The meaning of death, from an economist’s point of view

A few days ago Garett Jones came to my office door and asked “what do we really know about labor supply?”  I said we might as well extend the query to labor demand.  In any case, here was part of my answer, paraphrased of course:

I’ve been much influenced by having kept a dining guide blog/website for almost thirty years, and seeing so many places come and go.  On one hand, I see the stickiness of plans.  A restaurant opens up, and the proprietor has the intent to be a certain thing.  They’re not going to take the pupusas off the menu, just because the price of corn has gone up.  Similarly, increases in the minimum wage might not much alter the hiring plans of the restaurant.  The very act of starting a business selects, to some extent, for people who stick to their plans.  The dishes still need to be washed, and many owners are not at the margins of considering serious automation.

That said, sooner or later these restaurants pass from the scene.  And when the El Salvadoran place closes, there is a real competition across competing food visions.  Will it be pupusas, roast chicken, or kebab?  Once again, relative prices will exert their influence, on both the supply and demand sides of the market.  In fact, pupusa places are slightly in retreat, as they cannot always bid for their higher area rents — it is hard to sell a pupusa for more than a few dollars and at the same time the requisite labor is harder not easier to come by and demand seems stagnant at best.

Similarly, if the minimum wage is high, the new restaurant, if indeed it is even a restaurant, will economize on the number of laborers required to make the food.  The plan for a true Bengali sweets shop will not get off the ground.  You might see storage space or a less labor intensive means of food preparation.

We thus come to a truth that is both happy and sad: death and turnover are how relative prices imprint their impact on the world.

And that, to an economist, is the meaning of death.

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Replace the illegal immigrant sweat shop with a real American job like coal mining or truck driving, then you clueless liberals will truly understand why Trump was elected. MAGA or Green New Deal, don't care as long as it's not another pointy-haired scheme by condescending, out of touch elites who have utter contempt and hatred for regular Americans. This is real death means to everyday people.

Lol this post must be a troll. You couldnt have picked two worse jobs to stake the Great future on. Right up there with buggy whips and ice block delivery

Time will tell how valuable those jobs are. But if you believe that they will simply go away on their own why would you demand they go away by government fiat?

Oh yeah, I forgot I was arguing to make those go away by fiat.

Would you mind pointing me back to that, to, you know, refresh my memory.

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What proportion of businesses constantly adjust their economic decisionmaking to maximize their ROI and what percentage mostly stick to the plan? I'm guessing Amazon is at one pole and many small businesses at the other.

Lets see, Amazon's plan is:

Roic is zero as long as Bezos can maintain control (on GAAP basis).

Lobby government to raise costs too competitors to level playing field.

Lobby government to raise incomes of Amazon customers to be at leaast high as amazon workers buying from competitor.

Any business with roic much higher than zero should be a competitor to Amazon by Amazon entering that market if Amazon can quickly gain major market share.

Keynes was correct, Amazon can never have (own) too much capital, especially capital needed by all other enterprises, including governments.

The only other enterprise with similar focus is China.

Right, at a macro level Bezos is extraordinarily consistent, while at a micro level Amazon is constantly adjusting to maximize profits.

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Businesses have sunk costs, so what is rational for an already existing business (continue to operate) is not necessarily true for a new business. Likely this is how a lot of companies work - they wouldn't justify their original investment, but if they are cash positive on a day to day basis it is worth continuing. Businesses that can't earn their cash costs are quickly shutdown. Not sure how this analogy relates to life - is it that some humans don't really justify the investment society made in them (like schooling, health) but on a day to day basis they are earning their keep so we shouldn't euthanise them? That's a bit cold Tyler.

But more seriously there is a lot of evidence that death (along with sex) is evolutionary necessary to avoid parasites. If you are a long lived animal eventually you will become a carrier mostly of other organisms DNA. Having sex mixes up your DNA with others so ensuring at least part of it survives long term. But there is no reason to have sex without death, otherwise the parasites are still around eating your DNA's lunch. Reversing the analogy - businesses need to have mergers and spin-offs I suppose to keep their businesses viable, otherwise they end up loaded up with parasites.

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There is no peace, there is anger

There is no fear, there is power

There is no death, there is immortality

There is no weakness, there is the Dark Side.

I am the heart of darkness

I know no fear

But rather I instil it in my enemies

I am the destroyer of worlds

I know the power of the Dark Side

I am the fire of hate.

All the universe bows before me

I pledge myself to the darkness

For I have found true life

In the death of the light.

Peace is a lie, there is only passion.

Through passion, I gain strength.

Through strength, I gain power.

Through power, I gain victory.

Through victory, my chains are broken.

The Force shall free me.

This is from Tom Jobim, Waters of March?

The poet's drink, though, perhaps does surpass the warrior's. Of swallowed tongues and empty imaginations, I will swim through a sea of flat teeth for a molar. It is not for the poet's sake. It is because the poet asks why. and How? How is an explanation not a reason nothing meaningful as ever come from how.

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Excellent post!

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There is so much invested in bringing up an individual and his or her education. That lasts about 40-60 years and then the individual becomes a burden in old age, but hopefully funded by savings. Those who game the system live lavishly and rely on state handouts instead.
If death by ageing were abolished as some of the tech giants are planning, then this equation would not apply. However on average people would still die by accident after about 600 years. This would provide a much better return on the costs of education.

How does one "live lavishly and rely on state handouts" other than the fossil fuel, forest products, ranching, and mining corporations with good lobbyists?

Get a government monopoly for 125 years instead of the 95 instead of 75 instead of ...14 renewable for 14 more?

Is a life sentence in prison your definition of lavish?

Obviously I did not word this clearly enough. What I meant was that people could if they wish spend all their money when in work and not save any for retirement, and when they get too old to work, **then** rely on benefits.

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In this context, could we consider food trucks to be zombies?

Okay, that made me smile, the more so because I detest the food truck "dining experience."

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There was very good northern Italian restaurant in my sunbelt city that opened in the late 1970s in a nondescript strip center. In time, the restaurant moved to much more expensive space on the ground floor of one of the high rise office buildings, lured there by the landlord offering a period of free rent. My law firm represented the landlord. After the free rent period ended, the owner of the restaurant didn't pay the rent and we were engaged to either collect or evict. The owner of the restaurant, who was from Italy, paid the way from Italy for those who would work in his restaurant. They were like family. That was his explanation for not paying the rent: he had a greater responsibility to his employees to pay a living wage having brought them to America to work in his restaurant. My spouse befriended a woman married to one of the Italian waiters. They invited us to their modest home for dinner, which was prepared by the Italian waiter. It was excellent. In his broken English he apologized for the modest home, but explained to us that because his employer had to pay the expensive rent to keep the restaurant open, he didn't have the funds to pay his employees. I did not have the heart to tell this man the truth.

Small restaurants, especially ethnic restaurants, are typically a family operation, with some working for little or nothing (except for food or a place to live). Most do it with the understanding they would not be paid or would be paid less than a living wage. In time, family moves on, to a different business that pays a living wage, leaving the family restaurant operation at risk and leaving the owner with little choice but to pay whatever wage it takes to staff the restaurant. The weekly wages must be paid or the staff won't come back. Payroll taxes, on the other hand, don't have to be paid, as they are self-assessed. Besides, if the restaurant owner misses a few payments of payroll taxes, he can always make it up when revenues go up. Sure, revenues go up, but so do expenses, the rent that must be paid to avoid eviction, the purchase price for equipment to replace old equipment that no longer works, the cost of supplies, and on and on. To paraphrase Hemingway, in the restaurant business, bankruptcy comes gradually, then suddenly.

Years ago I represented the owner of a chain of health food restaurants. He was a smart guy, having been successful in an entirely different business and having expanded into a health food restaurant business because that's what he ate. What I quickly learned, is that the well-advised restaurant operator, typically his wholly-owned corporation, owns no assets other than the supplies and daily receipts. When the restaurant fails, which is just a matter of time, the creditors (the landlord, the vendors, the employees) have no real recourse, except for the IRS, which can recover from the person in "control" who fails to pay payroll taxes. Thus the well-advised restaurant operator will pay his payroll taxes, if no other expenses. Such is the reality of the restaurant business. Bon appetit.

And therein lies a splendid example of how our system favors those with the wherewithal to form and execute LLCs, and the antisocial inclination to plan in advance to rip people off

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...is there an app that translates Tyler's musing into plain English?

Do you need an app? Just repeat "Straussian. Mood affiliation. Straussian. Mood affiliation. S....."

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@Bob - TC is saying that restaurants have sticky prices, and the only way of prices changing is if they go out of business (death).

Mnemonic: think of a iHOP with maple syrup all over the menu, and the owner refusing to clean up the menu until they go out of business. PS - For hyper-inflation, think of the same menu but the owner constantly cleaning the menu with a sponge and wasting valuable time doing so.

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Excellent insight. And I think that actual people death has related impacts for certain types of industries. For example, the choice to go to seminary and enter the ministry/priesthood is (more or less) a lifetime path that ultimately affects the number of churches that will exist in an equilibrium. Not that it is a 1 to 1 determinism, but it has a big effect.

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Page through a copy of Fortune from the 1950s. The expensive, full-page advertisements are almost exclusively for corporations that no longer exist. They died.

Yep, bankrupted by successive waves of businesses that had their employees as customers, but paying their workers too little to be customers of the high wage firms.

Ie, high end store employees buying from Sears whose employees bought from kmart whose employees bought from walmart whose employees buy from dollar general.

In the 50s, few workers needed food stamps to live, but now stores need welfare so they have employees able to work and get to work. Food stamps so they have energy to work, housing subsidies so they are clean, medicaid so they aren't sick and infecting customers, subsidized transportation so they can get to work.

And immigrants so they have educated workers without paying higher taxes for education. Is Texas seeking immigrants from California and NYC homeless, drug addicted school drop outs, gangsters, walmart employee populations?

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Restaurants are a good, favorable, example of market evolution, because we enjoy food and it is good for us.

Now do cigarettes? The capitalist machine faces harder justifications when it is selling harm.

Also multivitamins. A harm now apparent, but preserved because this is an established industry.

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Multivitamins are a harm to professions whose services could be displaced. The technology industry has these professions, with their arrogant, authoritarian manner, firmly in their sights.
Nothing is perfectly safe, least of all a stay in hospital, but neither are multivitamins in a few instances.
The professions regard people as statistics to be administered by a bureaucracy, but not all people are the same. Advanced health technology in an open market can treat different people differently.

Are you thinking of overdoses or other misuses of over the counter vitamins? I am speaking of recent RCTs showing that taking vitamins makes you die sooner, rather than later. So the relation is that companies might like selling them, you might like buying them, but if you were buying them for life extension, forget it.

https://blogs.plos.org/publichealth/2014/08/21/multivitamin-supplements-increase-mortality-risk/

Thanks for the link. The Life Extension Foundation do not recommend iron unless the person is diagnosed anaemic. Iron supplements were emphasised as harmful in the 2014 article you kindly appended. Also in the article it said current evidence is insufficient to assess the balance of benefits and harms. It seems that not much has changed, as there are plenty of articles that go both ways, even now five years later.
I have no doubt that taking supplements may make some people perish sooner, but it may make others die later. The variables depend both on the person and on the supplement. The average is just that an average and there doesn't seem to be a vast swing either way.
The rabbit the tech companies may pull out of the bag is some form of chip which people can spit on that can be plugged into a smartphone which will tell them what they need and what they don't need.

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Or real estate rents could go down. Keeping restaurant wages low is really just a way for landlords to keep rents high for a given amount of restaurant spending, and there is nothing sacred about that.

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by the end of the post and related comments I find myself no more enlightened regarding labor supply or demand. Perhaps that was the point...

I should go back to seeking music from Mad Soul Child.

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And then there is La Tour d'Argent, along with a few others.

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C'est la vie. It's like natural selection. Nature is a brutal judge of merit, but that's the way it works.

In the long run the elasticity of supply goes to 1, whether you like it or not.

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This is common sense casual observation to non-economists wrapped in melodrama

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Eventually restaurant menu adjustment will be driven primarily by machine learning models. To make this work well the restaurants will need to be in chains. ML models will therefore boost chains versus individual restaurants. There'll still be a human role for trying menu items that the model can't learn from with past data.

A lot of other lists of choices you see (e.g. at the biggest online store sites) are already driven by ML models. This change will come to restaurants too.

Automation all the way to robotic chefs will also come to restaurants. It will be interesting to see how much of the shift will come in via existing restaurants embracing automation vs new restaurants founded in order to launch new methods of automation.

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An analogous observation can be made for many, probably most workers: if you want to increase your salary faster, you'll need to quit your job (and work for another company -- and possibly another occupation -- that pays you more).

Steve Jobs made a similar observation about death in his famous commencement speech at Stanford: it's nature's way of renewal and clearing out the old.

Admittedly, he didn't extend his observation to relative prices, but it's a familiar observation for economists: elasticities of demand and supply are larger in the long run than in the short run, for reasons including the death or dissolution of old businesses or simply old ways of doing business.

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Is this basically the same principle by which the best way to get a raise and/or a promotion is to change jobs?

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