Basic Econ Talk and Andrew F. Pudzer

A have a little macroeconomics lesson today!  But first, I wanted to make sure I didn't overlook this great quote from likely Dept of Labor head Andrew F. Pudzer:

Speaking to Business Insider this year, Mr. Puzder said that increased automation could be a welcome development because machines were “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”

Machines!  Perhaps machines will help Make America Great Again, but they sure as hell won't bring people's manufacturing jobs back, will they?  Precisely the opposite. 

I just think it's kind of hilarious how many people expect that Trump is going to bring back manufacturing jobs, and yet here he is appointing a devoted enemy of the working man to head the Department of Labor.  Well, hey, who knows, maybe it'll work out somehow.  After all, he's not a total ideologue:

There is some evidence to support that view. In a Wall Street Journal op-ed article after his comments on automation, Mr. Puzder wrote that humans remained important “to assure smooth experiences” for customers.

Glad to know that humans remain important.  "LOL".  Read the Times article; there is some grey area in there, so perhaps Pudzer's talk is scarier than his walk will be.  We'll find out.  (Also please read Dean Baker's brief take on Pudzer.)

Anyways, econ! I promised it, and here it is:

Credit where it is due - I outright stole this chart from these lecture notes.  I was surprised how difficult it was to find this fairly standard macro chart on the internet.

I won't drone on about these concepts at great length - I encourage you to simply read the Wikipedia entries on "Perfect Competition," "Monopolistic Competition," "Oligopoly" and "Monopoly" when you have the leisure time.  If you don't have the time (or interest) to do so, that's fine.  The whole point of me posting this chart is just to make clear that a one-size-fits-all economic ideology is never appropriate for the entirety of a given economy.

Saying that everything must be conducted by the free market ignores the fact that there are certain sectors of the economy - especially public utilities - that are nothing like, for instance, the fast food market, or the corn or wheat market, or the designer sneakers market, etc.  Gas, water, electricity - it makes natural sense for one controller of these goods to deliver them to the consumers, because not every Joe Schmoe can set up their own energy grid, and because it doesn't make sense to have multiple water systems in one area, etc.

Saying that everything would be better under nationalization and government monopoly control ignores the fact that there are areas that function very well when left to the private market - everything from video games to furniture to restaurants, you name it.

This all seems painfully obvious, but we never talk about these market structures.  Instead we get all worked up about "how much government is good."  That formulation misses the point.  It's sort of like the "the government's going to go broke!" problem.  The federal government cannot go broke.  The federal government prints the American dollar, which is a fiat currency.  It can print as much or a little of this currency as it wants as long as the American dollar is accepted.  And yet, both liberals and conservatives express recurrent fears that America can go broke.  America cannot go broke.  It is not like you, your family, the business you work for, or even the city or state where you live.  It is unique in that way.

The way we discuss health care and education in this country is similarly detached from reality.  Yes, you can do some moderate "shopping" for these goods, but ultimately, health care and education are not like streaming television, ordering pizza or buying a new pair of slacks.  They are public goods that require mass participation to be effective.  These goods are naturally monopolies, or oligopolies at least.  Our current mix of public sector/private sector collaboration in these fields work, with difficulties, fairly well, but not in the same way that most of the products coming out of Silicon Valley work well.  To fit health care and education into a venture capital-shaped boxed is the act of an idiot or a con artist posing as an idiot.

And that, my friends, has been my belaboring of the obvious for the day.  I hope that everyone has a wonderful weekend, and remember, our country is a laughing stock and is going to hell.  I hope the lobbyists and donors don't control your weekend.