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The Fed plans to sharply boost unemployment

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Re: The Fed plans to sharply boost unemployment

#71

Post by smoldesu »

koheripbal wrote: post #59
jmoak3 wrote: post #31

Earlier quoted context omitted.

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…

Calling it a "race to the bottom" is a bit ironic, when these jobs have been going to the world's poorest people and those in most need of a job.

You pass off your dirty work to the most desperate players, and the frugal companies even resort to using political prisoners and children as laborers. These companies aren't saviors, they're accutely aware of the living conditions and actively exploit it.

Re: The Fed plans to sharply boost unemployment

#73

Post by SantalBlush »

MereInterest wrote: post #51
mjhay wrote: post #25

Earlier quoted context omitted.

Supply and demand works great in Econ 101 though.

Correct, because Econ 101 is based on an idealized economy that doesn't match the real world.

That's why you take Econ 102, which is an intro microeconomics course. It covers the different market types, like competitive, monopolistically competitive, duopolistic, and monopolistic, and it covers the concepts of positive and negative externalities, market failures, etc.

A lot of people here are acting like these are foreign concepts to an econ curriculum, when they're completely rudimentary. It's just ignorance.

Re: The Fed plans to sharply boost unemployment

#74

Post by Aunche »

fxtentacle wrote: post #2

"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…

It sounds wacky because they're framing it in the worst possible light to generate populist outrage and get more clicks.

The goal of raising interest rates is to contract the money supply because it would disincentivizing lending. Increasing unemployment is an unfortunate side effect, but clearly not their intention.

Re: The Fed plans to sharply boost unemployment

#75

Post by fallingfrog »

ethbr0 wrote: post #47
ajackfox wrote: post #8

For basically my entire adult life, at the macro level capital investments have basically been free for corporations. While I have an idea of will happen based on historical data, it will certainly be ‘interesting’ to experience it first hand. :/

It's healthy in that it causes unproductive firms to go bankrupt. It's painful in that unproductive firms are no longer handing out free money to employees and customers. Looking at the market of companies today, especially in the tech space, IMHO ten years or so of fiscal prudence would be really healthy. The only downside is that Apple, Amazon, Google, and Microsoft would weather it and come out more relatively dom…

I agree, that’s probably what will happen. It’s the natural progression of things and the boom/bust credit cycle speeds the process- a new field of technology, full of hungry competitors, eventually winnows down to a small number of large firms, who then usually proceed to fix prices to ensure permanent profits. Then you have to get government involved to make sure they don’t abuse their monopoly power, and the whole thing ends up being a government/private industry hybrid operation. At that point it’s a power struggle between popular power/democracy and private power/capital, which lately capital has been dominating, but that may reverse.

Libertarian supporters of capitalism look backward to the earlier phase of a lot of competing small firms innovating rapidly, in which government is more an impediment than anything else, and while that’s a great time to be in, it’s just a phase, and eventually the board clears and you end up with a small number or just one large firm that controls a whole industry, and popular movements or government is really the only check on their power.

Re: The Fed plans to sharply boost unemployment

#76

Post by rufus_foreman »

mjhay wrote: post #5

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...

From your first link:

"Nominal wage growth has been fast over the past year relative to the past few decades, but it has lagged far behind inflation, meaning that labor costs are dampening—not amplifying—price pressures"

This is not necessarily true since it doesn't take into account labor productivity. From the BLS:

"Unit labor costs in the nonfarm business sector increased 10.2 percent in the second quarter of 2022, reflecting a 5.7-percent increase in hourly compensation and a 4.1-percent decrease in productivity. Unit labor costs increased 9.3 percent over the last four quarters. This is the largest four-quarter increase in this measure since a 10.6-percent increase in the first quarter of 1982. BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs and increases in productivity tend to reduce them."

From your second link:

"At the state level, we can do more and, frankly, we should have done it a long time ago. The 'Inflation Relief and Consumer Assistance Plan' (A.8481), which was introduced by Leader Barclay, would slash state sales tax for two years on everything from gas to groceries to utility bills. This would provide immediate and meaningful relief. The windfall in state sales tax revenue could easily be covered by surplus money from the federal government."

So during a period of inflation and rising interest rates, they are advocating fiscal stimulus financed by government debt. You think that is a good idea?

Re: The Fed plans to sharply boost unemployment

#77

Post by afpx »

koheripbal wrote: post #59
jmoak3 wrote: post #31

Earlier quoted context omitted.

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…

Calling it a "race to the bottom" is a bit ironic, when these jobs have been going to the world's poorest people and those in most need of a job.

These jobs allow something like 60-100M households escape poverty every year. That's a good thing for everyone (except the Earth).

Re: The Fed plans to sharply boost unemployment

#78

Post by rufus_foreman »

fxtentacle wrote: post #2

"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…

Companies are increasing prices now. If they could have profitably increased them before, why did they wait until now?

Re: The Fed plans to sharply boost unemployment

#79

Post by soulofmischief »

smnrchrds wrote: post #30
refurb wrote: post #11

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…

Since wage hikes historically have not matched inflation, I don't see anything wrong with hikes that surpass inflation rates.

We have a lot of catching up to do, and incumbents designed this system so that healing the gap hurts the bottom line of voters, so there is simply no painless way out of it. We've all been paying towards a debt that is about to be realized.

Re: The Fed plans to sharply boost unemployment

#80

Post by soulofmischief »

californical wrote: post #27
mjhay wrote: post #14

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.

Not exactly — wealthy people don’t spend most of their money on goods & services, they leave it parked in investments. Reducing a wealthy person’s net worth don’t really affect how much they spend on consumer goods. A poor or working-class person spends (nearly) all of their money on consumer goods. Give them 10% more money and they try to buy 10% more things. Restricting money on the wealthy doesn’t reduce demand fo…

Then tax the wealthy and put that money into the hands of people who actually need it.
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