51–60 of 227 posts
Earlier quoted context omitted.
Supply and demand works on a idealized economy, but it's hardly true in the real world where there are cartels, monopolies, and other incentives to keep prices high even if there's supply.
Supply and demand works great in Econ 101 though.
Reducing power of workers in favor of capital is deeply disappointing to me. The idea that we'd want to increase unemployment rather than have everyone working is frustrating. "But wages are too high!" Shouldn't the folks who believe in markets as a force for good want wages to be set by markets? The most profitable businesses can pay the wages for workers, and the least profitable ones can't hire? Why do we need som…
The only justification for this is preventing a self-perpetuating inflationary feedback cycle. Wage increases increase COGS, which increases prices, which leads to demands for wage increases. Once that gets going (encoded in labor contracts and expectations), it's very hard and even more painful to break. Whether that's what we're seeing now... or it's temporary supply side impacts... economists for more data than I…
> In plain English, that means unemployment. The Fed forecasts the unemployment rate to rise to 4.4% next year, from 3.7% today — a number that implies an additional 1.2 million people losing their jobs. > "I wish there were a painless way to do that," Powell said. "There isn't." A reminder to us that psychopaths are running the world economy.
Labeling Powell/the Fed as a psychopath simply because they're turning one of the very few if not only inflation control knobs they have seems extreme.
A psychopath would have done this randomly or at an illogical time (say by raising rates at the outset of the Great Recession). Just because you don't like the outcome of a decision doesn't make the decision maker a psychopath, more so when they agree that they wish there was a better way.
Earlier quoted context omitted.
Everybody wants to control inflation until it's time to suppress wage growth. The Bank of Canada even came right and out said that employers should definitely not raise wages quickly. https://www.theglobeandmail.com/business/article-wage-negoti...
Bank of Canada's position is very nuanced, but all the nuance is ignored by their critics. They never asked employers not to raise wages this year. They asked them not to bake in e.g. 8% per year wage increase for the next 10 years if they are negotiating a long term contract with a union. The rationale is that while 8% raise this year is reasonable given the inflation rate, the inflation rate will not remain high fo…
If you're going to account for inflation in a contract, I believe indexing is the preferred method anyway. Many government pensions - and some salaries - are indexed to inflation.
Earlier quoted context omitted.
Weird how government agencies that fall to regulatory capture all keep advocating for things beneficial to the industries they oversee. Sufficient tax increases for the well-off would have the same effect as punishing the working class, but that's never an option for some reason.
replying to californical: "Sufficient" is the operative word here. There's a tremendous amount of non-productive rent-seeking, such as literal rents. These are a massive drag on our economy, because they shift investments towards non-productive use. More targeted tax increases to discourage the worst rent-seeking would help a lot, in addition to generating revenue and easing price pressures.
Supply bottlenecks are what technology is supposed to solve. If they impovish people every time our shoddy infrastructure isn't up to the task, what is the point of being an engineer?
"With an additional million or two people out of work, the newly unemployed and their families would sharply cut back on spending, while for most people who are still working, wage growth would flatline. When companies assume their labor costs are unlikely to rise, the theory goes, they will stop hiking prices. That, in turn, slows the growth in prices." That seems like a pretty whacky theory to me because it assumes…
There is a range of prices between the underlying costs+overhead to the price point where demand drops off.
In that range, several factors influence where a company sets its price.
In a case where a company produces a unique product on the market, then it will price in the higher end of the range where demand drops off.
On the other hand if multiple companies produce the identical product (a commodity market), then the competition all try to undercut the prices of one another and prices are more determined by the underlying input costs (such as labor and raw materials).
Few companies product something COMPLETELY unique and irreplaceable for long until other companies copy them, but most try to differentiate themselves somehow to enable higher pricing without competition. They obviously also try to reduce overhead and negotiate lower input prices to gain a pricing advantage and capture more market share.
Many companies exist in mature markets where commodity pricing dominates. In such cases, and in OPs case, the LACK of rising labor costs allow prices to remain low.
Only on social media do people think that companies price things from a purely ethical/greed based model. Efficient pricing is just one aspect of running a successful company.
Wage growth has not been keeping up with inflation, and may even be damping it. The steady chorus of claims that wages are too high strikes me as consent-manufacturing by capital. https://www.epi.org/blog/wage-growth-has-been-dampening-infl... https://insurancenewsnet.com/oarticle/inflation-continues-to...
Wages are too high, because our entire economy is built on the backs of available race to the bottom international labor. Demographics and the security situation is changing this, and the establishment (for better and worse) is absolutely freaking out. The world as we have lived it the past 30 years cannot exist if people doing labor can command a decent wage by USA standards, we’re going to have to recalibrate for a…
Wage growth has not been keeping up with inflation, and may even be damping it. The steady chorus of claims that wages are too high strikes me as consent-manufacturing by capital. https://www.epi.org/blog/wage-growth-has-been-dampening-infl... https://insurancenewsnet.com/oarticle/inflation-continues-to...
Wages are too high, because our entire economy is built on the backs of available race to the bottom international labor. Demographics and the security situation is changing this, and the establishment (for better and worse) is absolutely freaking out. The world as we have lived it the past 30 years cannot exist if people doing labor can command a decent wage by USA standards, we’re going to have to recalibrate for a…
Wage growth has not been keeping up with inflation, and may even be damping it. The steady chorus of claims that wages are too high strikes me as consent-manufacturing by capital. https://www.epi.org/blog/wage-growth-has-been-dampening-infl... https://insurancenewsnet.com/oarticle/inflation-continues-to...
It's the opposite actually. The Fed is raising interest rates to contract the money supply, which will temper inflation. They acknowledge the negative impacts it will have to unemployment and wages, but if you read their press releases, you can tell it's clearly not their intent. Meanwhile, the MSM is spinning it as them wanting to stop wage growth to spark populist outrage and get more clicks.
It's a shame that everyone is intent on badmouthing one of the only somewhat competent parts of the government. The Fed is an easy target because they don't play petty politics. First Trump pressures the Fed to reverse quantitative tightening. Then, during the pandemic, the Republicans badmouth the Fed again for "printing money." Now, the left is criticizing them for "planning to sharply boost unemployment".