General Question

jca's avatar

In your opinion, what is better for the economy: cheap consumer goods or having a lot of decent jobs available?

Asked by jca (29281 points ) February 15th, 2013

I am thinking of how we used to have a lot of decent jobs available – companies hired, factories hired, jobs were everywhere (1950’s – 1980’s). Now the jobs are overseas but we have a ton of cheap consumer goods – clothes, electronics, appliances, you name it.

What do you think is better – more jobs of a better quality or cheap consumer goods?

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16 Answers

Response moderated (Unhelpful)
laureth's avatar

Without a job, even cheap consumer goods may be unobtainable.

With a job, you may be able to buy consumer goods that don’t break.

That said, if you have a lot of desperate labor around, you can make a lot of profit if you own the capital. And you can use that profit to influence the lawmakers so that you make even more profit. So there’s really no incentive to change it to benefit the little guy anytime soon.

josie's avatar

False alternative
What is good is cost of labor and cost of goods that actually reflect the evaluation by the markets for labor and goods.
If either or both of these are manipulated it is bad for the economy.
Both of these are being manipulated.
Thus the economy is volatile and unpredictable.

CWOTUS's avatar

On a national scale, the fact that we can send “money” (which has no intrinsic value other than an implied promise of redemption for “something of equivalent value” when repatriated to the issuer) for real stuff, which has whatever value people assign to it, that obviously benefits the country issuing the money. At least it benefits us temporarily. It also benefits the seller of goods, to the extent that the dollars retain most of their perceived value over time, can be accumulated and repatriated for other valuables (whether goods or title to real property) that can be judged on the basis of a relatively stable medium of exchange – the dollar.

When we welsh on the promise to redeem the money as it is repatriated to us, at a more or less equal value with which it was sent overseas, then the shit will hit the fan.

For example, you give me $1, and I give you an apple, which we both agree is worth a dollar, given the relative values we place on “dollars” and “apples” today. If I attempt to spend the dollar tomorrow and find that I can only buy half an apple, or not even that much, then your dollar is on a fast track to worthlessness, and you won’t be able to buy much of anything with it, no matter how many you have. This is the current problem in Zimbabwe, and in my lifetime has been the problem in Romania, Brazil and Argentina, to name a few places you might have heard of.

“What is best”, in my own opinion, is when there are no “intervention” measures to “prop up” or “devalue” the dollar (and likewise with the currencies of foreign countries, such as Japan, which has recently been devaluing the ¥ (yen) in order to make their goods cheaper to export – and make imports much more expensive for Japanese consumers). This would also require that politicians not create vast new oceans of debt by printing currency that has no backing (which is what the US has been doing, not just for the past four years, but for most of the past hundred years).

The way the system is supposed to work, and nominally has worked for a long time, is that a lending nation, such as China is presently, would accumulate stores of US currency from our “imbalance” of trade with them, and would repatriate that money to the US by purchasing assets such as real estate, factories… and capital goods… to enable the further expansion of their economy. (At the same time that they were accumulating capital, their own workers’ wages would be rising and they would presumably be spending their income on higher-quality consumer goods and food than they’ve been used to, leisure activities and vacations, homes and furnishings, medical devices and “general health care”, etc. And these would be other ways to repatriate their dollar holdings.)

@josie has a better response, I think. The question does present a false alternative. This isn’t an “either-or” situation.

dabbler's avatar

campaign finance reform
PAC funding transparency reform

less limit on the liability, of a limited liability corporation

make it harder for corporations to be forgiven debt of all kinds
periodically unburden individuals who are cash-flow challenged from dealing with debt they cannot service anyway

establish more state banks modelled on successes like North Dakota’s

SadieMartinPaul's avatar

Nobody rides for free. Workplace safety, child-labor laws, and a reasonable work week…they all cost money. It’s unconscionable that the U.S. touts these values yet outsources production to places that do not. It’s the American way—talk a big game while exploiting for lower prices and more consumption.

marinelife's avatar

You have to have people who can afford to buy the cheap consumer goods.

CWOTUS's avatar

Exactly how would you propose that the US enforce its national laws on foreign producers, @SadieMartinPaul?

ETpro's avatar

Here’s my not so liberal side. I agree with what @josie and @CWOTUS had to say. Past that, I will not that my personal preference is not for super-cheap consumer goods that break in a few months, but are obsoleted by newer “improved” models in that time anyway, making people want to chuck out the few that still work in favor of the one that has the new, “must have” features. I’d rather buy something that does what I need it to do and that is built to last, and I’ll keep it until I either actually wear it out or until new features are developed that aren’t just marketing gimmicks, but are great enhancements; at which time I can donate my still serviceable item to the Goodwill Industries and get the new improved model. It just so happens that strategy leads me to buy a lot of goods Made in the USA.

The USA still is the richest nation in Earth’s history, and as our people go back to work, we are a vast market. I applaud our using some of our purchasing power to buy items that have lots of labor in them from third world nations that desperately need to provide decent paying jobs for their people. We can afford to do that. But we can often save money in the long haul by buying quality, Made in America goods that provide much needed jobs here. Our workers are unrivaled in productivity. We can compete. The proof is that manufacturing jobs are coming back to our shores.

YARNLADY's avatar

I would prefer to see a free market with no international or government manipulation.

ETpro's avatar

@YARNLADY Experience teaches that when we allow that, what we get is not free market at all but trusts, price fixing, and market rigging of the worst kind. Government should intervene to keep the playing field level for all and to eliminate anti-competitive practices. Government should stay out of picking winners and losers.

wundayatta's avatar

People need money in their pockets and confidence that the economy is stable, so that they will spend that money. The money in the pockets can come from jobs or it can be printed and handed out. Either will work, so long as consumers are confident. If they are confident, they will spend, and thus stimulate demand and that will end up with people going back to work making stuff for us all to buy.

Of course, confidence is a tricky thing. Since different people feel confidence under different sets of policies. Some people feel confidence when debt is low and the government doesn’t have to borrow. They worry the federal deficit is too high. So they want tax cuts (!) and draconian budget cuts to lower the deficit. This makes some people feel confident, but destroys the confidence of others.

It makes the producers feel confident, and it destroys the confidence of consumers. Which means no one will buy, and those policies won’t work in the end, as we see in Greece and other places that are making draconian spending cuts.

The preferred method is to ignore the producers opinions. When they see the demand, they’ll do what they should out of greed, even if they don’t have confidence. Pay attention to consumers. Give them tax cuts. Increase government spending. Put money in people’s pockets. Make them believe they will have money in the future. They’ll start buying, and the producers will start producing, even though they believe the sky will fall.

Eventually the economy will get going again, the taxes can go up again, and spending can go down because fewer people need help, and we’ll cut the deficits and the producers will start to feel confident. In fact, they’ll get overconfident, and do something stupid like lending money to people who shouldn’t be borrowing it, and then we’ll have a bubble, and people will discover how stupid the producers are again, and things will crash again.

But right now, Obama is doing the right thing. We want a very slow recovery. Not a fast one. We need to even out the cycles. We want producers to be nervous. We want consumers to provide the pressure. Consumers should be more confident than producers. It has a calming effect.

The economy is starting to grow faster now. People are already getting overconfident. The stock market is crazy at this point. We’ve made back all the losses of the last four years in one year. The producers will make us cut the budget, which will reduce consumer confidence while increasing producer confidence. And the recovery will stall. Which might not be a bad thing in the long term, but will be bad for whoever is in power at the time, and mean a regime change in 2016.

SamandMax's avatar

I think Obama may be learning from the gross mistakes being made by the UK’s government

laureth's avatar

@CWOTUS – if you think of a “dollar” in terms of being a commodity, just like an “apple,” you realize that commodities can and do change in worth, based on market forces. Let’s reverse your example and see what it shows us, except it’s not a money-holder seeking an apple, but an apple-farmer seeking a dollar.

“For example, you give me an apple, and I give you an a dollar, which we both agree is worth an apple, given the relative values we place on “dollars” and “apples” today. If I attempt to sell an apple tomorrow and find that I can only buy half a dollar, or not even that much, then your apple is on a fast track to worthlessness, and you won’t be able to buy much of anything with it, no matter how many you have.”

Now, you seem to easily accept a relatively volatile apple market, say, cheap apples when the harvest is in, more expensive come July when we’re almost out of apples and more people want them. Why do you think that the changing value of a dollar, based on supply and demand, is so much worse? Meanwhile, when you realize that the changing market rate of a dollar affects people with many dollars (the wealthy) and say that the sh!t hits the fan when they can’t get a constant rate of value for them, please realize that the changing value of apples (or, say, “labor hours”) means that people with more apples or labor-hours than dollars will be just as revolution-minded when they can’t extract more dollars for their commodities, but that is unacceptable?

On the other hand, “the market” solves your perceived problems of China being unable to repatriate their U.S. dollars. If we all have the ability to trade our apples or labor-hours for dollars, we each have a choice about how many we want to trade to China for some sweet, sweet dollars. If I won’t trade with them, maybe you will. Or maybe they just need to offer me the right number of dollars and then I’ll offer up my apple. But to claim they have some moral right to a dollar equaling an apple today, next week, and a year from now, is an odd misunderstanding of the market pressure of supply and demand, for one who claims that a free market is the answer to our problems.

CWOTUS's avatar

That’s an interesting turnaround, @laureth, and I congratulate you for the thought.

Where it breaks down, though, is how the supply of apples and dollars is regulated. People who grow apples – farmers – get to say how many apples are in the marketplace. When there are “not enough apples”, then the higher price for apples signals to other producers (including producers in other countries) that “there’s a booming apple market here!” and we get more apples. It’s not magic, but it’s a regulation of supply (if not demand) that is telegraphed by the price.

The thing is that the dollars we use to signal those prices are intended to have relatively stable value, to be constant – as well as we can manage that – from day to day, week to week, year to year. If that value varies – and not seasonally, but on a completely arbitrary basis – then the world would look for some other means to represent “constant value”.

I know, and I know that you know, that farmers and other commodity producers have to deal with supply gluts all the time. It’s one reason that grain elevators are found throughout the Midwest, for example, so that not all the grain harvested in the Fall hits the market at the same time, wrecking farmers’ economies. Of course, some farmers will try to be “first to market” with their new crops, and not join the co-ops storing grain in elevators, but that’s an individual decision that they make, and they accept the risk, too. (Or they try to hedge the risk, but that’s still their own decision.)

Dollars, though, only have a value based on their supposed scarcity and tight control. If we start producing dollars as if that manufactures wealth, then the dollars just become worthless – and the added resources put into their production, wasted. Apples have inherent value: I can eat them myself, make pies for sale, feed them to horses or throw them at people I don’t like. Dollars? I suppose I could start a fire with them, but that’s illegal. Dollars don’t seem to have a lot of inherent value; they’re only a means of somehow equating apples with oranges.

If “making dollars” could make us rich, then we should make 300 million trillion-dollar coins and give one to every American. Poverty resolved. I could win the next Nobel Peace Prize. It’s ironic that the more dollars we made that way, the poorer we would all be. Maybe that observation is worth a Nobel Prize.

It would take a bit more effort to give an apple to everyone in the country, but it would do us a lot more good.

laureth's avatar

@CWOTUS

Re: “That’s an interesting turnaround, @laureth, and I congratulate you for the thought.”

Not too many people congratulate me for thinking. Not sure what to think about that. ;)

Re: ” farmers and other commodity producers have to deal with supply gluts all the time. It’s one reason that grain elevators are found throughout the Midwest, for example, so that not all the grain harvested in the Fall hits the market at the same time, wrecking farmers’ economies.”

That’s one way of manipulating the supply, you realize, even if it’s not the government doing so. Why is it OK for farmers to manipulate the market and not a government? Or, in other words, why do farmers manipulate to even out a market, but a government’s manipulation does nothing but cause volatility (in your opinion, it seems)?

Re: “Dollars, though, only have a value based on their supposed scarcity and tight control.”

I disagree. They are intrinsically worthless (or worth what their paper or pixels are worth), but that is not what matters about a dollar. A dollar is valuable because it is useful, not useful because it is valuable. A dollar is backed not by the paper that comprises it, but by what you believe you can get for it. For example, I have a $10 bill backed by tomorrow’s sushi lunch, in my pocket right now.

Re: “If we start producing dollars as if that manufactures wealth”

We don’t, though. Dollars are not wealth, they are just a symbol that people can trade to obtain wealth in the form that they prefer.

Re: “If “making dollars” could make us rich, then we should make 300 million trillion-dollar coins and give one to every American. Poverty resolved.”

I know you mean to be sarcastic, but that’s not what dollars are about and we both know that. Dollars are merely a mechanism to lubricate trade between people who have something, and people who want something. If your poverty is caused by the cash supply being too small to efficiently trade your labor or apples to people who would be willing to buy what you’ve got, increasing the cash supply can make that transaction possible, reducing poverty. That’s why, as the economy grows, with more people wanting to trade goods and services than they are able to because the money supply is constrained (say, because it’s set at some arbitrary amount of gold that has to increase in velocity to lubricate all those trades, but can’t), we go into a downturn. The size of the economy is restricted by the size of the money supply, assuming you have the resources around (the real wealth), but no way to trade it.

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