That type of population growth will likely be unsustainable long-term, particularly once climate change really gets going.
I have poked Spassapparat twice, and he recommends Post Keynesian Price Theory by Frederic S. Lee. I started reading the synopsis on Amazon and immediately fell asleep. ¯\_(ツ)_/¯
Well, it's not for everybody.... I have a bachelors degree in Economics and I have a hard time following much of the logic of post-Keynesian Economists, because of its complexity. Let me try to put some contest to it in layman's terms. Going back to the 19th century, there use to be a branch of economics called Hetorodox Economics, which challenged Neo-classical economic thought. It was mostly considered fringe by the mainstream, as it was used to justify all kinds of alternative policies (like for example Marxist policies.) Basically these heterodox economists challenged as simplistic the basic assumptions of the neoclassical model of individual behavior. Neoclassical theory assumed that individual decision making can be reduced to individual humans maximizing our pleasure and/or utility. Hetorodox thought rejected these assumptions as simplistic, and in the process of arguing about how humans make decisions they challenged not just classical economic ideas but also basic human psychology theory.. Fast forward to the present, and a new group of economists decided that with today's technology and ability to engage in complex calculations, we can actually seriously measure and test mathematically some of the assumptions of those "fringe" hetorodox economists, and do it within the context of John Maynard Keynes' economic models. And this is basically what we have with post-Keynesian analysis of economists like Frederick S Lee. The results they are coming up with seem to be closer to classic Keynes than some of the neo-Keynessian crap, but they do seem to be used to justify some populist policies. It would be great if Spassapparat or others with expertise in this area could put it into the context of our discussion.
So full disclosure, Fred Lee was actually Spassapparat's dissertation advisor until his untimely death from lung cancer in 2014. We chatted a bit about Lee's work last night, so I'll try to sum up. I got an A in high school honors Economics (Micro and Macro), so those are my very impressive credentials in the field. The sort of general/popular conception of inflation is viewed through a macroeconomic lens - prices rising overall within an industry or country. And price is seen as being determined by the intersection of supply and demand (y'all know the graph). Lee looked at inflation from a microeconomic perspective - why do individual companies choose to increase prices on their products? He found that individual companies tend to not actually increase prices when demand increases, often because that increase in demand is only temporary. And if they think the increase is permanent, they will instead increase their production capacity (most companies apparently run with some slack in their production capacity so that they can do this, and if they are out of slack, will invest in increasing their overall production capacity). They will, however, periodically evaluate prices compared to their production costs, and will increase prices to maintain a steady profit margin. So, because shipping costs and gasoline costs have increased significantly, prices are rising for all sorts of other products. Apparently there have also been significant climate change related droughts causing an increase in the price of soybeans, and since soy is in every damn thing including animal feed, the price of a lot of foodstuffs is increasing as well. Companies are also loathe to increase prices out of concern for customer good will. If they increase prices and a competitor doesn't, they lose market share. One thing Spassapparat said he'd be interested in discussing with Lee were he still alive is the potential difference in this area between Western Europe/the United States, which have had low inflation for quite a long time now, and places like Latin America, where inflation is much more common. The papers Lee studied for his book were predominantly looking at Western Europe/USA. Spassapparat hypothesized that, because inflation is more expected in other countries/regions, companies feel less pressure to avoid increasing prices, creating a sort of circular inflation cycle. By this point in the discussion, I am drooling on the sofa. It's less boring than the poker streamers he watches, but at least Spraggy has a cute cat.
This is, in a small way, the key reason why I believe what historians say about the economy more than economists. Economists think about what should happen, historians think about what did happen. I know which one is a better predictor of future behavior.
Not to pretend I know more than the scientists, but I’d think that some companies do increase prices because they have better information about their market, like airlines or hotels, that know when to expect high demand. Also, adjusting prices is easier for services than for goods.
Recession fixing inflation is like taking a frying pan that caught fire from the kitchen to the living room. If all you care about is not having a fire in the kitchen, than things look great. But it's not really dealing with the underlying problem. The underlying economic problem is that for some reason people can't get as much stuff as before, and inflation/deflation/recession/mass emigration/whatever is the economy's way of deciding who it is that isn't getting as much stuff. By random chance, it always ends up being poor people eventually. Volcker didn't solve 70's inflation through manipulating money. That was just moving the frying pan to the working class I mean living room. Reagan solved it by convincing Saudi Arabia to make oil cheap to hurt the USSR.
I've never actually played D&D, despite my extensive nerd credentials. Are barbarians the tank class? I wanna smash stuff.
We took a look at the most recent earnings statements and earnings calls of the big meat processing companies, and here's what we found: they are raising prices far more than any cost increases they're facing, resulting in skyrocketing profit margins.https://t.co/NVboVeAvWT— Bharat Ramamurti (@BharatRamamurti) December 10, 2021 I wonder how common this is.
Inflation hawks relief: The Fed is still betting that it can slow inflation with little pain by tapping the brakes lightly. Very curious to see how the hawks react. Will Jason Furman say "OK, the Fed is following my recommendations?" Will Larry S make a big deal over 3 rate hikes instead of 4? 4/— Paul Krugman (@paulkrugman) December 16, 2021