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> $15 an hour will push a lot of people out of being employable. On the other hand, isn't it illogical in a free market economy that wages do not increase at a

> $15 an hour will push a lot of people out of being employable. On the other hand, isn't it illogical in a free market economy that wages do not increase at a rate at least equal to the inflation? How do you keep the economy running if people have less and less purchase power as time goes by? (These are genuine questions, I'm not an economist at all.)

esrauch 8y ago
I think the answer is that full employment is increasingly not necessary to keep the economy running in this increasingly automated economy.
- lgeorget 8y ago
  But how come low wages do not impact negatively the domestic consumption, which is an important part of the GDP?
  - snuxoll 8y ago
    Have you not seen the explosion of consumer debt over the past decades? Buying power is now tied to how much a bank is willing to lend you, not how much you have in your savings accounts. Synchrony, who Amazon partners with to offer their store card, will give basically anybody with a pulse a $500 credit line and ramp them up to thousands fairly quickly as long as they don't default. I don't even want to get into the real debt traps targeted at the least fortunate among us like payday/title loans, buy-here-pay-here car dealerships, etc.
  - esrauch 8y ago
    With increased income disparity, the top can make up for the bottom on domestic consumption metrics.
justinhj 8y ago
Some of the answers are that technology makes things cheaper, people feel wealth from house prices rising faster than wages, easy access to cheap credit gives another more temporary feeling of wealth
gowld 8y ago
It's not illogical at all. Wages and inflation are not dependent on each other. Inflation means money supply is growing faster than productivity, but it doesn't mean wage-earners are getting that extra money. Banks and capitalists might be.
- lgeorget 8y ago
  Uh... yes. Let's replace "illogical" by "irrational" in my first question, then. :-)
VLM 8y ago
I got mine vs an infinitely sustainable long term stable system, is not really an economic problem its a cross cultural human problem for as far back as we have records (or archeology, it seems). So, no, the economy not being on a survivable path is not really all that unusual of a situation for humanity in general. You'd be amazed what extracting and burning or otherwise disposing of an impossible to replace resource can do to boost a declining economy. "cheap oil" or "cheap fertilizer" masks a lot of problems... for awhile...
Kim_Bruning 8y ago
How do you keep the economy running as purchase power goes down? Traditionally, I don't think you can. Henry Ford was one of the people to point this out; in the general case, you need to pay your workers enough (and keep prices low enough) that they can afford your products; else who can? (other threads have quoted him as well )
- hexane360 8y ago
  Note that one of the reasons the great depression was so bad was people underestimated the income elasticity of demand. This especially showed up in car manufacturing, where new car sales were almost entirely replaced by the used and repair markets.

esrauch 8y ago

I think the answer is that full employment is increasingly not necessary to keep the economy running in this increasingly automated economy.

lgeorget 8y ago
But how come low wages do not impact negatively the domestic consumption, which is an important part of the GDP?
- snuxoll 8y ago
  Have you not seen the explosion of consumer debt over the past decades? Buying power is now tied to how much a bank is willing to lend you, not how much you have in your savings accounts. Synchrony, who Amazon partners with to offer their store card, will give basically anybody with a pulse a $500 credit line and ramp them up to thousands fairly quickly as long as they don't default. I don't even want to get into the real debt traps targeted at the least fortunate among us like payday/title loans, buy-here-pay-here car dealerships, etc.
- esrauch 8y ago
  With increased income disparity, the top can make up for the bottom on domestic consumption metrics.

justinhj 8y ago

Some of the answers are that technology makes things cheaper, people feel wealth from house prices rising faster than wages, easy access to cheap credit gives another more temporary feeling of wealth

gowld 8y ago

It's not illogical at all. Wages and inflation are not dependent on each other. Inflation means money supply is growing faster than productivity, but it doesn't mean wage-earners are getting that extra money. Banks and capitalists might be.

lgeorget 8y ago
Uh... yes. Let's replace "illogical" by "irrational" in my first question, then. :-)

VLM 8y ago

I got mine vs an infinitely sustainable long term stable system, is not really an economic problem its a cross cultural human problem for as far back as we have records (or archeology, it seems). So, no, the economy not being on a survivable path is not really all that unusual of a situation for humanity in general. You'd be amazed what extracting and burning or otherwise disposing of an impossible to replace resource can do to boost a declining economy. "cheap oil" or "cheap fertilizer" masks a lot of problems... for awhile...

Kim_Bruning 8y ago

How do you keep the economy running as purchase power goes down? Traditionally, I don't think you can. Henry Ford was one of the people to point this out; in the general case, you need to pay your workers enough (and keep prices low enough) that they can afford your products; else who can? (other threads have quoted him as well )

hexane360 8y ago
Note that one of the reasons the great depression was so bad was people underestimated the income elasticity of demand. This especially showed up in car manufacturing, where new car sales were almost entirely replaced by the used and repair markets.