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I'm pretty sure inflation under these circumstances occurs independently of further fed intervention, the classical economic theory being that competition for l
by opportune 9y ago
I'm pretty sure inflation under these circumstances occurs independently of further fed intervention, the classical economic theory being that competition for labor (under low unemployment) drives an increase in salaries unaccompanied by an increase in productivity, resulting in inflation
- sjg007 9y agoRight but traditional inflation fears might be overblown... everything is basically manufactured in China or other low wage countries now. Food production is highly mechanized. And most jobs are in the service sector. All I can think of is that inflation manifests in insurance, healthcare, and housing costs.
- opportune 9y agoProductivity can still be measured in service, although in certain cases abstractly, but for example a barber is a service worker with pretty measurable productivity. I think inflation can still occur within the classical model wrt the service sector. An example being that a restaurant has trouble keeping dishwasher positions filled, incentivizing them to increase dishwasher wages, requiring higher menu prices to compensate. As long as the US continues to maintain a comparative advantage in certain industries (e.g. software) I see no reason why they will be immune to wage inflation either. In fact this is arguably already occurring