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Frank1
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Limits to economic growth
Apr 16th, 2015 at 3:05pm
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A limit to economic growth is individual consumption, we can each only consume so much.

So, how do companies get around this?

1. Make products that do not last long or are single use.

2. 'Monetize' as many activities as possible. Basically, Wall Street types want there to be almost no activity that we engage that does not involve some type of purchase from a business. Many activities that people used to engage in did not involve money going to someone.

For example, if I walk no one gets any money from it. But, if our cities are designed solely around automobiles, rather than around the power of human legs people will have to drive everywhere, which involves money going to car companies, car repairman, oil companies, Saudi Princes, and on and on.

3. Make minor changes to a product line that makes the products predecessors outmoded so that people have to buy a new product.


Perhaps you guys can think of more ways which the business class uses to get around the limits of individual consumption.
« Last Edit: Apr 16th, 2015 at 3:58pm by Frank1 »  


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Re: Limits to economic growth
Reply #1 - Apr 16th, 2015 at 3:42pm
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Frank1 wrote on Apr 16th, 2015 at 3:05pm:
A limit to economic growth is individual consumption, we can each only consume so much.

So, how do companies get around this?

1. Make products that do not last long or are single use.

2. 'Monetize' as many activities as possible. Basically, Wall Street types want there to be almost no activity that we engage that does not involve some type of purchase from a business. Many activities that people used to engage in did not involve money going to someone.

For example, if I walk no gets any money from it. But, if our cities are designed solely around automobiles, rather than around the power of human legs people will have to drive everywhere, which involves money going to car companies, car repairman, oil companies, Saudi Princes, and on and on.

3. Make minor changes to a product line that makes the products predecessors outmoded so that people have to buy a new product.


Perhaps you guys can think of more ways which the business class uses to get around the limits of individual consumption.

When Toyota went from relatively unknown to the largest auto company in the world by offering a vehicle that was ridiculously long lasting and of relatively high quality for the dollars spent on it?

Lasting hundreds of thousands of miles?

Or does that not fit your narrative?
  

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Re: Limits to economic growth
Reply #2 - Apr 16th, 2015 at 3:45pm
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Create products people don't need and convince them they do. Examples include electric toothbrushes and adult bathroom wipes.
« Last Edit: Apr 16th, 2015 at 3:53pm by notime »  
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Re: Limits to economic growth
Reply #3 - Apr 16th, 2015 at 3:46pm
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I would argue that if we can only consume so much, it is because we can only afford to consume so much.

Our consumption is constrained by our incomes, as it were.

Though I definitely agree that consumption is a limit on economic growth, but I see it in completely different terms from what is presented here.

The idea I have in mind is that economic growth requires investment of scarce resources, which requires saving and abstention from consumption. For what we consume we cannot invest.

Since economic growth is limited by the scope of investment, consumption does limit growth as it captures resources that could otherwise go into investment.

But since resources are scarce and we must make trade offs, growth is indeed limited by consumption.

To circle back to the themes found in the original post, I do agree that firms enlist various strategies to get you to spend your money on their product rather than on their competitors. One way of doing that is constant innovation and experimentation. Another is advertising. Generally these are married together in such a way as to make people feel that they must have the shiny new thing.

And to the extent they are right, and their newly retooled product is indeed innovative, they will establish trust and build a good reputation. This is the secret to profits.

To the extent there is little to no value added, and the ad is just a skimming operation, the company will violate it's trust with the consumer and losses will be felt in short order, followed by bankruptcy or restructuring.

  

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Re: Limits to economic growth
Reply #4 - Apr 16th, 2015 at 3:52pm
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Rabbit_Reborn wrote on Apr 16th, 2015 at 3:42pm:
When Toyota went from relatively unknown to the largest auto company in the world by offering a vehicle that was ridiculously long lasting and of relatively high quality for the dollars spent on it?

Lasting hundreds of thousands of miles?

Or does that not fit your narrative?


It is still a lot more expensive than walking, or riding a horse.
  


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Re: Limits to economic growth
Reply #5 - Apr 16th, 2015 at 3:52pm
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TowardLiberty wrote on Apr 16th, 2015 at 3:46pm:
Since economic growth is limited by the scope of investment, consumption does limit growth as it captures resources that could otherwise go into investment.


But if people consume less, then aggregate demand falls, prices go down, and economic growth right alongside.  So cuts in consumption (in order to save) can actually lead to LESS real savings.

http://en.wikipedia.org/wiki/Paradox_of_thrift
  

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Re: Limits to economic growth
Reply #6 - Apr 16th, 2015 at 3:56pm
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TowardLiberty wrote on Apr 16th, 2015 at 3:46pm:
I would argue that if we can only consume so much, it is because we can only afford to consume so much.


Well, I suppose I could buy all kinds of stuff I will never use and store it in garages.  I could buy houses everywhere and never use them.

So, in that sense I suppose consumption is not a limit.  But, if we are talking about things we will actually use, that is "thoughtful and/or needful purchases" than there is definitely a limit to growth.

Not to do a disserve to the rest of your thoughtful reply, but the above is the part that struck me the most.
  


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Re: Limits to economic growth
Reply #7 - Apr 16th, 2015 at 4:04pm
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Frank1 wrote on Apr 16th, 2015 at 3:56pm:
So, in that sense I suppose consumption is not a limit. But, if we are talking about things we will actually use, that is "thoughtful and/or needful purchases" than there is definitely a limit to growth.


I remember reading that some of the english colonial leaders in east africa were aghast to discover than much of their labor pool was content to work LESS THAN FULL TIME, earn enough to keep a shack and feed starch to their kids, and otherwise just socialize and enjoy life.  There wasn't much for them to buy with wages earned at the colonial plantations.  So the brits created a poll tax -- people were required to earn hard currency in order to pay the tax, and the only place to earn it was the plantations.

The point is, there was a point in that society at which people were meeting their basic needs and happy to live without economic growth.
  

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Re: Limits to economic growth
Reply #8 - Apr 16th, 2015 at 4:07pm
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forgotten centrist wrote on Apr 16th, 2015 at 4:04pm:
I remember reading that some of the english colonial leaders in east africa were aghast to discover than much of their labor pool was content to work LESS THAN FULL TIME, earn enough to keep a shack and feed starch to their kids, and otherwise just socialize and enjoy life. There wasn't much for them to buy with wages earned at the colonial plantations. So the brits created a poll tax -- people were required to earn hard currency in order to pay the tax, and the only place to earn it was the plantations.

The point is, there was a point in that society at which people were meeting their basic needs and happy to live without economic growth.


Fascinating, seriously.
  


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Re: Limits to economic growth
Reply #9 - Apr 16th, 2015 at 4:16pm
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Frank1 wrote on Apr 16th, 2015 at 3:52pm:
It is still a lot more expensive than walking, or riding a horse.

"Expensive"?

Sure. But there are positive tradeoff/impacts as well, no?

Less time spent traveling means more time spent doing something else.

And a greater range of movement leads to greater flexibility in the labor force, and higher levels of specialization of labor.

I couldn't have the job I have without air transportation. But air transportation is "more expensive", I suppose...
  

Wadsworth wrote on Jun 11th, 2018 at 3:40pm:
You are awfully concerned about who gets to live.  Why is it so important to you?
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