Leaving aside more gov't debt, if you pay people more (especially in real terms), they can BOTH spend and save. WOW! What a concept!
NOTE TO GREENSPAN, FISHER, AND EVERYONE ELSE AT THE FED: WAGE INFLATION IS NOT THE GREATEST EVIL IN THE WORLD!!!!
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Wage inflation - in the context of the last 30 years - is what is needed. It's the old Henry Ford principle - if working people don't make good wages, who will buy the cars? This same rule applies across the board.
Once we have returned to economic growth, I'd like to see the minimum wage nearly double to $12.50/hour over a few years. My formula is essentially 150% of the poverty level for family of three (one parent, two kids). This, of course, will raise other wages thanks to the ripple effect.
No - this will not cause small business to fold en masse. So long as competitors face the same higher wages, no one's competitive position is damaged. We'll all pay a little more for our burgers and retail purchases. Only the most marginal operators will fail - just as Schumpeter described.
Can you please show me somewhere where this theoretical nonsense has ever been accomplished? Where do you think the money will come from to pay these wages? Do you actually believe that when wage inflation occurs that the goods that you but with these wages will not increase? You two are so laughably simple minded. What happened when Jimmy Carter was President? Please research how all consumer goods went up in price dramatically far outstripping the rise in wages.
There you are! I thought you disappeared again, frustrated that reality had intruded on and thoroughly discredited your economic philosophy.
Wage hikes add to inflation, as do increased profit margins. Higher wages will mean higher prices, though the benefit to the low end wage earners will far exceed the pain shared by 300m consumers. The minimum wage has not kept pace with our national income in the post war era. Corporate profits, until recently, had grabbed a larger piece of the pie than ever before. Our workers are not benefiting from productivity gains.
The gap between the high end and low has not been greater in 60 years. There are many reasons for this, including the lagging minimum wage.
You would do well to achieve the level of simple minded. It is a shame you can't blog with someone smart sitting next to you, as I am sure that is how you survived law school. :)
Did you ever here of the owners or share holders maybe just maybe take a little cut, and not raising prices. To answer simply that is where the money comes from. I say again " rising tide lifts all boats" Of course if you like the alternative "going out of business" because no one can buy your products. One of the problems
with "principle" of economics as with all economic principles it has the unstated assumption that everything else stays equal.And we know of course that is not true.
I ask you does a McDonald's Hamburger cost the same in a Westchester County in New York, and Tupelo, Mississippi, and why is that?
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