But prosperity isn't your goal, at least as I read it. Productivity is. The two aren't synonymous, and I think the difference is likely where I disagree with your theory. You can produce and produce until the cows come home, but unless you have a solid middle class market to BUY what you produce, all you're doing is lowering wages and wasting goods. And if you're taking well paying jobs in one place, and trading them for poorly paying jobs elsewhere, you're shooting yourself in the foot.
Same error of reasoning as in the last post. Economics is not a zero sum game.
The two aren't synonymous
They are. The only difference is that productivity can be poorly directed. It doesn't matter if you can make 10000 widgets a day if nobody is interested in and has a use for widgets. That's where advertising comes in and adds a whole other dimension to the game.
Still, if productivy is directed toward filling a need or a demand, it IS synonymous with prosperity.
Price per unit drops as units are produced more efficiently. More to the point, after the bleeding edge consumers with the big bucks are tapped out, the next wave of customers must be attracted via lower prices. The demand levels vs the supply levels keep the market in flux.
Currency does NOT have a fixed value. It has a measured value. "Retail" and "Wholesale" prices are an illusion. You walk into a store and you see a fixed price? No. You see an offering price. Retail stores don't get into the business of bartering? At one level they can't afford to do so, because they can't afford the time-intensive nature of haggling. So with the individual customer, no, they do not haggle. Yet the money talks and items not moving off the shelves is its own form of haggling. If prices are too high, compared to what people are willing and able to pay for those goods, profits suffer. There is always a curve, statistically, wherein total profits peak at a blend of price and volume. Even then, where do you think inflation comes from? There are CONSTANT pressures on currency. I don't have the full education on all the dynamics and theory, but I know enough to understand that all forms of human trade are both fluid and flexible. How much are you willing to pay for what you need and want? How much can you get someone else to pay for what you produce?
As long as people have needs and wants, there will be jobs. As long as there are jobs, there will be people able to pay for goods. There are a lot of "house of cards" elements that blow in the wind, and things are nowhere near "stable" or "secure" even in the best of times. But I've listening for thirty years now to predictions from a variety of sources about the next great depression and it hasn't come to pass. We had a technology speculation bubble very much akin to that through the '20's. Radio, automobiles, flight, there was a huge boom and lots of people chasing one another with artificially high demand levels in the stock market, and the moment the confidence bubble burst we had all these debtors getting fleeced. Well that has happened again, fortunes won and lost on speculation. Some grabbed some money and ran, some lost big sums, most are in the middle who made a lot of paper gains then lost them. Yes it IS possible to tip the scales and for currency in various forms to be skewed in its value. It's even possible for currency to lose all its value, if the whole system of a nation collapses.
But it still comes down to productivity. Depression can form if the middle class dries up. But the middle class doesn't dry up for no good reason. The '20's bubble bursting left a lot of debt on a lot of heads, and people shut down real production to cover their paper debts. All manner of things went wrong, but not out of the blue and not without cause. Real production suffered a setback when people's money and resources and time went too heavily into speculation. Resources got devoted to productivity that went nowhere, that got consumed.
You can spend a billion dollars of investor money. If you do so and the result is a company that can turn enough profits to stay in business, there will be more returns on the money, stock prices go up, dividends are paid out, etc. If you spend the same billion dollars of investor money and the result is a company that can't turn a profit, then you either need more money (if there's still hope) or else the whole thing goes down the tubes, and the investors have nothing to show for it. And what's the difference? Productivity. Profits are related to productivity. X costs to produce, Y income from sales, the difference is the Z profit margin. Profits can be skewed, and loopholes can be worked into the system, but at its core there is a real measure there to prosperity and it is profit. The markets set the stage.
The alternative to specialization is generalization. Shall we all stake out a bit of land and go back to subsistence farming or hunting and gathering? Those methods are obsolete for a reason.
Don't lose track of the real force at work here: the demand. Demand trumps all, because for as long as there is demand, there will be an urge to supply. As long as the demand comes with something of recognized worth to trade in exchange (mutual demand) we will have trade. Currency greases those wheels in an artificial and inaccurate way, but it saves us all from having to seek out partners for barter. We can trade almost anything for currency, knowing that we can then trade the currency for almost anything else. You still have to figure out for yourself where, when, and how you can fit into both sides of the game. You have to find something in demand to supply, to be able to have the stuff you need to fill your own demand.
Don't lose track of the supply, either. The companies do need workers. Workers are replaceable but only up to a point. For more skilled positions, workers are much less replaceable, and those workers who have proven themselves reliable are worth more than those who are unknown and unproven.
You can produce and produce until the cows come home, but unless you have a solid middle class market to BUY what you produce, all you're doing is lowering wages and wasting goods.
If what you produce has no market, it then has no value in trade. My website is such an instance, and so often is my writing. YOU try pouring your life's work and passion into a product, polishing it up to high quality, then coping with buyers who don't have ten minutes to give you because you're just one of a countless swarm of wannabees all vying to sell to the same little niche. Then come tell me about economics.
Yes, I've had an up close and personal relationship ongoing for over a decade now with supply and demand, and the whims of advertisement. No, I don't have all the answers yet -- my advertising and marketing skills are not up to snuff with my writing skills as yet. I didn't believe that portion of the job was going to be this difficult, but it is. I live on the very cheap and do without a lot of things because my need for THINGS is much less than my need for purpose. I remain confident there is a market for my work, but... it's a long and quiet and lonely road, and you have no idea what I've sacrificed to stay on it.
Sometimes markets are fickle. People are fickle. The consumer is often too easily manipulated, but I do think that Madison Avenue also overestimates its own importance. Education and experience are the enemies of duplicitous marketing gimmicks. On the other hand, the circus fellow did have a point: there IS a sucker born every minute. I've been a sucker, and everybody here knows the one product in my life over which I have felt the MOST suckered. Our society just happens to be SO productive, at the moment, that we can waste all that we do and still get by.
Computer games? Books? Music? Whole segments of our culture are nothing but leisure and luxury. Is this a bad thing? Does it mean we are doomed? I don't think so. Putting ten laborers out of work, replacing them with one very skilled machine operator and a big machine, puts the machine operator to work, and also the makers and maintainers of the machine. If five people are then freed from ANY need whatsoever, those people can go and do something else, like work on luxuries for the other five, who have double the trade value they did previously and can therefore afford to pay more. Productivity shifts, but finding ways to be more productive and effective is what keeps the markets moving forward, instead of equalizing. The bottom line is, with the machines now doing some of the labor, SOME of the people can benefit from that labor without having had to do the labor themselves.
So your economic analogies to past empires falls flat on its face, for this reason and more. You notice some similarities and then predict the same outcome. :rolleyes: You aren't accounting for the differences. Rome was built on slave labor and conquest. It had all manner of enemies, and all manor of corruption from within, and many pressures working against it. The United States is not Rome. We started with some of its flaws, but have worked out the worst of them: limited citizenship, limited representation, and a society of predation, the wealthy carried on the backs of the masses. This model is NOT true of the USA. We are all citizens here, all represented, all equal under the law one to another (at least in theory -- in practice we are still short of this ideal, but we are pursuing it and coming closer to it over time). Elements of domination that ripped Rome apart are not ingrained in the American system, not in the same brutal manner, nor to the same degree. Pick another empire, any of them, list the similarities, sure, but then note the differences. You are, in my view, underestimating the value of freedom and the potential of human beings to cooperate.
Trade is never, ever, ever a zero sum game. We all need food, shelter, clothing, but more and more, we need things to occupy our minds because we've invented our way out of needing ALL our combined efforts just to survive.
And if you're taking well paying jobs in one place, and trading them for poorly paying jobs elsewhere, you're shooting yourself in the foot.
Not if the productivity level remains the same. If there is wisdom instead of corruption where the new lower paying jobs head off to, the profits will be used to further increase productivity, allowing wages even there to be increased.
There appear to be several holes in your understanding of the relationships. Economics is not about merely goods and services and prices and wages, it is also about relationships. Corruption of all kinds is the enemy of progress, as people seek to cheat the system and one another. We're even past the NEED for any of that in the USA, but people are still greedy, some of them: preferring to take the risks of robbery, theft, embezzlement of all shapes and sizes, drug sales, any number of other ways to take what they want. There is such behavior in corporations, too. Finding more and better ways to be transparent, to shine the light of day onto interactions and relationships in a way that reduces corruption, may be the next great task. We have a lot of housecleaning to do, if ENRON is any measurement.
Still, that greed exists and in a big way inside western business culture is not an indictment of the core principles that have led us on a steady worldwide increase for the standard of living. Properity has not yet seeped far into some cultures and nations, but the examples are there for how to run cleaner governments and reduce the waste and corruption, and these people don't act on it. Why not? Pride? Sometimes. Status quo in their own nations, people entrenched in power who DO maintain their lifestyles on the backs of their own people by depriving them of voice and representation. And the USA is to blame for that? Some think so.
We start to get into the bigger messes there, though, so now's a good time to stop.