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A Less Productive World

Reasoning
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5/17/2011 9:04:05 AM
Posted: 5 years ago
I've come to think that a market anarchist society would be significantly less productive than the current capitalist economy and that most people would spend much more time in sloth than in industry.

Without all the taxes and regulations of industry, you could work significantly fewer hours than you do now and have the same amount of purchasing power. Due to the law of diminishing marginal utility, once you have enough purchasing power you prefer more leisure to working to earn even more purchasing power.

Therefore, I expect a libertarian society to be much less productive than the current society, not more.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Ragnar_Rahl
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5/17/2011 9:19:01 AM
Posted: 5 years ago
The median production could go down. Depends on people's preferences. But the mean and the total? I doubt it, the Great Man with Great Drive is set free of red tape ^_^.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
Rob1_Billion
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5/17/2011 9:36:16 AM
Posted: 5 years ago
At 5/17/2011 9:04:05 AM, Reasoning wrote:
I've come to think that a market anarchist society would be significantly less productive than the current capitalist economy and that most people would spend much more time in sloth than in industry.

Without all the taxes and regulations of industry, you could work significantly fewer hours than you do now and have the same amount of purchasing power. Due to the law of diminishing marginal utility, once you have enough purchasing power you prefer more leisure to working to earn even more purchasing power.

Therefore, I expect a libertarian society to be much less productive than the current society, not more.

First off, just because someone isn't producting widgets doesn't necessarily mean they are sating the emotive intent of sloth. Relaxing, raising children, gardening, helping out around the house or neighborhood, mentoring, and many other things are arguably more productive than, say, helping GM with their new ad campaign by producing hats and number 7 plastic water bottles with logos on them. Secondly, by giving people the ability to choose what they want to do for work instead of letting industry choose what jobs we have to choose from, there is reason to believe people would enjoy their positions more and therefore be more productive at them. Lastly, we are killing the value of our planet with overproduction and I would argue that if everyone in the world stopped going to work tomorrow we would actually see an increase in value/utility, not a decrease. When you consider the astronomical costs lingering over our heads in terms of climate change, water and air quality, and loss of species, there's really nothing we can do in terms of production that can possibly approach what we are doomed to lose if we don't get ourselves back under control. It is estimated that a gallon of gas, which we pay $4/gal now, is actually costing us between $20-$100/gal in external costs. But you won't hear anything about externalities from economists, because in order to address that you need scientists. Economists would rather put their heads in the sand and pretend they didn't hear that.
kfc
Rob1_Billion
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5/17/2011 9:50:58 AM
Posted: 5 years ago
At 5/17/2011 9:12:09 AM, Thaddeus wrote:
Is that a bad thing? That people will have to work less to survive and have more time to enjoy being alive?

Sloth is a real concern, if you can make that connection... When a person must work to survive it does tend to offset sloth, because you pay bills instead of, say, sitting on DDO all day, but my idea is that instead of continuing to prod people to work we should give them more freedom in choosing what they want to do. I believe that sloth will be dealt with no matter what the economic system and I have reason to believe that a communistic anarchist system would be even more effective at removing sloth because we now never have any reason not to be productive. In Green Bay, we have a large population of American Indians who live off of the "per-cap" and don't have to work. Welfare is similar, and right now I'm on unemployment so "hey!" I'm on DDO full-time now! I'm applying for jobs but I'm way overqualified for most of what's out there (because of my degree) and way under-qualified for what I want to do (because I've yet to gain enough experience. This type of bullsh*t is simply unexcusable and people like me, welfare recipients, and others who don't necessarily HAVE to work will absolutely not work because there is no cultural more` to do so (and often no easy way to obtain work). If you have money, no one is going to question if you never lift a finger. It's the people who don't support their families financially and those who leach off of other's money that we scorn.
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Rob1_Billion
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5/17/2011 9:55:00 AM
Posted: 5 years ago
At 5/17/2011 9:19:01 AM, Ragnar_Rahl wrote:
The median production could go down. Depends on people's preferences. But the mean and the total? I doubt it, the Great Man with Great Drive is set free of red tape ^_^.

Unfortunately the definition of Great Man is relative; we are not all great. "Great" people by definition represent a small percentage of the community, and you would only like to see this small percentage enjoy freedom and prosperity.
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Thaddeus
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5/17/2011 9:56:47 AM
Posted: 5 years ago
At 5/17/2011 9:50:58 AM, Rob1_Billion wrote:
At 5/17/2011 9:12:09 AM, Thaddeus wrote:
Is that a bad thing? That people will have to work less to survive and have more time to enjoy being alive?

Sloth is a real concern, if you can make that connection... When a person must work to survive it does tend to offset sloth, because you pay bills instead of, say, sitting on DDO all day, but my idea is that instead of continuing to prod people to work we should give them more freedom in choosing what they want to do. I believe that sloth will be dealt with no matter what the economic system and I have reason to believe that a communistic anarchist system would be even more effective at removing sloth because we now never have any reason not to be productive. In Green Bay, we have a large population of American Indians who live off of the "per-cap" and don't have to work. Welfare is similar, and right now I'm on unemployment so "hey!" I'm on DDO full-time now! I'm applying for jobs but I'm way overqualified for most of what's out there (because of my degree) and way under-qualified for what I want to do (because I've yet to gain enough experience. This type of bullsh*t is simply unexcusable and people like me, welfare recipients, and others who don't necessarily HAVE to work will absolutely not work because there is no cultural more` to do so (and often no easy way to obtain work). If you have money, no one is going to question if you never lift a finger. It's the people who don't support their families financially and those who leach off of other's money that we scorn.

I wasn't advocating laziness, rather just asking how requiring to do less work to survive, and thus having more free time to self-actualise could be bad.
Regarding the anarcho-communistic point, could you just spell out for me why there are less/no disincentives to work?
Ragnar_Rahl
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5/17/2011 9:56:59 AM
Posted: 5 years ago
At 5/17/2011 9:55:00 AM, Rob1_Billion wrote:
At 5/17/2011 9:19:01 AM, Ragnar_Rahl wrote:
The median production could go down. Depends on people's preferences. But the mean and the total? I doubt it, the Great Man with Great Drive is set free of red tape ^_^.

Unfortunately the definition of Great Man is relative; we are not all great. "Great" people by definition represent a small percentage of the community, and you would only like to see this small percentage enjoy freedom and prosperity.

They'd all enjoy freedom. People desiring to be be lazy have no better hope than to ride the coattails of such men to prosperity. ^_^.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
Ragnar_Rahl
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5/17/2011 9:59:33 AM
Posted: 5 years ago
Remember, such people only have to be a small percentage. That's why they get so darn rich. ^_^
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
Ore_Ele
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5/17/2011 10:02:11 AM
Posted: 5 years ago
At 5/17/2011 9:04:05 AM, Reasoning wrote:
I've come to think that a market anarchist society would be significantly less productive than the current capitalist economy and that most people would spend much more time in sloth than in industry.

Without all the taxes and regulations of industry, you could work significantly fewer hours than you do now and have the same amount of purchasing power. Due to the law of diminishing marginal utility, once you have enough purchasing power you prefer more leisure to working to earn even more purchasing power.

Therefore, I expect a libertarian society to be much less productive than the current society, not more.

This is actually true (that once you start making a particular level of income, the value of future income becomes worth less, I mean, if you have $20,000,000, how much is another $5,000 to you?), however, I believe the effects of this are not really seen until you get to high levels of income, like over $200,000 a year (that varies from person to person of course). So I don't think any society really needs to worry about those effects.
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Rob1_Billion
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5/17/2011 10:21:23 AM
Posted: 5 years ago
At 5/17/2011 9:56:47 AM, Thaddeus wrote:
At 5/17/2011 9:50:58 AM, Rob1_Billion wrote:
At 5/17/2011 9:12:09 AM, Thaddeus wrote:
Is that a bad thing? That people will have to work less to survive and have more time to enjoy being alive?

Sloth is a real concern, if you can make that connection... When a person must work to survive it does tend to offset sloth, because you pay bills instead of, say, sitting on DDO all day, but my idea is that instead of continuing to prod people to work we should give them more freedom in choosing what they want to do. I believe that sloth will be dealt with no matter what the economic system and I have reason to believe that a communistic anarchist system would be even more effective at removing sloth because we now never have any reason not to be productive. In Green Bay, we have a large population of American Indians who live off of the "per-cap" and don't have to work. Welfare is similar, and right now I'm on unemployment so "hey!" I'm on DDO full-time now! I'm applying for jobs but I'm way overqualified for most of what's out there (because of my degree) and way under-qualified for what I want to do (because I've yet to gain enough experience. This type of bullsh*t is simply unexcusable and people like me, welfare recipients, and others who don't necessarily HAVE to work will absolutely not work because there is no cultural more` to do so (and often no easy way to obtain work). If you have money, no one is going to question if you never lift a finger. It's the people who don't support their families financially and those who leach off of other's money that we scorn.

I wasn't advocating laziness, rather just asking how requiring to do less work to survive, and thus having more free time to self-actualise could be bad.
Regarding the anarcho-communistic point, could you just spell out for me why there are less/no disincentives to work?

There are less disincentives because we are no longer flooding the market with crap jobs that no one wants to do. Most of these jobs are either unnecessary in the first place (production of flow-bies) or easily done by yourself anyway (e.g., cooking, cleaning). Also, without profit there is no risk to employing people. I'd be working somewhere right now instead of sitting home on unemployment on DDO.
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djsherin
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5/17/2011 11:25:57 AM
Posted: 5 years ago
At 5/17/2011 9:04:05 AM, Reasoning wrote:
I've come to think that a market anarchist society would be significantly less productive than the current capitalist economy and that most people would spend much more time in sloth than in industry.

Without all the taxes and regulations of industry, you could work significantly fewer hours than you do now and have the same amount of purchasing power. Due to the law of diminishing marginal utility, once you have enough purchasing power you prefer more leisure to working to earn even more purchasing power.

Therefore, I expect a libertarian society to be much less productive than the current society, not more.

How does that make society less productive? You can achieve the same output with less input. That situation is more productive, even if people only work enough to maintain their current standard of living.

But I question the whole notion that people would simply work enough to maintain their current purchasing power. Assuming it takes far fewer hours to achieve the same purchasing power, you now have more leisure. This means that compared to your previous state, the marginal unit of leisure is worth less and the disutility of the marginal unit of labor is also less (since you're working fewer hours) making you more likely to work for greater income.

You may not (and probably won't) go back to working as much as you did before, but you will likely work more than what it takes to maintain your previous standard of living. You get more leisure and a higher income as opposed to just more leisure.
Ore_Ele
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5/17/2011 11:57:19 AM
Posted: 5 years ago
At 5/17/2011 11:25:57 AM, djsherin wrote:
At 5/17/2011 9:04:05 AM, Reasoning wrote:
I've come to think that a market anarchist society would be significantly less productive than the current capitalist economy and that most people would spend much more time in sloth than in industry.

Without all the taxes and regulations of industry, you could work significantly fewer hours than you do now and have the same amount of purchasing power. Due to the law of diminishing marginal utility, once you have enough purchasing power you prefer more leisure to working to earn even more purchasing power.

Therefore, I expect a libertarian society to be much less productive than the current society, not more.

How does that make society less productive? You can achieve the same output with less input. That situation is more productive, even if people only work enough to maintain their current standard of living.

They're not making the same output, just the same income.

If I can make 100 chairs for $625 a week, which gets taxed down to $500 a week. That means the chairs sell for $6.25 each. Now if I'm not taxed, I can make that $500 a week by only making 80 chairs a week (thus, less stuff is produced).

In reality, it would likely meet somewhere in the middle (maybe 90 chairs for $562.50 a week).


But I question the whole notion that people would simply work enough to maintain their current purchasing power. Assuming it takes far fewer hours to achieve the same purchasing power, you now have more leisure. This means that compared to your previous state, the marginal unit of leisure is worth less and the disutility of the marginal unit of labor is also less (since you're working fewer hours) making you more likely to work for greater income.

As said above, it is likely to meet somewhere in the middle.


You may not (and probably won't) go back to working as much as you did before, but you will likely work more than what it takes to maintain your previous standard of living. You get more leisure and a higher income as opposed to just more leisure.
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Reasoning
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5/17/2011 1:03:15 PM
Posted: 5 years ago
At 5/17/2011 11:57:19 AM, OreEle wrote:
If I can make 100 chairs for $625 a week, which gets taxed down to $500 a week. That means the chairs sell for $6.25 each. Now if I'm not taxed, I can make that $500 a week by only making 80 chairs a week (thus, less stuff is produced).

In reality, it would likely meet somewhere in the middle (maybe 90 chairs for $562.50 a week).

Right, but as the supply of goods being produced decreases, you'd need more money than you do currently to obtain the same amount of purchasing power.

So you would need to earn more nominal money income to obtain your current standard of living. Assuming for some reason that the monetary unit is still the dollar.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Reasoning
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5/17/2011 1:04:01 PM
Posted: 5 years ago
At 5/17/2011 11:25:57 AM, djsherin wrote:
But I question the whole notion that people would simply work enough to maintain their current purchasing power. Assuming it takes far fewer hours to achieve the same purchasing power, you now have more leisure. This means that compared to your previous state, the marginal unit of leisure is worth less and the disutility of the marginal unit of labor is also less (since you're working fewer hours) making you more likely to work for greater income.

This is true and something I hadn't considered.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Reasoning
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5/17/2011 1:13:11 PM
Posted: 5 years ago
At 5/17/2011 1:03:15 PM, Reasoning wrote:
At 5/17/2011 11:57:19 AM, OreEle wrote:
If I can make 100 chairs for $625 a week, which gets taxed down to $500 a week. That means the chairs sell for $6.25 each. Now if I'm not taxed, I can make that $500 a week by only making 80 chairs a week (thus, less stuff is produced).

In reality, it would likely meet somewhere in the middle (maybe 90 chairs for $562.50 a week).

Right, but as the supply of goods being produced decreases, you'd need more money than you do currently to obtain the same amount of purchasing power.

On second thought, with the abolition of the wasteful governmental section of the economy, those engaged in those lines of work would have to switch into more productive fields which would increase the supply of goods produced.

Though this doesn't mean that any individuals would work more hours than he does now but suggests the opposite as the greater the supply of useful goods produced, the less the individual has to work to obtain a satisfactory amount of purchasing power.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
djsherin
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5/17/2011 1:44:39 PM
Posted: 5 years ago
At 5/17/2011 11:57:19 AM, OreEle wrote:
At 5/17/2011 11:25:57 AM, djsherin wrote:
At 5/17/2011 9:04:05 AM, Reasoning wrote:
I've come to think that a market anarchist society would be significantly less productive than the current capitalist economy and that most people would spend much more time in sloth than in industry.

Without all the taxes and regulations of industry, you could work significantly fewer hours than you do now and have the same amount of purchasing power. Due to the law of diminishing marginal utility, once you have enough purchasing power you prefer more leisure to working to earn even more purchasing power.

Therefore, I expect a libertarian society to be much less productive than the current society, not more.

How does that make society less productive? You can achieve the same output with less input. That situation is more productive, even if people only work enough to maintain their current standard of living.

They're not making the same output, just the same income.

I didn't say they had to make the same output. I said that they can achieve the same output with less input which is true regardless of the amount of output they make, i.e. they are more productive at any level of output. That said, if output falls then real income falls and workers will have to continue producing the same output in order to maintain real income.

If I can make 100 chairs for $625 a week, which gets taxed down to $500 a week. That means the chairs sell for $6.25 each. Now if I'm not taxed, I can make that $500 a week by only making 80 chairs a week (thus, less stuff is produced).

Well the OP isn't just talking about income taxes, but all taxes and regulations (presumably regulations that wouldn't exist in a free society since most free market economists still expect there to be market regulations, but that's a different topic). This lowers the final price of the product, thus the worker would have to make more than 80 chairs to continue making $500 a week (and if we're talking economy wide production, output would have to remain the same for real incomes to be maintained), but there are a lot of different things going on that make it difficult to determine what exactly would keep the worker's real income the same.

Income taxes being removed increases the worker's pay and decreases the employers costs (the incidence of the tax falls on both employer and employee, thus its removal affects both) as well as increasing the amount of labor supplied and demanded. This is for normal supply and demand curves. However the proposition being made is that workers have a sudden vertical supply curve for labor at whatever output they were producing when taxes were in effect i.e. no increases in income after this point will entice the worker to work more (however unlikely this is, we'll put it aside). Not to be redundant, but the worker is interested in maintaining real income so the same output must continue to be produced. The firm is now producing the same amount with less money so it is more productive.

That said, all other taxes being removed would allow even further productivity increases. Capital and rent for instance would be cheaper. These can obviously make workers more productive per unit of time expended so they could supply less labor and still make the same amount of real income since they could still produce the same amount of output.

However as I noted earlier, the assumptions here that workers wouldn't work for a higher real income are unrealistic. They may work less total hours than they did when there were taxes, but their physical output and thus real incomes will likely be higher in addition to having more leisure time.

In reality, it would likely meet somewhere in the middle (maybe 90 chairs for $562.50 a week).


But I question the whole notion that people would simply work enough to maintain their current purchasing power. Assuming it takes far fewer hours to achieve the same purchasing power, you now have more leisure. This means that compared to your previous state, the marginal unit of leisure is worth less and the disutility of the marginal unit of labor is also less (since you're working fewer hours) making you more likely to work for greater income.

As said above, it is likely to meet somewhere in the middle.

I more or less stated that in my next paragraph.


You may not (and probably won't) go back to working as much as you did before, but you will likely work more than what it takes to maintain your previous standard of living. You get more leisure and a higher income as opposed to just more leisure.
TheAtheistAllegiance
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5/17/2011 3:12:55 PM
Posted: 5 years ago
At 5/17/2011 11:25:57 AM, djsherin wrote:

How does that make society less productive? You can achieve the same output with less input. That situation is more productive, even if people only work enough to maintain their current standard of living.

But I question the whole notion that people would simply work enough to maintain their current purchasing power. Assuming it takes far fewer hours to achieve the same purchasing power, you now have more leisure. This means that compared to your previous state, the marginal unit of leisure is worth less and the disutility of the marginal unit of labor is also less (since you're working fewer hours) making you more likely to work for greater income.

You may not (and probably won't) go back to working as much as you did before, but you will likely work more than what it takes to maintain your previous standard of living. You get more leisure and a higher income as opposed to just more leisure.

This.
Reasoning
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5/17/2011 3:44:30 PM
Posted: 5 years ago
Take the case of a slave. Like other slaves he is compelled under threat of force to produce for his master. But unlike other chattel slaves he is paid for his service.

Let us say that the slave produces widgets. And suppose that he must work eight hours a day and that after eight hours he has enough money to provide for himself a comfortable life outside of "work."

Now suppose that the worker is freed and can now produce widgets by himself and sell them for himself. Suppose that if he worked his eight hour day and sold the widgets on the market that he would make twice as much money as he made before, making the same number of widgets in the same amount of time only that he sells the widgets himself and is able to reap the full product of his labor.

This means that if he wants to maintain his previous comfortable standard of living, he only has to work half as long as he ha previously.

Would he work the same amount of time as he did before? Unlikely. But this means that he produces fewer widgets and that therefore there are fewer widgets to go around.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Reasoning
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5/17/2011 3:50:53 PM
Posted: 5 years ago
Now imagine that the economy was built largely on widget production and that the large class of people enslaved in widget production were freed and decided to cut back on work time and spend more time in leisure.

Would this not hinder production and slow economic growth?
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
LaissezFaire
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5/17/2011 3:53:08 PM
Posted: 5 years ago
At 5/17/2011 3:50:53 PM, Reasoning wrote:
Now imagine that the economy was built largely on widget production and that the large class of people enslaved in widget production were freed and decided to cut back on work time and spend more time in leisure.

Would this not hinder production and slow economic growth?

Why are you only counting produced goods and services as economic goods? If people would prefer leisure to more physical stuff, then the trade-off that would happen in a free society is economic growth.
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Reasoning
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5/17/2011 3:53:49 PM
Posted: 5 years ago
At 5/17/2011 3:53:08 PM, LaissezFaire wrote:
Why are you only counting produced goods and services as economic goods? If people would prefer leisure to more physical stuff, then the trade-off that would happen in a free society is economic growth.

GDP would fall.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Reasoning
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5/17/2011 4:09:15 PM
Posted: 5 years ago
Marx says in the Grundrisse:

The Times of November 1857 contains an utterly delightful cry of outrage on the part of a West-Indian plantation owner. This advocate analyses with great moral indignation—as a plea for the re-introduction of Negro slavery—how the Quashees (the free blacks of Jamaica) content themselves with producing only what is strictly necessary for their own consumption, and, alongside this 'use value', regard loafing (indulgence and idleness) as the real luxury good; how they do not care a damn for the sugar and the fixed capital invested in the plantations, but rather observe the planters' impending bankruptcy with an ironic grin of malicious pleasure, and even exploit their acquired Christianity as an embellishment for this mood of malicious glee and indolence. They have ceased to be slaves, but not in order to become wage labourers, but, instead, self-sustaining peasants working for their own consumption.

So it seems like in the past when laborers began to receive a greater portion of the product of their labor, they did indeed begin to work less and spend more time in leisure. Decreasing the supply of sugar and other "widgets."
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Ore_Ele
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5/17/2011 4:32:08 PM
Posted: 5 years ago
At 5/17/2011 3:50:53 PM, Reasoning wrote:
Now imagine that the economy was built largely on widget production and that the large class of people enslaved in widget production were freed and decided to cut back on work time and spend more time in leisure.

Would this not hinder production and slow economic growth?

Yes (though the lower supply of widgets will naturally raise the price of them). However, if the people are happier (they are making more money, and working fewer hours) what is wrong with that?

Basically, if we look at it like a whole.

Lets say the GDP is $50 billion for a state and $10 billion is taken in taxes, so only $40 billion is for the people (worker, owners, etc).

Now, lets say the taxes are removed, and the new balance is reached at $45 billion. They are technically making less, but they are getting more.
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mongeese
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5/17/2011 5:41:00 PM
Posted: 5 years ago
Reasoning, you just compared the situation with taxes to slavery. How does that make the removal of taxes any less appealing?

Let's say Bob makes and sells 40 widgets per day at $5 profit each, earning $200 over the course of eight hours. Suddenly, taxes are reduced, and Bob can sell widgets at a profit of $6 each. He chooses to work only seven hours, producing 35 widgets at a profit of $210 per day. He now has an extra hour and an extra $10 each day.

However, the supply has dropped for widgets, and demand is constant, so the price of widgets increases. Bob wants to capture part of this market, so he hires Joe for four hours each day. Joe is able to make 18 widgets in these four hours using Bob's machinery, selling them at $6 each, making a total profit of $108. Bob, as the employer, claims $20 from this, leaving Joe with $88 per day while he was previously unemployed.

Through the dynamic processes of the market, reducing restraints on production can only lead to an improvement in the people, be it in leisure time or actual production.
Ore_Ele
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5/17/2011 6:03:29 PM
Posted: 5 years ago
At 5/17/2011 5:41:00 PM, mongeese wrote:
Reasoning, you just compared the situation with taxes to slavery. How does that make the removal of taxes any less appealing?

Let's say Bob makes and sells 40 widgets per day at $5 profit each, earning $200 over the course of eight hours. Suddenly, taxes are reduced, and Bob can sell widgets at a profit of $6 each. He chooses to work only seven hours, producing 35 widgets at a profit of $210 per day. He now has an extra hour and an extra $10 each day.

However, the supply has dropped for widgets, and demand is constant, so the price of widgets increases. Bob wants to capture part of this market, so he hires Joe for four hours each day. Joe is able to make 18 widgets in these four hours using Bob's machinery, selling them at $6 each, making a total profit of $108. Bob, as the employer, claims $20 from this, leaving Joe with $88 per day while he was previously unemployed.

If demand is constant, then there is only demand for 5 more widgets (since Bob continues to make 35 a day. You already stated that demand remained the same, therefore, Bob can only employ up to 5 widgets a day of production. Unless he lowers the price (thus creating more demand) to justify hiring someone on.

But funny thing, if Bob pays Joe the full profit for those 5 widgets (unlikely), Joe still only gets paid $30 a day. While through the taxes, the government could have paid Joe $30 a day in unemployment, and the government would still be making $10 a day on the taxes over that.


Through the dynamic processes of the market, reducing restraints on production can only lead to an improvement in the people, be it in leisure time or actual production.

Not to mention you've cut funding from roads, police, and all that fun stuff (i.e. now others are out of a job).
"Wanting Red Rhino Pill to have gender"
mongeese
Posts: 5,387
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5/17/2011 9:01:36 PM
Posted: 5 years ago
At 5/17/2011 6:03:29 PM, OreEle wrote:
At 5/17/2011 5:41:00 PM, mongeese wrote:
Reasoning, you just compared the situation with taxes to slavery. How does that make the removal of taxes any less appealing?

Let's say Bob makes and sells 40 widgets per day at $5 profit each, earning $200 over the course of eight hours. Suddenly, taxes are reduced, and Bob can sell widgets at a profit of $6 each. He chooses to work only seven hours, producing 35 widgets at a profit of $210 per day. He now has an extra hour and an extra $10 each day.

However, the supply has dropped for widgets, and demand is constant, so the price of widgets increases. Bob wants to capture part of this market, so he hires Joe for four hours each day. Joe is able to make 18 widgets in these four hours using Bob's machinery, selling them at $6 each, making a total profit of $108. Bob, as the employer, claims $20 from this, leaving Joe with $88 per day while he was previously unemployed.

If demand is constant, then there is only demand for 5 more widgets (since Bob continues to make 35 a day. You already stated that demand remained the same, therefore, Bob can only employ up to 5 widgets a day of production. Unless he lowers the price (thus creating more demand) to justify hiring someone on.

Sorry, I meant the demand curve. Technically, lowering the supply increases the price, which in turn lowers the price. However, if Bob employs Joe to make more widgets, supply will increase, and the price decreases, increasing the demand. It's an equilibrium that takes a while to resolve itself.

But funny thing, if Bob pays Joe the full profit for those 5 widgets (unlikely), Joe still only gets paid $30 a day. While through the taxes, the government could have paid Joe $30 a day in unemployment, and the government would still be making $10 a day on the taxes over that.

Huh? Joe ended up making $108 per day, with $20 going to Bob for use of equipment.

Through the dynamic processes of the market, reducing restraints on production can only lead to an improvement in the people, be it in leisure time or actual production.

Not to mention you've cut funding from roads, police, and all that fun stuff (i.e. now others are out of a job).

Well, a mere lowering of taxes will eliminate the unnecessesary beurocracy that Reasoning seems to be talking about, which will achieve a similar effect anyway. Whether or not you believe roads and the police ought to be privatized belongs in another thread.
Grape
Posts: 989
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5/17/2011 11:32:26 PM
Posted: 5 years ago
I haven't read the thread but I'll post this even though I know someone has mentioned it:

If people willingly work less in a totally free market, that's an economic GAIN. It means people prefer having more leisure time to what they produce. If people would rather lay around than make stuff, then making stuff isn't inherently good. Production is only worthwhile when it's worth the opportunity costs.