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> If the prices of the product have gone up with inflation this just means a bigger part of the pie has gone to the owners of the business Labor costs are not
by Gys 9y ago
> If the prices of the product have gone up with inflation this just means a bigger part of the pie has gone to the owners of the business
Labor costs are not the only costs. In most cases there is also material involved and less tangible costs like rent, IT, external accounting, VAT increase that could not be forwarded (a common problem in Europe), etc.
Running a business is not simple. For most companies its a struggle. One day you win some, the next day you loose some. I have done well in the end, but I know many that did not.
- musgrove 9y agoLord...the pie analogy. The OP thinks there's a limited amount of pie, which is a novice error. The pie itself can grow while remaining proportional, which is another scenario he didn't consider.
- coldtea 9y agoAnd the thing your example doesn't consider is that in human societies wealth is relative. We don't think a family living in a trailer is doing great just because the average house in 1860 used to be worse and have less amenities (no electricity for one). Hence, it's not the volume of the slice one gets that matters but its relation to the overall size of the pie (e.g. whether your share grew, not whether the slice grew). And the situation we have is that while the pie is getting larger, the common people's slices are getting either only slightly larger (not as much as the change in the pie size), and they need to work a lot than they did in the 50s and 60s to get a basic slice. In other words, the society produces e.g. 2x or even 10x more wealth, but they only get, say, 2x larger share of that or worse, despite working harder than ever.