{"id":22860,"date":"2017-02-20T14:34:44","date_gmt":"2017-02-20T19:34:44","guid":{"rendered":"http:\/\/olduvai.ca\/?p=22860"},"modified":"2017-02-20T14:34:44","modified_gmt":"2017-02-20T19:34:44","slug":"oops-the-economy-is-like-a-self-driving-car","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=22860","title":{"rendered":"Oops! The economy is like a self-driving car"},"content":{"rendered":"

Oops! The economy is like a self-driving\u00a0car<\/a><\/h3>\n
Back in 1776, Adam Smith talked about the \u201cinvisible hand\u201d of the economy.\u00a0Investopedia<\/a>explains how the invisible hand works as, \u201cIn a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.\u201d<\/div>\n
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We talk and act today as if governments and economic policy are what make the economy behave as it does. Unfortunately, Adam Smith was right; there is an invisible hand guiding the economy. Today we know that there is a physics reason for why the economy acts as it does: the economy is a dissipative structure\u2013something we will talk more about later. \u00a0First, let\u2019s talk about how the economy really operates.<\/p>\n

Our Economy Is Like a Self-Driving Car: Wages of Non-Elite Workers Are the Engine<\/strong><\/p>\n

Workers make goods and provide services.\u00a0Non-elite workers\u2013that is, workers without advanced education or supervisory responsibilities\u2013play a special role, because there are so many of them.\u00a0The economy can grow (just like a self-driving car can move forward) (1) if workers can make an increasing quantity of goods and services each year, and (2) if non-elite workers can\u00a0afford to buy the goods that are being produced<\/em>.\u00a0If these workers find fewer jobs available, or if they don\u2019t pay sufficiently well, it is as if the engine of the self-driving car is no longer working. The car could just as well fall apart into 1,000 pieces in the driveway.<\/p>\n

If the wages of non-elite workers are too low, they cannot afford to pay very much in taxes, so governments are adversely affected. They also cannot afford to buy capital goods such as vehicles and homes. Thus, depressed wages of non-elite workers adversely affect both businesses and governments. If these non-elite workers are getting paid well, the \u201cmake\/buy loop\u201d is closed: the people whose labor creates fairly ordinary goods and services can also\u00a0afford to buy those goods and services<\/em>.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Oops! The economy is like a self-driving\u00a0car Back in 1776, Adam Smith talked about the \u201cinvisible hand\u201d of the economy.\u00a0Investopediaexplains how the invisible hand works as, \u201cIn a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.\u201d We talk and act today as […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9157,1233,14837,1808],"class_list":["post-22860","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adam-smith","tag-gail-tverberg","tag-self-driving-car","tag-wages"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22860"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22860\/revisions"}],"predecessor-version":[{"id":22861,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22860\/revisions\/22861"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}