More Demand for Goods and Services will Create More Employment ?

[nameta9]

I find it incredible that so many economists and smart people still believe that "More Demand for Goods and Services will Create More Employment".

This no longer holds:

1) We live in mostly automatic societies - economies where most work is no longer needed, is automated, is optimized and will continually be further automated, optimized; the goal of any organization or company is to decrease, and decrease as much as is possible the number of employees it has, and this is what they will do no matter what;

2) Even if you do need "More Employees", there are today so many options on the table: build factories in third world countries for people making 100 dollars a month salary; hire temp people for a month or two (heck even a year and then ax them) at low wages (since people have diminishing bargaining power, as being unemployed means your power is ZERO, you must accept whatever the Employer offers), make people work from the Internet (information workers beware), in this way you can choose from a pool of about 500 million people worldwide and choose the cheapest and best (Russian programmers are cheap and good), etc;

3) Even when demand increases, the relationship to Employment is non-linear, meaning that if a factory needs to build 30 % more cars it will not hire 30% more people, but jack up the working hours, working turns, and maybe hire a few temps (more like 3 or 4 % more). The same thing happens in Services and actually in Services most of the work is so phony and unnecessary that if demand increases I wouldn't be surprised that they can make due with even less people, a negative relationship;

4) What we have today worldwide, in the globalized economy is a huge amount of Work Availability in terms of people that could potentially work, and a much smaller Need for this work, and the Need for this work is constantly going down with automation - computers - optimizations while the Availability is constantly increasing;

5) There is no counter force, no union, no nothing that is on the side of employees, the only thing that is happening is to make employees fight amongst each other for the breadcrumbs that will remain;

6) Services are supposed to create Employment, but only if people value or think the Services are worth the price: many are starting to doubt the real worth of "call centers", Health Care Thieves of All Kinds, Education and Training towards imaginary jobs and positions that no longer exist, etc.

I find it amazing that in the Developed world there still are so many people "working", I expect Unemployment to skyrocket in the USA, EU and JAPAN.

The only real solution to all of this is FREE SALARIES, that is what is needed, salaries of 1,000 dollars a month and CHEAP RENTS, rents of 200 dollars a month, no buying homes anymore or Home Ownership myth and crap. And a huge modern BUS transportation system, BUS MASS TRANSIT system (either public or private, doesn't matter). I honestly cannot see how on earth, with present day technology and optimizations and the present combination of social forces, how on Earth Employment is supposed to go up.

 

[Kimchijjigae]

Not necessarily. Unless more employees is seen as a viable investment, firms won't hire more people. That is why we must implement tax incentives for small to medium firms. If their balance sheet is in the red, the incentive greatly diminishes, and moreover you must consider their means of production whether they are labor intensive or capital intensive. In a macroscopic perspective though, you could say it is true.

 

[John Creighto]

You're thesis is slightly off. You admitted more demand created more employment, you just questioned weather the relationship is linear and weather the demand will be created at home or abroad. This could very well be true and their is a surplus of labor now and unfortunately what is valued in an economy is what is scarce. However, when their is a shortage of labor the opposite happens and companies pay more and more for labor for ever smaller returns in output.

 

[talk2glenn]

1) We live in mostly automatic societies - economies where most work is no longer needed, is automated, is optimized and will continually be further automated, optimized; the goal of any organization or company is to decrease, and decrease as much as is possible the number of employees it has, and this is what they will do no matter what;

This is inane. Productivity per employee has increased exponentially over the past 200 years. Industrialization improves individual productive output, it does not "automate it away".

2) Even if you do need "More Employees", there are today so many options on the table: build factories in third world countries for people making 100 dollars a month salary; hire temp people for a month or two (heck even a year and then ax them) at low wages (since people have diminishing bargaining power, as being unemployed means your power is ZERO, you must accept whatever the Employer offers), make people work from the Internet (information workers beware), in this way you can choose from a pool of about 500 million people worldwide and choose the cheapest and best (Russian programmers are cheap and good), etc;

Who designs the factory? Builds it? Oversees production? Designs the products the factory produces? Markets them? Ships them? Sells them? Etcetera, etcetera. This is the same old anti-trade nonsense we've been hearing since, well, forever.

3) Even when demand increases, the relationship to Employment is non-linear, meaning that if a factory needs to build 30 % more cars it will not hire 30% more people, but jack up the working hours, working turns, and maybe hire a few temps (more like 3 or 4 % more). The same thing happens in Services and actually in Services most of the work is so phony and unnecessary that if demand increases I wouldn't be surprised that they can make due with even less people, a negative relationship;

This is nonsensical. A 30% increase in output requires a 30% increased in input, including labor hours. Whether those hours come from new hires, temps, or existing workers is irrelevant to any point.

4) What we have today worldwide, in the globalized economy is a huge amount of Work Availability in terms of people that could potentially work, and a much smaller Need for this work, and the Need for this work is constantly going down with automation - computers - optimizations while the Availability is constantly increasing;

Again, this is patently and demonstrably false. A computer increases the productive potential of the laborer; it does not replace that laborer. Labor is the most expensive input in production precisely because it is the most valuable - far more so than any computer or machine.

6) Services are supposed to create Employment, but only if people value or think the Services are worth the price: many are starting to doubt the real worth of "call centers", Health Care Thieves of All Kinds, Education and Training towards imaginary jobs and positions that no longer exist, etc.

Who is this "many"? I assume by many you mean, "me". If so, don't pretend your opinion counts for anything. If somebody is willing to pay to operate a call center, hospital, or school, it is because they think it is valuable at some price.

The only real solution to all of this is FREE SALARIES, that is what is needed, salaries of 1,000 dollars a month and CHEAP RENTS, rents of 200 dollars a month, no buying homes anymore or Home Ownership myth and crap. And a huge modern BUS transportation system, BUS MASS TRANSIT system (either public or private, doesn't matter). I honestly cannot see how on earth, with present day technology and optimizations and the present combination of social forces, how on Earth Employment is supposed to go up.

...I don't know what to say. This makes me think you haven't been serious from the beginning, and I've just been trolled.

 

[John Creighto]

This is inane. Productivity per employee has increased exponentially over the past 200 years. Industrialization improves individual productive output, it does not "automate it away".

And hence, less workers are need, labor becomes abundant and consequently the value of labor becomes less in terms of what the market will pay based on supply and demand. Granted most goods are cheaper at the same time but that this doesn't mean that housing and property becomes cheaper which can take up a significant portion of someones income. I don't see anywhere in the part of the post you quoted where it said that the productive output of the individual is automated away.

Who designs the factory? Builds it? Oversees production? Designs the products the factory produces? Markets them? Ships them? Sells them? Etcetera, etcetera. This is the same old anti-trade nonsense we've been hearing since, well, forever.

This is nonsensical. A 30% increase in output requires a 30% increased in input, including labor hours. Whether those hours come from new hires, temps, or existing workers is irrelevant to any point.

The original poster is arguing economics of scale.

Again, this is patently and demonstrably false. A computer increases the productive potential of the laborer; it does not replace that laborer. Labor is the most expensive input in production precisely because it is the most valuable - far more so than any computer or machine.

Source please. Regardless, we don't have full employment at the moment and some argue it is structural.

 

[FlexGunship]

Guys! Calm down! Did you read the OP's post? He's clearly joking. As an "automation engineer" I recognize the satire.