Abundance Theory Economics
 

Are you guys familiar with abundance theory economics and its rise in the 1960s? The old school of thought is called scarcity theory economics.

The basic difference between the two is simple as their name suggest. In a nutshell scarcity theory economics says that resources and size of the marketplace are limited. Government therefore has a role in managing the distribution of wealth.

On the other hand abundance theory economics says that with ever improving technology there is little need for government intervention. People will always come up with new stuff to keep themselves employed.

During the technological revolution of the 1960s-1990s it is easy to see how abundance theory could prevail in political thought.

What are your thoughts? Were you fan of abundance theory and have now changed your mind? Vice versa? No change?

I searched the board for occurances of the words scarcity and abundance. The results are pretty interesting.

The word scarcity has only been used a handful of times. It was used to describe a scarcity of:

*medical resources in light of Obamacare
*natural resources vs. population
*consumer goods in East Europe during the Cold War

On the other hand the word abundance is used quite often. My search returned too many hits to cover them all but here is a sampling from the first batch of results. The word was used to describe an abundance of:

*middlemen
*offshore accounts
*guns
*abundance is bad in the context of global warming
*abundance of gas stations causes higher gas prices in NYC
*abundance as a broken promise of communism

One curious result was that a writer believed there is an abundance of agreement between people of the right and left. I think there is a point there. We seem to agree that there aren't enough jobs and that mean people suck. :D

Depends on your definition of mean. I would say it is pretty mean to layoff 1000 workers to add a mil to an executive bonus, but the executive would not think so - or wouldn't care.

Regards,

D-Ray

Like all other economic theories, there's a shred of truth to all of them, yet rarely more than a shred.

Abundance theory economists firmly believe that those 1,000 workers will find work elsewhere. Jobs are abundant, the laid off just need to create them or adapt to fill existing job openings. It's a free country.

Is there a hole in that logic?

One you could pilot a container ship through.

John

Yes. This assumes that everyone has the ability to move freely from Alabama to North Dakota at the drop of a hat. Actually, the US is better at such relocation than those in the EU (i.e., an unemployed Greek has a more difficult time moving to Germany (due to language and culture) than someone from Alabama has when moving to North Dakota.

Abundance is more than a theory. It is the underpinning of changes to our laws and international trade agreements since the 1960s.

What keeps them from moving?

Care to expand?

When Obama signed the FTA with South Korea he did it on the contingency that it included retraining money for UAW workers that would lose their jobs. If abundance theory economics is good when Democrats do it then why is it bad when Republicans do it?

Is it possible that both parties have put their faith in a false theory?

OK, but things that are seemingly abundant at one moment can become scarce (e.g., corn in the current drought). Does a sense of abundance drive policy? Sure (i.e.,the corn ethanol program). However, I'm still not sure that this makes "abundance" a coherent economic theory (if there even is such a thing).

Fixed it for you.

John

The cost of a move, family ties, a house that won't sell, elderly parents in need of care, among other things.

This reminds me of at tip that one of my early career mentors gave me. When you're young and single (or at least without kids), move each and every time that it comes with a promotion, regardless of location (within limits). Once you reach an income (or organizational) level that you seek, focus on finding a location where you want to live and park it.

Drought and natural disasters are not part of macroeconomic theories.

Abundance theory is much simpler. Suppose an economy needs four things, food, clothing, housing, and defense. A trivialized implementation of abundance theory would say that it doesn't matter if we remove all well paying jobs from the clothing and food sectors. After all the workers will invent work elsewhere.

What might happen in that scenario?

See Post #11

Retraining for........? Located in........?

Who said that?

Probable.

John

... and therein lies the problem with a lot of economic theory - detachment from reality and an inability to deal effectively with all the relevant input variables.

An abundance theorist might say that you can hire people to take care of your parents. That alone would create jobs. Furthermore air travel is much cheaper since deregulation you could therefore afford to travel and see your family. As for your house that won't sell, that was your choice to buy a house. You could have rented.

Where is the hole in abundance theory? It creates adult care jobs and airline jobs while you have an opportunity to see more of America as you work in different areas.

For the record I lean toward scarcity economics. My point with the questions is to show how ingrained abundance theory economics is in the American psyche. It is more than a theory. It is what we have been molded into since the 1960s.

I can't read that trainwreck of sentences.

Home schooled?

Well Boreas has obviously expended his thoughts on the subject.

Any right wingers care to explain possible cons to abundance theory? We've all heard your pros.

Does this theory cover the aabundance of greedy bastards, the abundance of gullible fools?

I think that's a given Rob :)

Pete

Ebacon, I have to say that I'm a bit baffled by your obvious desire to engage me in a pretty personal, impertinent (in multiple senses of the word) and insulting manner. I can't really account for it unless I somehow managed to insult you at some earlier time. I don't know how that may have occurred but, of course, sometimes we convey unintended messages when we communicate.

If I am guilty of such, you have my sincere apology and my assurance that it was inadvertent. If, on the other hand, you simply have a desire to deal with me on that level, there's not a hell of a lot I can do about it except to try not to respond in kind.

So, here's an olive branch of sorts. Take it if you will. If you won't it's really no big deal but don't count on my playing along.

John

The hole in abundance theory, as I see it, is that not everyone shares in the abundance.

To further clarify; Many people do not earn enough, even when they ARE working, to afford a move across country, pay someone else to take care of elderly parents, etc.. it is the financial hardship of unemployment or underemployment that binds them.

In otherwords, "abundance theory" only works when there actually is an abundance to sustain us. Even "creating" your own job only works when others have the money to purchase whatever goods or services you offer.

There is also possibility that if the financial crisis is nation wide, there may be no point in moving to another state.

Dave

This brings a recent event to mind.

A former classmate who lives in Ohio, sent me an email over the weekend asking about Virgina as a potential place to move his family to. So I sent him all of the info I could find, positive and otherwise about local activities, government, schools, demographics, industry and economy, wage and cost of living levels and so on. And, of course attached my personal opinion, which I thought was quite positive.

His reply: "Thanks. Looks like we're better off sticking it out here."

He didn't elaborate, so I don't really know what he meant by that, but I find it interesting.

Dave

I accept. Thanks.

My short fuse is my Achilles' Heel.

Good. Game on! ;)

John

That's right. You can't talk to John like that! That's MY job! ;)

Exactly!

John

The scarcity of resources is an axiom of economics. There really is no getting around that given that we have a finite lifespan and reside on a planet of finite size. Thus, both time and resources are scarce. That constrains our ability to make choices. Now, if they mean that increases in efficiency have made some products that were once scarce more abundant, then I'm in agreement. I don't think abundance theory can exist outside of a tightly defined sphere before it collapses into standard economics as enunciated by Ricardo, Smith, Malthus, and Mill and their followers.

Having complete control of all the actors and inputs and an optimum model, I suspect that there would be enough randomness to degrade into a non-deterministic model.

Here's a link to Hayek's critique and the relation to Keynes' General Theory:
http://mises.org/daily/5282/The-Economics-of-Abundance


PS:
Reading a bit more it appears that this theory is more politcal than economic.

I guess looking at abundance theory from a perspective of policy, I don't understand how the left can be so enamored with Obama when his free trade policies are identical to the right. Obama has a track record of giving away the store and telling workers to go invent new work just like Romney would. That process is creating an enormous student debt bubble. It is over $1T now and growing.

IMO the game of musical chairs will stop when the student debt bubble pops. Things are going to get worse before they get better.

Since we are talking economics, can anybody give me a list of the different theories of economics?

I know of so************************m and capitalism. I have now hear of abundance and scarcity. What else lies out there. I ama going to do a fair amount of reading on this stuff so as to make my $0.02 worth a just a little bit more.
Seriously, I am going to read up on it.
Mark

IMO the most important read is the Communist Manifesto. It is in the public domain and available online. It explains the weak point of capitalism. The fact that capitalism has a weak point is a ghost that American leaders keep in the closet.

Capitalism a word that gets thrown around a lot but it its users often do not define it in hopes of misleading the voting public. There are basicly two flavors of capitalism working in the United States. The first is what most of us think of when we use the word capitalism. We generally think of privately owned means of production and markets that are somewhat regulated for consumer safety, economic stability, and the like. Typical mom and apple pie stuff. What is noteworthy with the traditional flavor of capitalism is that the markets are regulated according to an unwritten moral code that in our society all have some duty to respect and watch out for one another. That underlying moral code and duty that binds us is what has in part been painted as sexlaxalism by the Tea Party leadership of the right.

The other definition of capitalism is a more radical one. When the people that are being honest in discussion are talking about this more radical capitalism they modify it with adjectives such as laissez-faire capitalism or free market capitalism. It is also called anarcho-capitalism, Randism, and Objectivism.

The theory of Laissez-faire capitalism removes the regulation and hence governmentally enforced moral code that binds us. It removes consumer protections and pits us dog-eat-dog against each other. Easy to see examples of laissez-faire are deregulated campaign finance, deregulated financial markets such as hedge funds, deregulated banking structures, deregulated credit card interest rates, and the like.

Another big economic topic to understand is the concept of creative destruction. While the phonomenon is very real, the term is used misleadingly on the American public to rationalize shipping jobs overseas. There is a decent discussion of creative destruction on wikipedia.

Wealth of Nations is also an outstanding read. It is also in the public domain and free on the internet.

Other major topics:

Austrian School/Hayek
Keynes

It might be interesting to see the movie 2016:Obama's America that TD discussed in another thread. I suspect it will be released for free prior to the election. It might be on Netflix or On Demand cable already.

While the movie is obviously a propaganda piece it might explain a bit about the economic theory behind globalism/New World Order. If it does then there is something the movie makers aren't saying -- they are in it up to their eyeballs, too. They just want their man to be the boss instead of Obama.

It's all a nasty game when it doesn't have to be. Sad.

The egaltarian nature of free trade might just be why both parties aupport it, albeit with their own nuanced justifications. Inasmuch that free trade flattens the disparity between haves and have nots, one would hope that it would be broadly supported.

Why would the haves support it if their standard of living gets knocked down?

And to follow Ross Perot's logic, what incentive does the have not's government have to improve their standard of living?

What justification is there for government enforced moral code? I'm not certain that the social contract is sufficient to overide the sanctity of individual choice without sufficient harm being caused to that individual. Can't government always justify its actions by such appeals to a moral code and who or what determines what moral code ought be enforced?

Particularly, Keynes' General Theory and Hayek's extensive critique of Keynes' General Theory. Galbraith, Thurow, Arrow, Schelling, Friedman, Samuelson, and even early Krugman articles and books are all good background material in economics.

It is a simple manifestation of our sense of morality that gets embodied in the laws we write. For example in our traditional mode of capitalism we have a bankruptcy system that provides for a systematic unwinding of an insolvent estate. That system has roots in the Bible. We transferred our moral code into the law of the land.

By comparison the laissez-faire capitalists have been nibbling away at individual bankruptcy law and sticking debtors between a rock and a hard place. At the same time they have left the old Biblical based code intact for corporations.

See the bankruptcy act of 2005.

Oh, yes. we can't violate the "sanctity" of individual choice, even if that individual is a one way pig, apparently. See, expecting the "job creaters" to create jobs that are worth a shit might offend them....damage their delicate emotional state, their genteel sensibilities and leave them scarred for life. Heaven forfend! Oh Lawdy no, we don't want that! No, instead we'll all just learn to bow and scrape, shut up and do as we're told, ask Massa do he wanna nice shine to go with his poached eggs in da mornin'....Mebbe he'll leave a nice neckbone in the pot for us..............:rolleyes:

You know what? This delusional and unrealistic Pollyanna garbage you guys seem to believe is going to turn into one big, ugly fucking mess someday. It really is. The kind where cities burn and people get hurt.

You know how I know this?

Because we've been there before.

It really is that simple.

Christ, I swear.............

Dave

And, no I'm not angry. I'm incredulous that anyone actually believes this horseshit.

In the REAL WORLD, you work hard to earn your money, yes. But you also fight to protect that which has been accrued or some slick corporate weasel and his team of lawyers will soon get busy finding ways to shave you down. That's how they make their living, this is what they do.

Honestly, I don't know when our generation got this cockamamie notion that all businessmen are angels in their heads, but it needs to go the way of the dinosaur before we all end up exchanging company script at the company store to stock the shelves in the pantries of our company owned homes in our company run lives.......AGAIN.

Shakin' ma head,
Dave