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> suggesting that if wages are increased, prices will need to increase (...) fails to discuss if the chunky profit margin can be sacrificed without raising pric
by pedrosorio 5y ago
> suggesting that if wages are increased, prices will need to increase (...) fails to discuss if the chunky profit margin can be sacrificed without raising prices too
Even if companies were to choose to sacrifice the "chunky profit margin", wouldn't an increase in salaries (and therefore demand for consumption) lead to an increase in prices anyway?
- legulere 5y agoIn a lot of cases no: if the wage increases are eaten up by the energy price increases. If the wage increases go to the upper middle and upper class, which don’t know what their money on. If the demand goes into mass producible goods, where higher demand leads to lower prices.
- s1artibartfast 5y agoHigher demand only leads to cost reduction if goods are produced more cheaply with increased scale, which is not given. There is a point where diminishing returns bring saving at scale to 0
- simiones 5y agoOnly if supply is highly inelastic. Otherwise, increased demand can just mean increased supply at the same price point. Also, a lot of goods have their current price points because of price gouging and monopolistic practices. These can also be attacked, though that's a different matter.