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Massive Unemployment...

gerrandesquire
Posts: 1,258
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3/24/2011 12:17:13 AM
Posted: 5 years ago
lowers the production possibility curve of a region. I asked this question a while back (when there wasn't a different Economics forum), but didn't get any real answers, so here i try again.

Does it/ Does it not? Unemployed being the current non-working force.
Thaddeus
Posts: 6,985
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3/24/2011 2:20:08 AM
Posted: 5 years ago
It doesn't lower the curve. the curve shows can possibly be produced. It just means one produces at a point below the curve.
darkkermit
Posts: 11,204
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3/24/2011 3:36:04 PM
Posted: 5 years ago
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced
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Greyparrot
Posts: 14,222
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3/24/2011 3:44:28 PM
Posted: 5 years ago
It could exist that the people currently employed work twice as hard to keep their jobs which means more productivity.

But in reality, I do not think it is the case.
darkkermit
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3/24/2011 3:48:12 PM
Posted: 5 years ago
At 3/24/2011 3:44:28 PM, Greyparrot wrote:
It could exist that the people currently employed work twice as hard to keep their jobs which means more productivity.

But in reality, I do not think it is the case.

Wouldn't we assume caeteris paribus, all things equal. Of course, there could be technology changes, more capital sources, etc., but these would be bad assumptions.
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TheAtheistAllegiance
Posts: 1,251
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3/24/2011 8:46:57 PM
Posted: 5 years ago
At 3/24/2011 3:44:28 PM, Greyparrot wrote:
It could exist that the people currently employed work twice as hard to keep their jobs which means more productivity.

But in reality, I do not think it is the case.

It's interesting that you mention that, because the US economy is growing and corporate profits are up, yet unemployment has hardly improved. In other words, American businesses have been able to basically make much less people produce much more goods and services more efficiently.

It is odd that this would happen, but it does kind of make sense when considering that American income hasn't recovered much since the crash, and without surging consumer demand, businesses simply aren't willing to hire more staff, so they've decided to rely on efficiency alone to cover the difference.

That's at least the interpretation I have...
gerrandesquire
Posts: 1,258
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3/25/2011 4:42:15 AM
Posted: 5 years ago
At 3/24/2011 3:36:04 PM, darkkermit wrote:
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced

Look at it this way. Suppose there is a factory containing 10 machines. Maximum number of labourers required to work on those machines is 80 (say). So, the machines require just 80 labourers, and unemployment of the other 20 does not affect the productivity of the factory in any way. In fact, according to the law of variable proportion, if the factory were to hire the other 20, the productivity would decrease. So the PPC curve would not fall because it takes into account the present resources, which in case would be the machines that would be used to produce commodities. And technology, of course.
Thaddeus
Posts: 6,985
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3/25/2011 4:47:23 AM
Posted: 5 years ago
At 3/25/2011 4:42:15 AM, gerrandesquire wrote:
At 3/24/2011 3:36:04 PM, darkkermit wrote:
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced

Look at it this way. Suppose there is a factory containing 10 machines. Maximum number of labourers required to work on those machines is 80 (say). So, the machines require just 80 labourers, and unemployment of the other 20 does not affect the productivity of the factory in any way. In fact, according to the law of variable proportion, if the factory were to hire the other 20, the productivity would decrease. So the PPC curve would not fall because it takes into account the present resources, which in case would be the machines that would be used to produce commodities. And technology, of course.

There are many jobs where the capital required for the job is virtually nothing. Also capital increases directly proportionally the size of the economy.
Thaddeus
Posts: 6,985
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3/25/2011 4:48:18 AM
Posted: 5 years ago
At 3/25/2011 4:47:23 AM, Thaddeus wrote:
At 3/25/2011 4:42:15 AM, gerrandesquire wrote:
At 3/24/2011 3:36:04 PM, darkkermit wrote:
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced

Look at it this way. Suppose there is a factory containing 10 machines. Maximum number of labourers required to work on those machines is 80 (say). So, the machines require just 80 labourers, and unemployment of the other 20 does not affect the productivity of the factory in any way. In fact, according to the law of variable proportion, if the factory were to hire the other 20, the productivity would decrease. So the PPC curve would not fall because it takes into account the present resources, which in case would be the machines that would be used to produce commodities. And technology, of course.

There are many jobs where the capital required for the job is virtually nothing. Also increasing capital increases the size of the economy proportionally.

fix'd to make grammatical sense
gerrandesquire
Posts: 1,258
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3/25/2011 7:50:54 AM
Posted: 5 years ago
At 3/25/2011 4:48:18 AM, Thaddeus wrote:
At 3/25/2011 4:47:23 AM, Thaddeus wrote:
At 3/25/2011 4:42:15 AM, gerrandesquire wrote:
At 3/24/2011 3:36:04 PM, darkkermit wrote:
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced

Look at it this way. Suppose there is a factory containing 10 machines. Maximum number of labourers required to work on those machines is 80 (say). So, the machines require just 80 labourers, and unemployment of the other 20 does not affect the productivity of the factory in any way. In fact, according to the law of variable proportion, if the factory were to hire the other 20, the productivity would decrease. So the PPC curve would not fall because it takes into account the present resources, which in case would be the machines that would be used to produce commodities. And technology, of course.

There are many jobs where the capital required for the job is virtually nothing. Also increasing capital increases the size of the economy proportionally.

fix'd to make grammatical sense

Yes, but during plotting a PPC curve, we take into consideration the present resources and technology.
Thaddeus
Posts: 6,985
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3/25/2011 8:02:13 AM
Posted: 5 years ago
At 3/25/2011 7:50:54 AM, gerrandesquire wrote:
At 3/25/2011 4:48:18 AM, Thaddeus wrote:
At 3/25/2011 4:47:23 AM, Thaddeus wrote:
At 3/25/2011 4:42:15 AM, gerrandesquire wrote:
At 3/24/2011 3:36:04 PM, darkkermit wrote:
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced

Look at it this way. Suppose there is a factory containing 10 machines. Maximum number of labourers required to work on those machines is 80 (say). So, the machines require just 80 labourers, and unemployment of the other 20 does not affect the productivity of the factory in any way. In fact, according to the law of variable proportion, if the factory were to hire the other 20, the productivity would decrease. So the PPC curve would not fall because it takes into account the present resources, which in case would be the machines that would be used to produce commodities. And technology, of course.

There are many jobs where the capital required for the job is virtually nothing. Also increasing capital increases the size of the economy proportionally.

fix'd to make grammatical sense

Yes, but during plotting a PPC curve, we take into consideration the present resources and technology.

Exactly. Our present resources are proportional to that of the economy. We currently have enough capital for current employment. If employment were to rise, the amount of capital would also increase, and we would produce closer to the PPF. If it were to fall we would have surplus capital, and we would fall further away from the PPF.
askbob
Posts: 7,254
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3/25/2011 8:47:37 AM
Posted: 5 years ago
At 3/25/2011 4:42:15 AM, gerrandesquire wrote:
At 3/24/2011 3:36:04 PM, darkkermit wrote:
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced

Look at it this way. Suppose there is a factory containing 10 machines. Maximum number of labourers required to work on those machines is 80 (say). So, the machines require just 80 labourers, and unemployment of the other 20 does not affect the productivity of the factory in any way. In fact, according to the law of variable proportion, if the factory were to hire the other 20, the productivity would decrease. So the PPC curve would not fall because it takes into account the present resources, which in case would be the machines that would be used to produce commodities. And technology, of course.

you're assuming that 100 workers are employed to begin with. Now assume that there are only 80 workers employed at the firm. 60 are fired.

boom disproves your point.
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Greyparrot
Posts: 14,222
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3/26/2011 2:44:59 AM
Posted: 5 years ago
Until the govt gets its hand out of how banks need to loan out money (leveraging federal guarantees in exchange for loaning to the poor), companies will continue to have a hard time getting growth capital. It will fix itself if nothing changes, but it will be many years before the capital can be saved up for, since borrowing is out of the question.
gerrandesquire
Posts: 1,258
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3/26/2011 3:42:27 AM
Posted: 5 years ago
At 3/25/2011 8:47:37 AM, askbob wrote:
At 3/25/2011 4:42:15 AM, gerrandesquire wrote:
At 3/24/2011 3:36:04 PM, darkkermit wrote:
At 3/24/2011 2:08:09 AM, gerrandesquire wrote:
At 3/24/2011 12:30:02 AM, darkkermit wrote:
Yea, of course.

The answer is no.

Why?
More unemployed = less produced

Look at it this way. Suppose there is a factory containing 10 machines. Maximum number of labourers required to work on those machines is 80 (say). So, the machines require just 80 labourers, and unemployment of the other 20 does not affect the productivity of the factory in any way. In fact, according to the law of variable proportion, if the factory were to hire the other 20, the productivity would decrease. So the PPC curve would not fall because it takes into account the present resources, which in case would be the machines that would be used to produce commodities. And technology, of course.

you're assuming that 100 workers are employed to begin with.

I am assuming that 80 are employed, and 20 unemployed.

Now assume that there are only 80 workers employed at the firm. 60 are fired.

But when we say, 'massive unemployment', we are talking about natural unemployment, i.e. people who are unemployed because the jobs that they are specialized at, are not hiring. Not induced unemployment.

boom disproves your point.

i don't think so.
gerrandesquire
Posts: 1,258
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3/26/2011 3:44:25 AM
Posted: 5 years ago
At 3/26/2011 2:44:59 AM, Greyparrot wrote:
Until the govt gets its hand out of how banks need to loan out money (leveraging federal guarantees in exchange for loaning to the poor), companies will continue to have a hard time getting growth capital. It will fix itself if nothing changes, but it will be many years before the capital can be saved up for, since borrowing is out of the question.

English is my second language. Can you dumb it down?