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To: Skeeter Bug who wrote (637)	10/27/2000 8:27:19 AM
From: Daniel Chisholm	Read Replies (1) \| Respond to of 686

Re; your lemonade stand model, what about following it a bit further? Let's call the owner Al, and the employee Bob. Before the auto-lemonade machine, it took two units of labour (Al plus Bob) to produce $10 of GDP. Let's assume that the owner (Al) was responsible for $6 of this value, and the employee (Bob) was responsible for $4 of it. When the auto-lemonade machine is s bought, Bob is now unemployed. However "unemployed" also means "available" -- so Bob could now (say) start an apple growing business, which he formerly did not have time for. Also, since Al is quite a bit richer than he used to be, perhaps Al in now in a position to participate in financing Bob's new capital intensive business. It would probably be reasonable to assume that Bob would not be able to produce $4 of value in the apple business all by himself, otherwise he probably would have been in his own apple business even before the auto-lemonade machine arrived, instead of earning $4. Let's say Bob can produce $3 of value as a one-man, totally manual apple operation. Perhaps with capital-intensive farming methods (only possible because Al now has surplus capital to invest in Bob's business) Bob can run a one-man mechanized apple business that can produce $6 of value. Now the economy consists of $10 of lemonade plus $6 of apples. Of course if Bob cannot or does not want to work on his own, and can talk Al into supporting him in his unemployment, one can also see that the overall quality of life has risen -- the economy produces $10 of GDP, Al still works full time, but Bob can enjoy his days fishing instead of squeezing lemons. So productivity gains are good for social democracies, too ;-) . - Daniel