[Nasrudith]

Even with the macroeconomic effects as valid the mode of thinking is so painfully backwards and entitled in so many ways.

1. The job of the producers is to produce what the consumers want, not the consumers to accept whatever they want to produce! It is not a birthright to guaranteed profit from whatever they want to produce being sold. That has never existed. It brings to mind every idiot CEo of a business which failed to adapt bemoaning "murder by millenials" and wondering why they aren't getting new customers among those they insulted for products they don't even want in the first place.

2. If credit flow is required for the economic velocity it hints at an insufficient amount of solid currency in the economy and the interest costs are deterring spending exactly as intended. Even if taken for granted that the boost is needed doesn't mean that a consumer credit bubble is the best way to do so.

2a. If saving is not desired behavior retirement must be guaranteed in spite of lack of it. Asking for changes with no viable alternative is a fundamentally an unreasonable demand in negotiation. If you don't want a population explosion as 8 kids is the accessible way to be supported in old age then provide elder's pensions or stop complaining about population growth.

2b. Even if they could keep on using credit until they die the gains would be unrealized as the music stops even after they claimed the estate the debt would be written off. Continually rising consumer debts are a bubble because they are not immortal conglomerate entities like corporations or governments.

3. A drop in demand given available means of payment or credit implies a failure to at the same provide utility and provide a pathway to payment.

Essentially the answer to the economic problem isn't more consumer debt and pretending this fine but solving the root problems in a profitable way.

[digitaltrees]

Good analysis. Relying on credit to enable consumer spending happened in the mid 1920s as stagnant wages, and income inequality reduced the discretionary budget of most consumers. At best spending on credit is a temporary boost to the economy as consumers will eventually be tapped out and spending will stop.

I agree with you, consumer debt isn't the solution, more affluent consumers is the solution. Raise wages, sell better products. Its like Henry Ford said when he gave a very large and controversial raise, your employees should be able to afford your products, if they can't, you might not have a market. As leaders of companies, we should return to the value system of generosity because that will actually support more market activity.

[Fjolsvith]

This sounds exactly like what's happening in America today. Bring jobs back to the country, which elevates wages due to low unemployment, high worker demand. Bring manufacturing back to the country, which causes better products by them being designed closer to the people who would consume/use them.

[michaelbrave]

This is the opposite of what's happening in America today. Wages have not elevated in decades, there is an odd inflation that is only needs specific (food, housing, education), even the manufacturing that comes back to the country is usually automated so there are very little jobs brought by it.

[Fjolsvith]

The median income for 2018 was up for the second year in a row. 2017 marked the first year since 2007 that median income in the U.S. rose. [1]

1. https://www.investopedia.com/personal-finance/what-average-i...

[digitaltrees]

Two problems with this analysis and data. 1. These gains aren’t enough to undo the decoupling of wages from productivity that has resulted in real wage stagnation. (See here https://www.epi.org/productivity-pay-gap/ ), 2. These wage increases haven’t exceeded inflation so actual household spending power has decreased in real terms. Basically consumers have less ability to spend because more profit is being captured. The problem is this profit capture (i.e. the spread between productivity and wages) is good for companies in the short term but damaging in the long term as the market shrinks due to decreased demand. After a thirty year trend of this dynamic America is reaching a brick wall where consumers will be tapped out and growth will stagnate.

[Fjolsvith]

The point is that the last two years is a change over the last 30.

[lonelappde]

Is that happening? USAmericans can't afford what they consume; the economics only add up when most the work is imported from subsistence workers and slaves.

(I almost said ”offshored" but Mexico and South America)

[robomartin]

Agreed. When I read a business article that’s so far off base I have to take a moment to understand who wrote it. In this case —as is often seen with reality-challenged articles— the author has zero business experience and zero training in finance:

https://www.linkedin.com/in/matt-egan-7b75542b

He is a journalist who worked for Fox and now CNN and likely doesn’t know what he is talking about.

Before someone jumps on the apparent logical fallacy, let me point out that I started by saying his argument isn’t sound or valid, as the comment I am responding to correctly explains.

[austincheney]

> The job of the producers is to produce what the consumers want, not the consumers to accept whatever they want to produce!

But that is the current general practice of software, especially online interconnected software, to force acceptable product preferences to the consumer without regard for consumer demand or competition. Developers typically dictate the choice of architecture and framework and then specify acceptable ranges of performance and design allowed by that framework utterly without regard for what the user wants or willing to pay for. That is developers putting their personal technology preferences before the user concerns or business revenue goals. When you point out the nature of ethics violation the developers most concerned by those technology preferences get really emotional, perhaps hostile. I have seen this at every software job I have held and it’s not limited to any language or class of technologies.

[teilo]

No one forces you to buy or use software. How is software different than any other product? It's engineered a certain way, and offered to customers, who either buy it or do not.

Companies who develop products without regard for consumer demand or the competition are eventually unemployed. They may have a defacto monopoly for a time, but it inevitably ends.

Competition is not only real, but fierce in software, as anyone in corporate IT management will tell you. Because my damn phone never stops ringing with hungry software salescritters vying for my attention.

[austincheney]

> How is software different than any other product?

Software is unregulated.

> Competition is not only real

You are imagining an unstated opinion. I never claimed competition is absent from software but that software developers make decisions without regard for that competition and impose those decisions upon their products without regard for their users or business revenue.

> Companies who develop products without regard for consumer demand or the competition are eventually unemployed.

That sounds like hyperbole. Advertising companies, as an example, do very well without regard for competition or the end user. Companies will continue so long as they are cash flow positive.

[Fjolsvith]

A very valid example of this from the front page of HN today:

https://news.ycombinator.com/item?id=23288318