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I think there's too much focus on raising wages. While that's not really the way to improve the situation for low incomes. One should seek to raise the buying p

I think there's too much focus on raising wages. While that's not really the way to improve the situation for low incomes. One should seek to raise the buying power. A stronger dollar, can mean higher buying power for imported products. Keeping the inflation low is also as important as raising wages. Another positive factor is increasing the productivity. The more you produce, means there's more stuff for everyone to buy and that drives the prices lower.

dalbasal 8y ago
Remember that for most below average households, not much of their expenses aren't currency dependant. Housing, transport, education, food...
- codelord 8y ago
  How can you say that these aren't currency dependent? If the US dollar was 10 times stronger you could buy 10 times more food. If the prices stayed the same you'd see a surge in imports. When imported products are cheaper everything becomes cheaper, it might just take some time.
  - xg15 8y ago
    > If the US dollar was 10 times stronger you could buy 10 times more food. "You" being the distributor, not the final consumer. I don't see why the distributor (or other middlemen) wouldn't simply pocket the price difference themselves. What would force them to pass it on to consumers?
    - codelord 8y ago
      The middleman always wants to maximize profit. Nothing is stopping them from raising prices at anytime. However, unless you have a monopoly on the food market, competition will force the prices down.
    - chimeracoder 8y ago
      > "You" being the distributor, not the final consumer. I don't see why the distributor (or other middlemen) wouldn't simply pocket the price difference themselves. What would force them to pass it on to consumers? This would only work if the distributor had a monopoly on food sales in the US, or a monopsony on food imports to the US. Thankfully, this is not the case for anything except for specialty imports.
      - SketchySeaBeast 8y ago
        I'm not sure if it's the same in the states, but in Canada it's remarkable how all the gas stations, owned by different corporations, all seem to have price fluctuations at the same time, and even though crude oil is half the price it was half a decade ago the gas prices seem to have crept back to where they were pre-plummet. If all the distributors know the game, they find ways to work together.
        randomdata 8y ago
        What is remarkable about it? That's what happens when you are selling a commodity. There is nothing to set yourself apart in the marketplace, so you have no choice but to sell at the same price as everyone else or decline sales until the market improves. RBOB is publicly traded commodity at that. It is not exactly a mystery to sellers what the market price is. The buyers literally publish what they are willing to pay and the sellers decide if they agree to it or not. As a cash crop farmer, it is the same deal for us. We're told what the price is and it's a take it or leave it situation. We're growing commodities, so if I want more money than the customer is willing to spend, the buyer has no issue going to my neighbour who grows the exact same crops. It makes no difference to them. And thus, if I also want to sell at that time, I have no choice but to match every other farmer. If I offer an even lower price, every other farmer will have to match me if they want to sell.
        SketchySeaBeast 8y ago
        The argument above was: > I don't see why the distributor (or other middlemen) wouldn't simply pocket the price difference themselves. What would force them to pass it on to consumers? > This would only work if the distributor had a monopoly on food sales in the US, or a monopsony on food imports to the US. I'm saying that the independent distributors of gasoline have no monoply on the market, but still manage to ensure that they all get the same cut anyways. There's nothing stopping them all from agreeing to fix the market far above what the price could be because they see an opportunity for profit.
  - fwip 8y ago
    I think you misread. The parent said that there isn't much that isn't currency dependent - double negative, meaning most things are currency dependent.
    - codelord 8y ago
      Oops. You are right, my bad.
isolli 8y ago
That's misleading. Economists follow real wages, which take inflation into account.
- codelord 8y ago
  Yes, I'm not talking about the economists. I'm talking about the media and the politicians. How much do we hear about the need to improve productivity in the mainstream media? That's really the key to prosperity. Also, if you talk about the inflation adjusted income, it has been steadily increasing since 2012: https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N The median income in the US now is higher than most European countries including Sweden, Denmark, and Germany.
  - xg15 8y ago
    Improve productivity to where? The last decades already saw enormous productivity increases - it doesn't seem to have lead to less inequality or higher or more secure incomes for many.
foota 8y ago
Is there any reason to prefer those over policies that result in shifting income down?
cdash 8y ago
Actually the focus should be on increasing household discretionary income. The part of a persons income that is left over after all the mandatory expenses of food, shelter, tax etc are taken care of.
- chimeracoder 8y ago
  > Actually the focus should be on increasing household discretionary income. The part of a persons income that is left over after all the mandatory expenses of food, shelter, tax etc are taken care of. Arguably the US already is focusing on this; the US has the highest real net disposable income of all OECD countries.
  - randomdata 8y ago
    > the US has the highest real net disposable income of all OECD countries. A higher disposable income does not necessarily lead to a higher discretionary income. If the non-discretionary costs (food, shelter, etc.) are higher than elsewhere, discretionary income could actually be lower than in other countries with lower disposable income.
    - chimeracoder 8y ago
      > A higher disposable income does not necessarily lead to a higher discretionary income. If the non-discretionary costs (food, shelter, etc.) are higher than elsewhere, discretionary income could actually be lower than in other countries with lower disposable income. It doesn't necessarily, but it turns out that it does in this case, because the US does have a higher discretionary income than any other OECD country (and is below the median and well below the mean in household debt as well.
      - randomdata 8y ago
        That's interesting. Where would one go to find data about discretionary income? Disposable income data is readily available, but I wasn't able to find much about discretionary income, including going straight to the OECD which did not reveal anything in my searches.
xg15 8y ago
> One should seek to raise the buying power. This sounds an easily defeatable measure. If I'm a politician and encourage the economy to dump all kinds of cheap, low-quality crap onto the market, I will, on paper, have greatly boosted the buying power of low-income households - except not in a way that will be helpful for them: They will have choice between an enormous range of cheap products, except they will all be low-quality and likely not what the members of the household are looking for. > A stronger dollar, can mean higher buying power for imported products. See other post. Additionally, this does not cover products or services you can't import, e.g. housing. > The more you produce, means there's more stuff for everyone to buy and that drives the prices lower. Except a lot of that stuff is not actually produced for the domestic market but exported. Also, between "we produce more" and "we lower prices" there are usually several layers of management who decide how to price products, which costs to pass on, which products to sell at a loss and which products to sell with a margin. The lower your disposable income, the more your life will depend on that kind of strategic decisions, independently of what products you're able to buy at any particular point in time.
- refurb 8y ago
  This sounds an easily defeatable measure. If I'm a politician and encourage the economy to dump all kinds of cheap, low-quality crap onto the market, I will, on paper, have greatly boosted the buying power of low-income households - except not in a way that will be helpful for them: They will have choice between an enormous range of cheap products, except they will all be low-quality and likely not what the members of the household are looking for. That wouldn't be an increase in buying power if the replacement item is of lower quality/value than the original.
- chimeracoder 8y ago
  > This sounds an easily defeatable measure. If I'm a politician and encourage the economy to dump all kinds of cheap, low-quality crap onto the market, I will, on paper, have greatly boosted the buying power of low-income households That isn't what "purchasing power" means. OP is right - the purchasing power of the consumer is what matters, not the nominal wage. Focusing on the latter will actually be counterproductive, because it will lead to policies that decrease the former.

dalbasal 8y ago

Remember that for most below average households, not much of their expenses aren't currency dependant. Housing, transport, education, food...

codelord 8y ago
How can you say that these aren't currency dependent? If the US dollar was 10 times stronger you could buy 10 times more food. If the prices stayed the same you'd see a surge in imports. When imported products are cheaper everything becomes cheaper, it might just take some time.
- xg15 8y ago
  > If the US dollar was 10 times stronger you could buy 10 times more food. "You" being the distributor, not the final consumer. I don't see why the distributor (or other middlemen) wouldn't simply pocket the price difference themselves. What would force them to pass it on to consumers?
  - codelord 8y ago
    The middleman always wants to maximize profit. Nothing is stopping them from raising prices at anytime. However, unless you have a monopoly on the food market, competition will force the prices down.
  - chimeracoder 8y ago
    > "You" being the distributor, not the final consumer. I don't see why the distributor (or other middlemen) wouldn't simply pocket the price difference themselves. What would force them to pass it on to consumers? This would only work if the distributor had a monopoly on food sales in the US, or a monopsony on food imports to the US. Thankfully, this is not the case for anything except for specialty imports.
    - SketchySeaBeast 8y ago
      I'm not sure if it's the same in the states, but in Canada it's remarkable how all the gas stations, owned by different corporations, all seem to have price fluctuations at the same time, and even though crude oil is half the price it was half a decade ago the gas prices seem to have crept back to where they were pre-plummet. If all the distributors know the game, they find ways to work together.
      - randomdata 8y ago
        What is remarkable about it? That's what happens when you are selling a commodity. There is nothing to set yourself apart in the marketplace, so you have no choice but to sell at the same price as everyone else or decline sales until the market improves. RBOB is publicly traded commodity at that. It is not exactly a mystery to sellers what the market price is. The buyers literally publish what they are willing to pay and the sellers decide if they agree to it or not. As a cash crop farmer, it is the same deal for us. We're told what the price is and it's a take it or leave it situation. We're growing commodities, so if I want more money than the customer is willing to spend, the buyer has no issue going to my neighbour who grows the exact same crops. It makes no difference to them. And thus, if I also want to sell at that time, I have no choice but to match every other farmer. If I offer an even lower price, every other farmer will have to match me if they want to sell.
        SketchySeaBeast 8y ago
        The argument above was: > I don't see why the distributor (or other middlemen) wouldn't simply pocket the price difference themselves. What would force them to pass it on to consumers? > This would only work if the distributor had a monopoly on food sales in the US, or a monopsony on food imports to the US. I'm saying that the independent distributors of gasoline have no monoply on the market, but still manage to ensure that they all get the same cut anyways. There's nothing stopping them all from agreeing to fix the market far above what the price could be because they see an opportunity for profit.
- fwip 8y ago
  I think you misread. The parent said that there isn't much that isn't currency dependent - double negative, meaning most things are currency dependent.
  - codelord 8y ago
    Oops. You are right, my bad.

isolli 8y ago

That's misleading. Economists follow real wages, which take inflation into account.

codelord 8y ago
Yes, I'm not talking about the economists. I'm talking about the media and the politicians. How much do we hear about the need to improve productivity in the mainstream media? That's really the key to prosperity. Also, if you talk about the inflation adjusted income, it has been steadily increasing since 2012: https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N The median income in the US now is higher than most European countries including Sweden, Denmark, and Germany.
- xg15 8y ago
  Improve productivity to where? The last decades already saw enormous productivity increases - it doesn't seem to have lead to less inequality or higher or more secure incomes for many.

foota 8y ago

Is there any reason to prefer those over policies that result in shifting income down?

cdash 8y ago

Actually the focus should be on increasing household discretionary income. The part of a persons income that is left over after all the mandatory expenses of food, shelter, tax etc are taken care of.

chimeracoder 8y ago
> Actually the focus should be on increasing household discretionary income. The part of a persons income that is left over after all the mandatory expenses of food, shelter, tax etc are taken care of. Arguably the US already is focusing on this; the US has the highest real net disposable income of all OECD countries.
- randomdata 8y ago
  > the US has the highest real net disposable income of all OECD countries. A higher disposable income does not necessarily lead to a higher discretionary income. If the non-discretionary costs (food, shelter, etc.) are higher than elsewhere, discretionary income could actually be lower than in other countries with lower disposable income.
  - chimeracoder 8y ago
    > A higher disposable income does not necessarily lead to a higher discretionary income. If the non-discretionary costs (food, shelter, etc.) are higher than elsewhere, discretionary income could actually be lower than in other countries with lower disposable income. It doesn't necessarily, but it turns out that it does in this case, because the US does have a higher discretionary income than any other OECD country (and is below the median and well below the mean in household debt as well.
    - randomdata 8y ago
      That's interesting. Where would one go to find data about discretionary income? Disposable income data is readily available, but I wasn't able to find much about discretionary income, including going straight to the OECD which did not reveal anything in my searches.

xg15 8y ago

> One should seek to raise the buying power. This sounds an easily defeatable measure. If I'm a politician and encourage the economy to dump all kinds of cheap, low-quality crap onto the market, I will, on paper, have greatly boosted the buying power of low-income households - except not in a way that will be helpful for them: They will have choice between an enormous range of cheap products, except they will all be low-quality and likely not what the members of the household are looking for. > A stronger dollar, can mean higher buying power for imported products. See other post. Additionally, this does not cover products or services you can't import, e.g. housing. > The more you produce, means there's more stuff for everyone to buy and that drives the prices lower. Except a lot of that stuff is not actually produced for the domestic market but exported. Also, between "we produce more" and "we lower prices" there are usually several layers of management who decide how to price products, which costs to pass on, which products to sell at a loss and which products to sell with a margin. The lower your disposable income, the more your life will depend on that kind of strategic decisions, independently of what products you're able to buy at any particular point in time.

refurb 8y ago
This sounds an easily defeatable measure. If I'm a politician and encourage the economy to dump all kinds of cheap, low-quality crap onto the market, I will, on paper, have greatly boosted the buying power of low-income households - except not in a way that will be helpful for them: They will have choice between an enormous range of cheap products, except they will all be low-quality and likely not what the members of the household are looking for. That wouldn't be an increase in buying power if the replacement item is of lower quality/value than the original.
chimeracoder 8y ago
> This sounds an easily defeatable measure. If I'm a politician and encourage the economy to dump all kinds of cheap, low-quality crap onto the market, I will, on paper, have greatly boosted the buying power of low-income households That isn't what "purchasing power" means. OP is right - the purchasing power of the consumer is what matters, not the nominal wage. Focusing on the latter will actually be counterproductive, because it will lead to policies that decrease the former.