There is a shortage of workers in as much as there is a shortage of BMW 7-series sedans for under $30k. I looked everywhere at that price. Massive shortage.
How about if it costs a 100$ per loaf of bread?
I'd considered that to be a shortage. Even if supply is technically meeting demand.
But supply is meeting demand at that point, right?
But supply is meeting demand at that point, right?
Sorry if this was a little off topic. I feel uneasy about our growing inequality in our economy but we can't fix it outside of the boardroom. Did you know that board members get paid? I surely didn't until not too long ago. Why do they get paid? I mean I'm not talking compensation for travel. I'm talking six figure compensation. Do we have a shortage of people who are willing to sit on your board?
You can't be CEO of several companies, so a CEO is fully invested in the success of that one company. From the point of view of a CEO, it makes sense for the company to not take risks.
On the other hand, investors can invest in diverse companies and expect some of them to fail and some of them to win big. From the point of view of an investor, it makes sense for the company to take risks.
Therefore investors pay CEOs a lot and give them golden parachutes to prevent CEOs and investors from having opposite incentives.
I give you that being good ceo is hard and all that. But seriously, calling it financial risk is ridiculous.
What you and a bunch of other people confuse as a shortage is just basic market dynamics. Price is high but costs are also high (not a lot of people are willing and capable of being programmers). Cheaper developer prices would be great for businesses but price has to balance with cost and it is useless to call things a shortage for demand that is unsatisfied at a non-market price.
Example: would you say there is a shortage of Tesla model S's since I only am willing to pay $30,000. No, because the costs for a model S is higher than that and then everything would be considered a shortage at a low enough price point.
Exactly my point! Economists don't call situations where costs (wages for developers) exceed what the market will pay (value created) "shortages".
Whether a good is "luxury" or not makes no difference.
Personally, my definition of a shortage is "There is not enough of X, and it would be a very good thing to increase X".
Using my bread example, if bread cost 100$ a loaf, and people were literally starving to death because they couldn't buy bread or other food, then there IS a shortage of food.
It does not matter if "supply is equaling demand", because it is a very bad thing for food to cost 100$ a meal.
An economic shortage refers to a market failure and not a lack of resources and is only possible because of external factors like price controls, zoning laws, etc.
>There are almost always willing buyers at a lower-than-market-clearing price; the narrower technical definition doesn't consider failure to serve this demand as a "shortage", even if it would be described that way in a social or political context (which the simple model of supply and demand does not attempt to encompass).
If bread costs 100$ is it a good thing or a bad thing for society?
If the "market clearing price" for bread results in people starving to death, is this good or bad?
In this hypothetical situation, would it be a good idea or a bad idea for the government, or charities, or society/individuals in society to try and solve the high bread price problem?
Also, if people are literally starving to death, even if markets "clear", does it or does it not fit a normal person's definition of a "food shortage"?
Personally, my definition of shortage is "there isn't enough of X, and it would be a good idea to increase X".
You do realize that tens of thousands of people graduate from med school every year and go on to do 6 years of residency where they make about $15 / hr right? Maybe the reason you don't hear 'popular media' talk about it is that they would look ridiculous.
If bread cost that much, we'd start eating more rice, pasta, and potatoes. We'd change our meal plan.
Likewise, if the employees you need to hire to execute on your business plan are too expensive, you need to adjust your business plan. Maybe hire different kinds of employees, maybe pursue higher margin opportunities, maybe cut your losses and try something else.
Or maybe we'd import bread from other countries where it goes for $5/loaf? Nah, let's just protect our virtuous $100/loaf domestic industry at all costs and blame the greedy consumers for being selfish and cheap ;)
s/consumers/employers
s/loaf/programmer-hour
At some point the analogy breaks down, since importing people isn't the same thing as importing things. The points were that these kinds of pricing shifts can and have happened before, reactions can be varied, and reactions usually affect things on the demand (i.e., employer) side of the equation.
Or people would realize the ingredients for bread cost < $1, bakeries would pop up, and the price of bread would drop back to normal.
Similarly if software developers are all charging $1,000,000 / year, it gets cheaper to find smart people who aren't software developers (yes, there are plenty of smart people in other professions) and train them.
Even if it is just bread, is it a good thing or a bad thing for society if bread costs 100$?
I think part of the problem is that you can have a lot of "fun" these days for very cheap (video games, YouTube, etc). Maybe it's time for us to reexamine why people don't even want high-paying jobs.
I'm gonna guess there's two sides to that story
Perhaps the $100/hr isn't as much as you think it is. More so if you are somewhere expensive like San Francisco or New York.
...but yes, our entertainment costs are fairly inexpensive. Too bad there are so many other things to pay for.
Now i'm divorced, but I got to keep the rent controlled apartment in Russian Hill, with the roommates. Ex and kid moved to Sacramento and commutes in to her grad school classes at SF State.
Well technically you still have the roommates, they just make a mess everywhere and you have to cover their rent every month.
> I think part of the problem is that you can have a lot of "fun" these days for very cheap (video games, YouTube, etc).
Not even really sure what that means? Isn't this like talking about pro athletes or rock stars?