• I can’t help but wonder if the writers of Babylon 5 saw the MST3K riff of Laserblast before writing Infection…

      #tv
      (https://b-ark.ca/OGyW_Q)
    • Yesterday was the 45 anniversary of one my absolute favourite Pink Floyd albums: Animals. Much is made Gilmour’s virtuosity on the album but Waters’ writing is brilliant here, and would presage many great concept albums to come!

      (https://b-ark.ca/cqYmMW)
  • Grappling with Labour Markets

    The sixth post in my Blogging for the Holidays series, some thoughts on labour and market forces, and what COVID has done to upend an old dynamic.

    In my introductory post for this series I rattled off a number of topics that seemed especially interesting to me in light of the last two years of COVID, one of which being the relationship between capital and labour. A light and simple topic, obviously, but it seemed worth a post.

    Standing in the shower I was thinking about my way into this subject, and then it dawned on me that my post on supply chains, and in particular the topic of supply-demand dynamics, made for a very nice segue into this topic, particularly given the conversations I’ve been having this year regarding the labour market.

    I’m going to start off with a basic thesis that I suspect some might find a bit controversial, maybe even mildly offensive, but that (as I understand it) is pretty well understood in the world of economics: Labour is a market, and salaries are our price for our labour. This means that, absent government intervention, salaries are a function of supply and demand, along with all the other forces that make a market function.

    This is not what anyone deep down wants to believe!

    Naively, I think we’d all like to believe that the value we pay for something reflects what that thing is, in some way, intrinsically worth.

    But what makes an iPhone valuable? We know from Apple’s filings that they’re achieving something like 30% gross profit margins on their consumer devices. That means we’re paying over a third more for the device than is reflected in the total costs of raw materials, labour, shipping, and so forth. And yet people still buy those devices, believing them to be worth the additional cost.

    What about, say, a collectible baseball card? Intrinsically, the card is worth pennies in paper and ink. And yet there is a market in which such a thing could sell for hundreds or thousands of dollars.

    The reality is that prices reflect not just pure utility, but rather something more intangible.

    To offer just a little taste of just how intangible, consider the idea of the Keynesian beauty contest:

    This would have investors pricing shares not based on what they think an asset’s fundamental value is, or even on what investors think other investors believe about the asset’s value, but on what they think other investors believe is the average opinion about the value of the asset, or even higher-order assessments.

    In other words, our estimate of the value of a good isn’t necessarily even based on our own idea of its intrinsic value, but rather our idea of what other people believe to be its intrinsic value.

    Meta!

    Well, the same is true of labour, and the forces unleashed by COVID that have turned markets for goods and services upside down have had similar impacts on the labour market as well.

    Continue reading...