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105 sats \ 18 replies \ @Scoresby 29 Jul \ on: Minimalism is Pro-Social econ
I like minimalism. It's a good way to live, but I don't think that's true in aggregate.
Isn't there a story where Hodl Butter is making their fine products in their garage, and if they get a deal with Amazon to sell at Whole Foods, they go out and buy/build themselves a little production shop in an industrial park somewhere and start producing much more Hodl Butter at a lower price point?
That deal only happens because more people want Hodl Butter, not fewer.
The story of last few centuries has been that increasing consumption is what makes life affordable for others. That's why poverty rates have decreased so dramatically. We have more people on Earth who want more things than ever before and that's the exact reason a the percentage of the world living above poverty levels has increased.
People wanting less means there will be less stuff and less activity and less goodness in the world. Perhaps I have failed to grasp something in your argument, though.
Isn't there a story where Hodl Butter is making their fine products in their garage, and if they get a deal with Amazon to sell at Whole Foods, they go out and buy/build themselves a little production shop in an industrial park somewhere and start producing much more Hodl Butter at a lower price point?
There is, but I cleverly preempted it by holding supply fixed. What you're describing is a supply shift.
This is partially offset by the increased availability of financial capital that I described. Think of it like reducing the activation energy needed for a chemical reaction. There's a lower energy state that's not currently reachable, we can either reduce the hurdle or add energy.
The story of last few centuries has been that increasing consumption is what makes like affordable for others. That's why poverty rates have decreased so dramatically
I totally disagree with this. Increased production has made life more affordable. I think you have cause and effect completely backwards.
Human wants have always been unlimited. What's changed is our ability to meet them.
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It's a contrivance that economists call "the short-run". We bust it out when we want to think about the changes that will happen before the structure of production is able to adjust.
Still, it's not that crazy. Supply being fixed isn't the same as quantity supplied being fixed. If you think of a particular factory, with it's available labor force and suppliers, it has a fairly fixed supply. At different prices for its products, they'll scale production up or down, but the production technology is the same.
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I guess I'm confused by this. How can you make a generalized statement based on a particularized observation?
The structure of production will adjust and when it does, the result may very well be more expensive Hodl Butter...or no Hodl Butter at all if enough people decide not to purchase it. However if you keep on buying it and more people ask Hold Butter if they can buy some, then Hodl Butter might figure out some ways to make it more available. This is something they have no reason to do if they see their sales declining and interest waning.
Your post is making a generalized statement about life, not a specific observation about some very constrained place or moment in time:
By reducing your consumption, you make life more affordable for others, possibly even allowing them to pursue more rewarding lifestyles.
In any scenario where one might make a decision based off this observation, supply won't be fixed. If I decide to not buy something it may or may not contribute to the expansion of a business (it might also contribute to the degradation of the environment or a even to the beginning of a war) -- the same might be said if I choose to buy something.
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Your Hodl Butter point is somewhat inconsistent. You say that the production structure will change and then proceed to ignore it when declaring that they would have no reason to continue producing at lower demand: Most likely their inputs have become cheaper and their cost of living is most likely cheaper, so they can afford to spend more time on it.
When we're thinking about our individual actions, it's not all that likely that we need to allow for supply shifts. Our production is marginal in many cases. Only if your demand is sufficient to change how goods are produced do you need to think about supply shifts. Maybe that's the case for Hodl Butter, but it's not the case for anything that's mass produced. No one's opening a new plant, or closing an existing one, because you cut back on your spending.
Now, when you suggest that the equilibrium changes could go either way. I don't disagree, which is why I had the "half baked" description on those thoughts. Take those more as my musings on what I would expect to happen.
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You say that the production structure will change and then proceed to ignore it when declaring that they would have no reason to continue producing at lower demand:
Isn't this because one change is voluntary and the other is not? A person can choose to produce more Hodl Butter or not in response to an increase in demand. If they choose to not increase production, they can continue to sell what they make as they did before. They don't even have to change their prices. They can just sell what they have exactly as if there was no one new asking for Hodl Butter. There is an option to continue as is.
In response to a decrease in demand, they don't have this choice any more. If they choose not to decrease production, they will have too much Hodl Butter and will have to lower prices to sell it. They no longer have a choice to continue doing what they want, but must react or run out of money. It's a fundamentally different situation. Isn't this a difference that needs to be accounted for?
In the first case, any choice Hodl Butter makes is likely because they think it's in their own interest to do it--that they think they action will be beneficial for their business (it is unlikely that they will take an action they believe is harmful for their business). In the second case, Hodl Butter may have to lay off a good employee or miss a loan payment, they are not taking action because it is good for the business, they are taking whatever action they must -- beneficial or not (they may be compelled to take an action that is harmful to their business). This is a key difference, isn't it?
My assumption in both cases is that a person does not offer something to the market unless they want to make money. This leads to my next assumption that the price a person offers something at in the open market is near to the price it is not worth the effort to offer to the market.
I think about my posters I sell (maybe not the best example because I'm a terrible businessman). I had a number of people buy them in 2023 but then fewer in 2024. Now I don't really bother selling them anymore. I gave a few away a couple weeks ago because they are just sitting on my shelves. But largely, I've stopped trying to market them. The signal I got was that people didn't want to buy them at the price I was offering, and offering them for less really wasn't worth my time. If, however, there had been demand for 2 or 3 a month over the last year, I would likely still be selling them.
So in this case, a few people got free posters and are better off. But now I'm not making posters any more and anyone else in the world who wants them can't have them. Seems like a net loss (perhaps I am taking too high account of the merit of my posters, though).
i only just got the chance to read and digest this, although i did zap it earlier because i could see the proof of work (thank you keynsian beauty contest rewards).
it made a lot of sense to me, especially after reading scorsby's trial by fire.
i'll have to think on this idea some more until i have something more meaningful to add--although i will say that i noticed you took and made some complex concepts accessible and succinct--and in the meantime, i'll be waiting for your book to come out.
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I actually am planning on compiling a book out of all these exchanges with @Scoresby.
On Supply: a Scoresbatic dialogue
We've had so many of these lengthy discussions. There's one more post I need to make before I can start putting it together, though.
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Technological advancement and specialization from trade.
More stuff being consumed isn't the same as more demand. Hold a demand curve fixed and slide the supply curve to the right.
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Profit maximization is the reason. If cheaper inputs can be obtained or a more efficient conversion into outputs is discovered, profits increase and production expands.
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Isn't this also how organic food got so much cheaper? In the 90s and early 2000s, nobody was too interested in organic food and the prices were significantly higher than "normal" foods. But as demand for organic foods increased, producers figured out how do organic more efficiently (either because of economies of scale and/or because of tech) and the result is that a jug of organic milk doesn't actually cost that much more than a jug of non-organic milk.
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Yes, it is
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Consumerism has brought everything except good things, an example of this is how all the technological waste in the world has ended up in the poorest countries in the world.
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