Pretty Pennies

The beauty of technology is that is actually benefits us all. So, we're going to get better product, and yes, illustrators are going to be in less demand, but high-end illustrators have to create these computer images. And we're going to get better content; for less money. So I think that's fine; I don't feel sorry for anybody who's replaced by machines, if it's more productive and drives down the cost of all goods and services to all people.
Michael Pachter "The Economist Podcasts - Money Talks: Lights! Camera! Inaction…"

And this, I think, encapsulates the problem that many people have with capitalism, the idea that it's okay to sacrifice people, so long as everyone else can obtain a slightly higher standard of living in the bargain. For the defenders of capitalism, I don't know that they understand how statements like Mr. Pachter's come off to others. Okay, so motion pictures are better and cheaper. That's cold comfort to someone who can't afford to go to the movies or subscribe to a streaming service, because their replacement with a machine has resulted in them being unable to support themselves.

The defenders of free market capitalism tend to come back with the claim that labor markets are highly elastic, so much so, in fact, that anyone willing to expend even modest effort can do quite well for themselves, because Capital isn't much, if any, more powerful than labor. It's a viewpoint that lends itself to blaming those who lose out on or are left behind by technological advances. But such is the nature of faith.

But at the bottom of it all is a belief in what I call infinite demand. Put simply, it's the idea that, on the level of societies, people never get to the point of saying "No thanks, I have all of the goods and services I need right now." While the supply of individual goods and services can exceed demand, the supply of all available goods and services will never meet the demand. Therefore, there is always something that someone can do that will pay well enough to support them. Attached to this understanding is that a certain basic level of capital, enough to allow any person to take effective advantage of unrealized demand, is free for the asking.

This is all fine and good, but it's pretty clear that it doesn't line up with many people's lived experiences. Spend any amount of time on LinkedIn these days, and one is almost certain to come across posts by people who are openly desperate to return to employment. Telling people who are literally begging their networks for help that they have just as much power as prospective employers simply comes across as cruel. It also comes across as at odds with reality more broadly. In part because the rhetoric about employers being "desperate" to find people to work for them is, as usual, overblown. It's rarely as hard for employers to find people as they claim it is. What's difficult is being picky about who works for you, and then expecting to find the market glutted with candidates. One of the reasons why inflation is trending downward again is that wages aren't rising particularly quickly anymore. A problem that businesses are unwilling to throw money at likely isn't that big of a problem.

Modern economies run on discretionary income. The fact that people don't need to buy those goods and services means that it's risky to invest a lot in the capacity to provide them. And increasing production by reducing the number of people needed to produce things can quickly become self-defeating; once enough people have been put out of work to drive down the cost of goods and services, there aren't enough people who can afford them, even at the lower prices. And even if one has no sympathy for the people themselves, it's hard to imagine how an economy can work if the people who control all the capital have no customers outside of one another.