumer market, reducing the amount of productive output we can sell, making it *unproductive* output, essentially destruction of wealth. Then, even worse, we cut back productivity, leaving ourselves bereft of buying power yet saddled with many unemployed, while simultaneously eliminating much of the labor which is no longer of any use, cutting the consumer market further. It eventually settles, and it settles in a bad place which is ridiculously difficult and slow to recover from.
So yes, gutting jobs--slowly--improves the world.
If this all looks very strange, it's because it's a new theory of economics. Prior theories were based on wealth--the land theory of value (Barons hold land worked by serfs, Earls hold more land worked by more serfs and thus take more tithe, thus more land means more wealth, thus wealth and value comes from land), the labor theory of value (a thing is as valuable as the labor put into it--close!), the subjective theory of value (a thing is as valuable as it's believed to be--I call this "valuation" to distinguish markets from macroeconomics)--and never considered much about labor costs and their impacts, although they acknowledged the mechanism.
It's always been very broken, in a form such as, "Labor works to make things, and those things thus have value of what labor goes into it, or of what labor it would save the person buying those things, and thus wealth is when labor is efficient." Close, right idea; but this is a lot of muddled thinking trying to equate the cost of making things to its retail cost, rather than recognize that its retail cost is a market concept only influenced by macroeconomics. Those old theories never made provisions to explain why efficiency makes a nation rich, why efficiency increases wealth, and what causes things like scarcity, inflation, and the value of currency--or makes technological advances and new markets possible, let alone how they arise.
Fewer man-hours, more rice from less work, fewer farmers, less time spent working, less paid in wages, more produced, cheaper rice.
We still have people claiming value and wealth come from land, not from labor. Marx claimed more labor to produce a product meant more value and thus more wealth; I've outright demonstrated wealth comes from reducing labor spent on producing goods.
Then again, I abandoned theories of value when I started making my economic theories; I'm writing a theory of *wealth*, not an explanation of how something's inherent price comes along. Value was always a stupid idea with no place in macroeconomics.
I'm pretty much fine. I gained an extra 20lb in fat somewhere, so straightened things out a bit; I was managing to get 3000kcal or more in, thanks to the vending machine. I hit the vending machine less now. Sometimes I have a 1000kcal Popeye's chicken lunch and a 780kcal bagel sandwich from McDonalds and I still have to get a large soda when I go to Burger King to get the extra calories so I don't come 1000kcal under, and that's with two 15-minute light walks during the day to clear my head (while others are smoking for 15 minutes). Usually I have to not eat 6 packs of tasty cakes and 4 liters Dr. Pepper.
That's pretty much it for me, though. White bread, tea, meats, cheeses, lots of fat... I skip the huge starch portions, the 1200kcal of pancakes or 600kcal of fries, or the 800kcal of fried rice with chinese food. You get this nice meal with a big ass 40oz Sprite, and it comes with potato or grain that has more calories than the rest of the food and the soda combined, and people are like... soda is making you fat, eat your vegetables. Eating double portions is making you fat.
Theory is gray, but the golden tree of life is green. -- Goethe