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If you make the bottom workers too poor to buy stocks, then of course most stocks will be owned by the super wealthy. What is this argument intending to communicate? It’s not a preferable outcome for the wealthy to own most of the stocks rather than the poor, neither is it preferable to take wealth that could belong to the poor and place it in stocks. Because when they sell the stocks they waste the profit, whereas the poor can transfer the profit to wellbeing. The question is who gets the wealth as represented in the ownership of stocks. I mean, even the point of GDP is wellbeing, and the point of technology is wellbeing, so if you’re trading suffering for Metric Go Up then you’ve kind of missed the point of why humans are even interested in development in the first place.
No, and it’s important to understand why this is isn’t the case. The demand does not decline commensurate to the decline in supply from the restriction of the labor pool, because the low wage worker does not use Amazon at the high rate of the middle class and wealthy. There are many, many services that are used by the well-off and not used by the poor, and if you have to pay the poor more, you will not see a decline in demand among the lowest income brackets due to the price increase. Fitness centers are a great example of this — a very profitable industry which employs the poor but which the poor infrequently use. What happens if the gyms have to pay their poor employees more? Well, they can’t price the gym membership more — it’s already priced at the highest amount the consumer (middle class and above) is willing to pay. They can’t go out of business, because it’s a profitable industry, eg Lifetime Fitness making the founder half of a billionaire. So what happens? Profit that would go to the owners simply goes to the poor, there is literally nothing else that can possibly happen. And this is how it should be, because the idea of someone becoming a half-billionaire by creating a line of shitty gyms is insane.
Additionally, the case of Amazon, if the low wage class as a whole makes more money then they are more likely to use Amazon. Because all of the speculated (but incorrect) price increase of Amazon is, literally, just going to pay the poorest workers.
As per above, if the low wage class is earning more, than they will use more of Amazon’s services. Right now they use much less of Amazon. They would use more if they are paid more. All of the cost increase goes to the wages of low earners while the cost is shared equally among all the classes. In your theorized example, lower, middle, and higher class may have to spend an extra $1 on a package, and that $1 goes only to the lower class wages, which means that Amazon will actually make more in low wage areas than before. It’s just that middle and upper classes pay more, which they should. But in actual reality, Amazon is already priced as high as they can make it for the middle class and higher class. If they could price it higher, they would have already. Any cost of labor increase will affect Amazon more than it affects, say, CostCo, or any other warehouse-style model.
That’s because of the addition of a surplus of workers the following year. This proves my point. The recession began after the period were looking at.
You just have to look at the areas most affected by immigration disruption: https://www.kansascityfed.org/research/research-working-papers/immigration-disruptions-and-the-wages-of-unskilled-labor-in-the-1920s/
The mechanization came after. (Also, there was still too much immigration in this period, from Mexico and Canada.)
The illegal immigrants have their own illegal immigrant job network and sometimes illegal housing network. And even if they didn’t, the argument “but the poorest people in the hemisphere live on the streets until the find a job” would not be a compelling option for Americans who do not want to risk homelessness. And remember that the illegal makes more in “wealth” because of the difference between their purchasing power here and of their family back in, say, Guatemala.
Do you have any clear evidence you can present that restricting the pool of low wage workers makes their lives worse off? Literally every study shows them having greater wages and QoL when this happens.
I'm differentiating consumption from wealth and this is a really important distinction you keep ignoring so I'll go into detail. Consumption is more directly related to the actual output of the economy and better takes into account things like inflation. If the wealthy were spending their share of production on competing with the poor for consumption it would spike inflation up and actually have impacts on how the poor live. If they instead reinvest it in building out more capital capacity then it raises the total supply of things to consume produced by the economy reducing the cost of living for the workers.
Imagine a Dickens sweatshop owner that reinvests the profits of the garments his workers produce in sewing machines vs uses it to buy the clothing produced. In the 'buying the output' case his employees have less clothing to go around for themselves, in the reinvesting case not only is the owner not bidding up cost of the output but actively growing the output through capital investment so there are more clothes to go around for everyone.
The rich are not meaningfully consuming enough beef that their differential wealth has any impact on the worker's ability to buy beef for themselves, same for housing, same for most of the expenses the poor must deal with.
I think it'd be great if the poor could own more stocks, we have several government programs like IRAs and 401ks to give them some tax advantage towards this goal. But consumption wise we should be basically indifferent to who is holding on to the bits of paper.
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If they can't increase the price any further without losing the margin and the rich and middle class will not pay more then they will reduce scope of business. This is the option they have that you consistently miss and it's very important. You don't seem to be willing to recognize that the pie could just actually shrink. Amazon does not have some fat margin on delivery. They already almost certainly lose money on many rural delivery routes.
I asked before to define terms here, what percentage of people are "the rich", which percentage are "the poor"? It just does not parse as true to me that poor people don't go to the gym unless you defining the poor as like a very specific group of rural people who don't go to the gym for reasons other than cost savings.
Lifetime fitness may not go out of business but that's hardly the only gym company. There are many lower margin and local gyms that run much leaner margins. Restrict labor supply and the marginal leaner gyms, the type the poorer people use, goes under first.
My argument has never been that wages don't rise, it's that they're not the whole picture. Wages may rise for some subset of workers, another subset gets laid off and the pie shrinks. After the 1920s wages rose AND the economy went through massive restructuring due to mechanization AND inequality increased AND it ended in the great depression. You can't just isolate the one measure of wages from the whole rest of the economy.
Under your theory this shouldn't cause a recession, it should cause wages to go down, not production which should increase. But production decreased sharply. It doesn't fit your model any way you turn it. Yes, restricting supply of labor in the short term, before the consequences play out, increases the wages of labor. But firms quickly find equilibrium, they retract from less profitable markets and cut number of employees. These employees find themselves back in the labor market reducing the demand squeeze and then wages fall again. Maybe the wage line remains higher than before the squeeze, maybe it doesn't. But total production shrinks so the total amount of stuff in the economy to consume decreases and on average the workers get to consume less stuff.
As I already pointed out, covid, by forcing many to stay home from work, greatly restricted the supply of labor. The result was a massive amount of job loss and inflation.
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