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It's indisputable that the two are happening -- the labor pool has shrunk, and real wages have shrunk too. And it is consistent with economic logic that greater
by Jeff_Brown 5y ago
It's indisputable that the two are happening -- the labor pool has shrunk, and real wages have shrunk too. And it is consistent with economic logic that greater business expenses will lead to inflation. But economic models also predict that scarce labor should lead labor to command higher wages. How those two effects net out is an empirical question -- no model can yet answer it definitively. (The models and the data are, however, both clear that freer immigration leads to greater total world output.)
Also inflation is driven by labor squeezes outside of the United States. (Freer immigration into the US would actually worsen that problem, but negligibly, since US immigration is on the order of 100K people annually out of a world total around 8B.)
- rsj_hn 5y agoIt's hard to tease out covid supply shocks, massive expansionary fiscal policy, and immigration. My bet is that that this is the order of importance, but I could be wrong. Honestly, I don't understand why we are debating another few trillion of stimulus right now. My preference would be to pay for new projects with matching taxes until inflation subsides. We don't need any more "job creating" projects at the moment.
- Jeff_Brown 5y agoThat all sounds right to me. Contemporaneously matching taxes would be a novelty. Good lord your comment history is enthralling.
- rsj_hn 5y agoThanks! Sometimes I spend too much time on this site :)