4 ms·

I know my accounting degree is getting a little dusty but in what version of the world do you think you can "raise wages" while "costs of good sold" doesn't go

I know my accounting degree is getting a little dusty but in what version of the world do you think you can "raise wages" while "costs of good sold" doesn't go up?

josephcsible 5y ago
I think GP is arguing that increasing someone's hourly rate will proportionally increase their work output per hour. (I don't believe this to be true.)
- marcus_holmes 5y ago
  https://s1.q4cdn.com/806093406/files/doc_downloads/2019/05/Productivity-Profits-and-Pay-A-Field-Experiment-Analyzing-the-Impacts-of-Compensation-Systems-in-an-Apparel-Factory-Dec-2018.pdf https://s1.q4cdn.com/806093406/files/doc_downloads/2019/05/P... it is in fact disproportionate, raising wages raising productivity by a greater amount. Given the evidence, do you now believe this to be true?
dtech 5y ago
When the supply of goods goes up too, the marginal cost of labour goes down or the percentace of product cost of labour is small. All of those become more and more true (and are already true for a large class of products) as mechanization and automation increases.
- simonh 5y ago
  Those things are happening anyway. They might reduce the magnitude of the effect, but prices will still go up as wages go up. Also as automation increases productivity, leading to a wealthier economy, workers move into service sectors which are labour intensive. You can't just say, well, just reduce the amount fo labour to keep costs down. That labour still needs to be employed doing something.
mikeyouse 5y ago
If wages become a smaller portion of COGS, then there’s no contradiction. Eg if you buy equipment to make the process more efficient, you can amortize that equipment into COGS and the labor component can remain flat or even decrease even with higher wages for staff.
- simonh 5y ago
  Or your competitor can invest in equipment just the same and keep wages flat, and beat you on price. So nice sleight-of-hand but that's just an accountancy trick. Prices are still higher than they would otherwise be with stable wages.
  - mikeyouse 5y ago
    Price isn't determined by input costs but by supply and demand..
    - simonh 5y ago
      That's a very naive take on the economic realities. Supply is very often determined by input costs. If it costs more to provide a product or service, supply drops driving up prices, which in turn can lead to a drop in demand. Depending on market elasticity, one common way the market gets out of this negative feedback loop is by compromising on quality in order to hold down prices. You can see this in the current economy as restaurants and packaged foods suppliers in some sectors reduce the size of portions.
wincy 5y ago
The cost of video cards didn't go up despite everyone getting $2000 checks! I mean, you can't actually buy one unless you want to wait in line at a Microcenter for three days, but they are still the same price.
jacobr1 5y ago
When you only raise it for a minority of a populace. While UBI is "universal" it gets clawed back via taxes for majority of populace. So prices really only raise for the products/services that are dominated by the marginal labor rates of those whose wages are net-increased. AFAIK, that is primarily the lower-end of the restaurant industry and the non-mechanized segments of agriculture (mainly squishy fruit/veg).
splistud 5y ago
In the world of 'repeated experiments' ostensibly. Perhaps some should go wreck that world's economy and leave ours alone.

I know my accounting degree is getting a little dusty but in what version of the world do you think you can "raise wages" while "costs of good sold" doesn't go up?

josephcsible 5y ago

I think GP is arguing that increasing someone's hourly rate will proportionally increase their work output per hour. (I don't believe this to be true.)

marcus_holmes 5y ago
https://s1.q4cdn.com/806093406/files/doc_downloads/2019/05/Productivity-Profits-and-Pay-A-Field-Experiment-Analyzing-the-Impacts-of-Compensation-Systems-in-an-Apparel-Factory-Dec-2018.pdf https://s1.q4cdn.com/806093406/files/doc_downloads/2019/05/P... it is in fact disproportionate, raising wages raising productivity by a greater amount. Given the evidence, do you now believe this to be true?

dtech 5y ago

When the supply of goods goes up too, the marginal cost of labour goes down or the percentace of product cost of labour is small. All of those become more and more true (and are already true for a large class of products) as mechanization and automation increases.

simonh 5y ago
Those things are happening anyway. They might reduce the magnitude of the effect, but prices will still go up as wages go up. Also as automation increases productivity, leading to a wealthier economy, workers move into service sectors which are labour intensive. You can't just say, well, just reduce the amount fo labour to keep costs down. That labour still needs to be employed doing something.

mikeyouse 5y ago

If wages become a smaller portion of COGS, then there’s no contradiction. Eg if you buy equipment to make the process more efficient, you can amortize that equipment into COGS and the labor component can remain flat or even decrease even with higher wages for staff.

simonh 5y ago
Or your competitor can invest in equipment just the same and keep wages flat, and beat you on price. So nice sleight-of-hand but that's just an accountancy trick. Prices are still higher than they would otherwise be with stable wages.
- mikeyouse 5y ago
  Price isn't determined by input costs but by supply and demand..
  - simonh 5y ago
    That's a very naive take on the economic realities. Supply is very often determined by input costs. If it costs more to provide a product or service, supply drops driving up prices, which in turn can lead to a drop in demand. Depending on market elasticity, one common way the market gets out of this negative feedback loop is by compromising on quality in order to hold down prices. You can see this in the current economy as restaurants and packaged foods suppliers in some sectors reduce the size of portions.

wincy 5y ago

The cost of video cards didn't go up despite everyone getting $2000 checks! I mean, you can't actually buy one unless you want to wait in line at a Microcenter for three days, but they are still the same price.

jacobr1 5y ago

When you only raise it for a minority of a populace. While UBI is "universal" it gets clawed back via taxes for majority of populace. So prices really only raise for the products/services that are dominated by the marginal labor rates of those whose wages are net-increased. AFAIK, that is primarily the lower-end of the restaurant industry and the non-mechanized segments of agriculture (mainly squishy fruit/veg).

splistud 5y ago

In the world of 'repeated experiments' ostensibly. Perhaps some should go wreck that world's economy and leave ours alone.