This is effectively impossible. Time in the market beats trying to time the market because it is hard to identify the dip until you have already exited it.
How would that not be part of supply? If productivity doubles and is rolled out across the board, wouldn’t supply double as well? I mean, the total work being done would probably drop such that the supply isn’t actually doubled, but if supply was the constraint before then wouldn’t it settle somewhere between that doubled amount and the original, directly translating that increased productivity into increased supply?
Essentially, supply and demand meet each other, but that doesn’t explain prices alone, why a chair sells for 100 USD while a car sells for 50,000 USD. What matters is the difference in resources needed to devote to create one, ie labor time and raw materials, as well as the extent to which machinery, ancillary materials, semi-finished goods, etc are used up.
For a car, you use up far more of these than for a chair. A sudden influx of cars, say, by discovering a hidden trove, or a sudden decrease, ie a warehouse exploded, will have temporary distortions on price. However, this central, “natural price” is what supply and demand press towards over time.
Further, since raw materials exist naturally, the difference in their value is driven by the labor required to extract them, refine them, etc. Each step in the process makes it more valuable, unless supply is kept artificially low or high. Further still, these are averages. If someone spends a lot of time making an equivalent chair, they aren’t going to be able to take it to market for a higher price.
Right, but I’m having some trouble connecting that summation of supply and demand to your implied disconnect between productivity increases and supply. Were you specifically talking about scenarios where there is no space for output to grow, only input to shrink?
For instance, four people extract 1 ton of raw material in a day. A new machine means it only takes two people to extract that same 1 ton, but the size of the material patch stays the same so you can still only operate the one machine rather than using all four people to operate two machines. Thus increasing productivity without increasing “supply?”
If everyone bought the dip, the dip would end. Stock prices are only loosely tied to reality. They are more strongly tied to the perception that a stock’s price will increase. So, if people started pouring money into stocks (or other assets) the price of those stocks would naturally rise as they become more scarce and sellers demand a higher price for them. Assuming the reasons for the dip remain, it would just result in the inflation of another bubble.
Take a look back at the whole GameStop (GME) rollercoster. Large investors expected the stock to crater and began taking short positions. Retail investors saw the dip this was causing and bought the stock in droves, forcing the price up beyond anything it had any business being. Eventually, that bubble popped and the stock has settled to a more reasonable (if still higher) level.
An economy is really just a way to distribute finite resources in a world with infinite wants. Even the most egalitarian of systems is going to require deciding who gets something and who doesn’t (winner and losers). It’s perfectly valid to be frustrated by being on the “doesn’t” end of that equation. And we (US and other Western Democracies) could certainly do a lot more to shift some of the resources away from the few who are hording a lot of them, even without a radical “tear the system down” approach. The difficulty is the political will to do so.
Unfortunately, mustering political will for a collective good, which may come with some individual losses can be a tough sell. Especially when large parts of a population are comfortable. Not only do you have to convince people that the collective good is an overall good for them, you also have to convince them that the individual losses either won’t effect them or will be mitigated by the upsides of the collective good. And given peoples’ tendency to over emphasize the short term risks over the long term risks, this can be especially hard. But, that doesn’t mean you should give up, just that you need to sharpen your arguments and find ways to convince more people that things can be better for them, if they are willing to take that step.
The essential factor is that the imperialist countries, ie the US, EU, etc, leverage their financial and millitary domination of the global south to expropriate large sums of wealth. These spoils are used to bribe the working class into passivity. Imperialism, however, is self-defeating, and the rate of profit is lowering while there aren’t really new markets to plunder anymore. This causes crisis.
It’s not particularly outlandish to orient the economy around collectivized production and distribution based on need, rather than profit. Socialist countries already exist, and achieve good results compared to peer countries. They require working class organization, which is a difficult but possible process.
Imperialism, however, is self-defeating, and the rate of profit is lowering while there aren’t really new markets to plunder anymore. This causes crisis.
Potentially yes, but empires can last for hundreds or thousands of years. Democracy is relatively young by comparison, and we’re already seeing large cracks in it in the USA, one of the older democracies.
The point being: humanity hasn’t yet found a long term stable form of government.
It’s not particularly outlandish to orient the economy around collectivized production and distribution based on need, rather than profit. Socialist countries already exist, and achieve good results compared to peer countries. They require working class organization, which is a difficult but possible process.
I’m interested in your perspective on this. Which socialist country are you using as an example of what you describe above?
The US is really only democratic for the capitalist class, the wealthy capital owners whose primary income originates from capital ownership. The US isn’t seeing cracks in democracy, but in the entire system of financial plunder that keeps it going. Capitalists in the US, facing internal market saturation and steadily falling rates of profit, have had to expand outward, leveraging a strong overseas millitary to keep the global south under their thumb.
The US Empire wasn’t the first, it’s merely the largest. Britain, France, and Germany have all reached this stage of Capitalism. World War I left them debt-ridden to the US, and World War II flipped the script, with the US flooding the world with dollars, later destroying the gold standard, leveraging its own debt to essentially tax the entire world. The entire west, or the “global north,” gains from this system with the US as the “top dog,” and is falling down with it.
In the modern era, however, the sheer unsustainability of that system is choking itself. Manufacturing has been hollowed out and is all handled overseas, and countries in the global south are throwing off the west in favor of more favorable relations with China. The rate of profit is falling, and overconsumption as the US Empire’s strongest card to keep demand up is faltering due to this. It’s a house of cards.
As for socialism, the easiest answer is the PRC. Public ownership is the principle aspect of the economy, governing the large firms and key industries, enabling them to plan for the future and actually meet their targets. Market mechanics are used primarily to make central planning more efficient. This century is going to be marked by China’s undisputed rise. As they continue to develop, market mechanics will continue to be phased out:
Other countries, like Cuba, manage to maintain higher quality of life metrics despite being under intense embargo than peer countries. The USSR had, in its time, the most rapid improvements in economic growth and quality of life in history. None of these countries have been perfect utopias, or anything, but all have surpassed the inherent unsustainability of capitalism.
If you want further reading, Michael Hudson’s Super Imperialism is a pretty good book on how the US Empire rose in the first place, as well as how it can’t continue forever, and we are merely observing its dying phase.
It isn’t about “discovering” new systems. Capitalism was not invented, it emerged from mercantilism and early industrial manufacturing within the boundaries of feudalism. It was never a choice to adopt it, it arose naturally as it subsumed everything else, extending the domain of private property. History is not progressed by people randomly discovering new ideas, but is a gradual material process, and the ideas that rise and fall are secondary to that and support that process. Liberalism arose because of capitalism’s rise and need for ideological justification.
Edit: I should have lead with this, but I’ll add it now after-the-fact. I really appreciate you taking the time to response and share your views and data. Even though I don’t necessarily agree with it. I want to thank you for talking.
Capitalists in the US, facing internal market saturation and steadily falling rates of profit, have had to expand outward, leveraging a strong overseas military to keep the global south under their thumb.
My point is that capitalism isn’t the only system susceptible to this. All governments in human history have fallen to a version of this if they rise to any substantial size.
The empire of Japan did the same thing for the same reason causing their start of WWII in the late 1930s. In China the Qing Dynasty collapsed in the 1910s under the weight of its expansion. Rome did the same with collapse in 98AD to 117AD. The Aztec empire fell because of contact with European explorers, but the Aztec society was certainly based upon strict social hierarchies mirroring much of Europe with an aristocracy on one side and serfdom on the other.
It isn’t about “discovering” new systems. History is not progressed by people randomly discovering new ideas, but is a gradual material process, and the ideas that rise and fall are secondary to that and support that process. Liberalism arose because of capitalism’s rise and need for ideological justification.
I disagree. We haven’t found a stable system yet, so more exploration, discovery, evolution (whichever euphemism you want to insert here) is needed to arrive at something stable for humanity. The alternative is we just accept we get a few generations or tens of generations before society falls and we rinse and repeat.
As for socialism, the easiest answer is the PRC.
That… was not was I was expecting as your exemplar of socialism.
This century is going to be marked by China’s undisputed rise. As they continue to develop, market mechanics will continue to be phased out
I’m not so sure about that. First, China has a lot going for it to reach what you’re describing. I don’t dispute that. However, there’s been a shortcoming I’ve observed of China’s path to growth over the last 50 years that I don’t see called out. They’ve reach market mature and economic success far faster than a nation like the USA given the same amount of time. They have been, and still are, on a speedrun of national growth. However, this means they’ve had multiple generations robbed of “the good times” during growth were the growth slower.
Compared against the rise of the middle class in the USA post-WWII we’ve had 3 or 4 generations gain wealth, education, health care and raise families of their own with good paying jobs and readily available resources. In the USA we have grandparents or even great-grandparents that can tell us about the national poverty of living through the Great Depression, and how that shaped their choices (and those of their line). In China, its many times, the parents that lived through that subsistence poverty and their (now middle aged adult) children are the first generation to experience a middle class lifestyle and resources. Two to three generations of generational wealth building simply didn’t occur in China because they’re moving and developing so fast. The problem with this is, the boom times of manufacturing wealth have already started to decline in 大陆. Commodity manufacturing is already shifting out of China to other nations in the global south. Vietnam, Cambodia, India, and others are getting new manufacturing work that was previously going to China.
China has some giant problems looming in the next 50 year. Its population decline (as a result of state-enforced controls of birth) overcorrected and set up China to possibly be worse off that South Korea or even Japan in the decades ahead. source
China is a large net importer of both energy and food. All of these things together give me doubts China will be a long term stable society.
Other countries, like Cuba, manage to maintain higher quality of life metrics despite being under intense embargo than peer countries.
Cuba has done decently given its circumstances, but its historically another authoritarian regime. Further, much of Cuba’s progress might be attributable to artificial support from the Soviet Union to maintain its ally so close to its largest opponent.
The USSR had, in its time, the most rapid improvements in economic growth and quality of life in history.
…for those allowed to live.
None of these countries have been perfect utopias, or anything,
Dismissing Stalin’s purges and the Holodomor against Ukraine, much less the brutal repression of culture in Eastern Europe is doing a disservice to your argument of not being “perfect utopias”. The Soviet Union was as much an empire as the USA was in its expansion into other nations and suppression the local populace for exploitation.
but all have surpassed the inherent unsustainability of capitalism.
The Soviet Union was both born decades to centuries after other modern capitalist nations, and collapsed before them doesn’t really lend credence to your statement here about surpassing unsustainability.
To circle back to my main point. I’m not saying the USA has this figured out. I could write pages on what we’re doing wrong and how its leading to our decline. I’m saying nobody in the world in recorded human history has figured out how to have a sustainable system of governance. All systems are exploiting another to sustain themselves, and when that exploited group is exhausted a cycle of exploitation repeats or the nation collapses.
If you buy in the dip, that means you have extra money that’s not invested.
If you have extra money not invested cause you’re waiting for a dip, then you’re not getting investment returns from the very long period of time we’re not in a dip.
Even if you could predict the future, and determine when the bottom of a dip is so you could put all your money in, you’re still going to come out worse than if you just invested in the first place.
There is a bubble every decade. When you are saving over 40 years or more a single year dip every 10 years is fine.
Don’t sell in the dip, buy in the dip.
Buy high, sell low 😎
Ah, yes, the WallStreetBets approach.
Capitalism cannot last forever, though. With imperialism dying, crashes are going to get harder, to outright ending capitalism.
What would happen if everyone did this? Can everyone do this, even theoretically?
This is effectively impossible. Time in the market beats trying to time the market because it is hard to identify the dip until you have already exited it.
Answering the can everyone do this question, the dip usually implies that everyone cannot do this.
The dip implies a drop in demand that is causing prices to dip.
Just as I suspected. The economic system is built on some people losing and some people winning.
That’s basic economic theory to prices. For prices to down in an elastic market, either supply needs to increase or demand needs to decrease.
Or a breakthrough in production, lowering labor-time and overall input costs, though some people try to lump that into “supply.”
How would that not be part of supply? If productivity doubles and is rolled out across the board, wouldn’t supply double as well? I mean, the total work being done would probably drop such that the supply isn’t actually doubled, but if supply was the constraint before then wouldn’t it settle somewhere between that doubled amount and the original, directly translating that increased productivity into increased supply?
Essentially, supply and demand meet each other, but that doesn’t explain prices alone, why a chair sells for 100 USD while a car sells for 50,000 USD. What matters is the difference in resources needed to devote to create one, ie labor time and raw materials, as well as the extent to which machinery, ancillary materials, semi-finished goods, etc are used up.
For a car, you use up far more of these than for a chair. A sudden influx of cars, say, by discovering a hidden trove, or a sudden decrease, ie a warehouse exploded, will have temporary distortions on price. However, this central, “natural price” is what supply and demand press towards over time.
Further, since raw materials exist naturally, the difference in their value is driven by the labor required to extract them, refine them, etc. Each step in the process makes it more valuable, unless supply is kept artificially low or high. Further still, these are averages. If someone spends a lot of time making an equivalent chair, they aren’t going to be able to take it to market for a higher price.
Right, but I’m having some trouble connecting that summation of supply and demand to your implied disconnect between productivity increases and supply. Were you specifically talking about scenarios where there is no space for output to grow, only input to shrink?
For instance, four people extract 1 ton of raw material in a day. A new machine means it only takes two people to extract that same 1 ton, but the size of the material patch stays the same so you can still only operate the one machine rather than using all four people to operate two machines. Thus increasing productivity without increasing “supply?”
If everyone bought the dip, the dip would end. Stock prices are only loosely tied to reality. They are more strongly tied to the perception that a stock’s price will increase. So, if people started pouring money into stocks (or other assets) the price of those stocks would naturally rise as they become more scarce and sellers demand a higher price for them. Assuming the reasons for the dip remain, it would just result in the inflation of another bubble.
Take a look back at the whole GameStop (GME) rollercoster. Large investors expected the stock to crater and began taking short positions. Retail investors saw the dip this was causing and bought the stock in droves, forcing the price up beyond anything it had any business being. Eventually, that bubble popped and the stock has settled to a more reasonable (if still higher) level.
The whole system is built on winners and losers. It’s very frustrating to me.
An economy is really just a way to distribute finite resources in a world with infinite wants. Even the most egalitarian of systems is going to require deciding who gets something and who doesn’t (winner and losers). It’s perfectly valid to be frustrated by being on the “doesn’t” end of that equation. And we (US and other Western Democracies) could certainly do a lot more to shift some of the resources away from the few who are hording a lot of them, even without a radical “tear the system down” approach. The difficulty is the political will to do so.
Unfortunately, mustering political will for a collective good, which may come with some individual losses can be a tough sell. Especially when large parts of a population are comfortable. Not only do you have to convince people that the collective good is an overall good for them, you also have to convince them that the individual losses either won’t effect them or will be mitigated by the upsides of the collective good. And given peoples’ tendency to over emphasize the short term risks over the long term risks, this can be especially hard. But, that doesn’t mean you should give up, just that you need to sharpen your arguments and find ways to convince more people that things can be better for them, if they are willing to take that step.
The essential factor is that the imperialist countries, ie the US, EU, etc, leverage their financial and millitary domination of the global south to expropriate large sums of wealth. These spoils are used to bribe the working class into passivity. Imperialism, however, is self-defeating, and the rate of profit is lowering while there aren’t really new markets to plunder anymore. This causes crisis.
It’s not particularly outlandish to orient the economy around collectivized production and distribution based on need, rather than profit. Socialist countries already exist, and achieve good results compared to peer countries. They require working class organization, which is a difficult but possible process.
Potentially yes, but empires can last for hundreds or thousands of years. Democracy is relatively young by comparison, and we’re already seeing large cracks in it in the USA, one of the older democracies.
The point being: humanity hasn’t yet found a long term stable form of government.
I’m interested in your perspective on this. Which socialist country are you using as an example of what you describe above?
The US is really only democratic for the capitalist class, the wealthy capital owners whose primary income originates from capital ownership. The US isn’t seeing cracks in democracy, but in the entire system of financial plunder that keeps it going. Capitalists in the US, facing internal market saturation and steadily falling rates of profit, have had to expand outward, leveraging a strong overseas millitary to keep the global south under their thumb.
The US Empire wasn’t the first, it’s merely the largest. Britain, France, and Germany have all reached this stage of Capitalism. World War I left them debt-ridden to the US, and World War II flipped the script, with the US flooding the world with dollars, later destroying the gold standard, leveraging its own debt to essentially tax the entire world. The entire west, or the “global north,” gains from this system with the US as the “top dog,” and is falling down with it.
In the modern era, however, the sheer unsustainability of that system is choking itself. Manufacturing has been hollowed out and is all handled overseas, and countries in the global south are throwing off the west in favor of more favorable relations with China. The rate of profit is falling, and overconsumption as the US Empire’s strongest card to keep demand up is faltering due to this. It’s a house of cards.
As for socialism, the easiest answer is the PRC. Public ownership is the principle aspect of the economy, governing the large firms and key industries, enabling them to plan for the future and actually meet their targets. Market mechanics are used primarily to make central planning more efficient. This century is going to be marked by China’s undisputed rise. As they continue to develop, market mechanics will continue to be phased out:
Other countries, like Cuba, manage to maintain higher quality of life metrics despite being under intense embargo than peer countries. The USSR had, in its time, the most rapid improvements in economic growth and quality of life in history. None of these countries have been perfect utopias, or anything, but all have surpassed the inherent unsustainability of capitalism.
If you want further reading, Michael Hudson’s Super Imperialism is a pretty good book on how the US Empire rose in the first place, as well as how it can’t continue forever, and we are merely observing its dying phase.
It isn’t about “discovering” new systems. Capitalism was not invented, it emerged from mercantilism and early industrial manufacturing within the boundaries of feudalism. It was never a choice to adopt it, it arose naturally as it subsumed everything else, extending the domain of private property. History is not progressed by people randomly discovering new ideas, but is a gradual material process, and the ideas that rise and fall are secondary to that and support that process. Liberalism arose because of capitalism’s rise and need for ideological justification.
Edit: I should have lead with this, but I’ll add it now after-the-fact. I really appreciate you taking the time to response and share your views and data. Even though I don’t necessarily agree with it. I want to thank you for talking.
My point is that capitalism isn’t the only system susceptible to this. All governments in human history have fallen to a version of this if they rise to any substantial size.
The empire of Japan did the same thing for the same reason causing their start of WWII in the late 1930s. In China the Qing Dynasty collapsed in the 1910s under the weight of its expansion. Rome did the same with collapse in 98AD to 117AD. The Aztec empire fell because of contact with European explorers, but the Aztec society was certainly based upon strict social hierarchies mirroring much of Europe with an aristocracy on one side and serfdom on the other.
I disagree. We haven’t found a stable system yet, so more exploration, discovery, evolution (whichever euphemism you want to insert here) is needed to arrive at something stable for humanity. The alternative is we just accept we get a few generations or tens of generations before society falls and we rinse and repeat.
That… was not was I was expecting as your exemplar of socialism.
I’m not so sure about that. First, China has a lot going for it to reach what you’re describing. I don’t dispute that. However, there’s been a shortcoming I’ve observed of China’s path to growth over the last 50 years that I don’t see called out. They’ve reach market mature and economic success far faster than a nation like the USA given the same amount of time. They have been, and still are, on a speedrun of national growth. However, this means they’ve had multiple generations robbed of “the good times” during growth were the growth slower.
Compared against the rise of the middle class in the USA post-WWII we’ve had 3 or 4 generations gain wealth, education, health care and raise families of their own with good paying jobs and readily available resources. In the USA we have grandparents or even great-grandparents that can tell us about the national poverty of living through the Great Depression, and how that shaped their choices (and those of their line). In China, its many times, the parents that lived through that subsistence poverty and their (now middle aged adult) children are the first generation to experience a middle class lifestyle and resources. Two to three generations of generational wealth building simply didn’t occur in China because they’re moving and developing so fast. The problem with this is, the boom times of manufacturing wealth have already started to decline in 大陆. Commodity manufacturing is already shifting out of China to other nations in the global south. Vietnam, Cambodia, India, and others are getting new manufacturing work that was previously going to China.
China has some giant problems looming in the next 50 year. Its population decline (as a result of state-enforced controls of birth) overcorrected and set up China to possibly be worse off that South Korea or even Japan in the decades ahead. source
China is a large net importer of both energy and food. All of these things together give me doubts China will be a long term stable society.
Cuba has done decently given its circumstances, but its historically another authoritarian regime. Further, much of Cuba’s progress might be attributable to artificial support from the Soviet Union to maintain its ally so close to its largest opponent.
…for those allowed to live.
Dismissing Stalin’s purges and the Holodomor against Ukraine, much less the brutal repression of culture in Eastern Europe is doing a disservice to your argument of not being “perfect utopias”. The Soviet Union was as much an empire as the USA was in its expansion into other nations and suppression the local populace for exploitation.
The Soviet Union was both born decades to centuries after other modern capitalist nations, and collapsed before them doesn’t really lend credence to your statement here about surpassing unsustainability.
To circle back to my main point. I’m not saying the USA has this figured out. I could write pages on what we’re doing wrong and how its leading to our decline. I’m saying nobody in the world in recorded human history has figured out how to have a sustainable system of governance. All systems are exploiting another to sustain themselves, and when that exploited group is exhausted a cycle of exploitation repeats or the nation collapses.
If you buy in the dip, that means you have extra money that’s not invested.
If you have extra money not invested cause you’re waiting for a dip, then you’re not getting investment returns from the very long period of time we’re not in a dip.
Even if you could predict the future, and determine when the bottom of a dip is so you could put all your money in, you’re still going to come out worse than if you just invested in the first place.
If no one sold in the dip for you to buy would there even be a dip?
Exactly.