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Funny, central bankers advocating for wage price restraints are in effect calling for price controls (on labour). Except when anyone calls for price controls in

by jarym 3y ago

Funny, central bankers advocating for wage price restraints are in effect calling for price controls (on labour). Except when anyone calls for price controls in any other context (goods, commodities, services) they are generally shot down by mainstream economists because they create market distortions which eventually leads to unwanted side effects. Odd little disparity there.

legitster 3y ago
No where is he quoted advocating for wage controls. If anything his actual conversation is explaining why changes in wages do not impact inflation.
- jarym 3y ago
  Well he isn't directly but: > someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers. Coupled with prior remarks from the BoE governor: > In the sense of saying, we do need to see a moderation of wage rises, now that's painful. I don't want to in any sense sugar that, it is painful And add to that politicians using that (amongst other things) to deny pay rises for healthcare workers who've had a real-terms cut to wages of 25%+ over the past decade (when inflation was supposedly under control yet easy money was pumping risk assets like stocks). Together, it all paints a picture of: hey we can't control prices for food and energy, and because of inflation we have to increase taxes, and also we can't pay you more, oh and because we're going to support energy prices we will also have to tax you more. In totality, one should understand the frustration felt here is a culmination of the inequity that's been slowly building over a long time. I'm lucky, I'm relatively well off but I don't want to live in a system that screws (or at least appears to screw) the least-well off at every turn.
- justsee 3y ago
  Pill (BOE economist) is advocating for wage price restraints, which is what the parent observed. The parent then said it is in effect calling for price controls on labor, which is true. Pill is then recorded as saying wages do contribute to inflation: > "He said that firms and workers are in a “pass the parcel game” that’s causing more persistent price pressures, contributing to the UK’s main inflation rate remaining stuck in double digits." The final parent comment captures a very common line in corporate media messaging: which is that wages always need to be suppressed lest inflation rear its head, but corporate profits never should because that is market distortion and not related to inflation.
  - legitster 3y ago
    The full context of his interview: bloomberg.com/opinion/articles/2023-04-26/uk-inflation-boe-s-chief-economist-fails-find-the-right-words?leadSource=uverify%20wall > So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers. And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share, to try and pass that cost on to one of our compatriots. > That pass-the-parcel game is generating inflation and that part of inflation can persist. How much bargaining power and pricing power exists for different actors in the value chain in the corporate side and in the labor market? He is literally saying that corporations passing on energy costs is also causing inflation. Absolutely nowhere does he even advocate for policy intervention. Not only is everyone putting words in his mouth, it goes against his larger point that interventions on individual actors are meaningless.
MountainHoliday 3y ago
Central banks were designed to suppress wages. This is where we get the 0 to 3% target. It will erode wages and the thinking was not lead to layoffs and unemployment. When the elites meddle with the economy and peoples lives it's a good thing edit: There is a source for this, and quote by Janet Yellen, in a New York Times article discussing the modern theory on central bank governance if I can be bothered to find it
- HDThoreaun 3y ago
  Stop commenting about things you, at best, don't understand.
  - MountainHoliday 3y ago
    yea I guess everyone else on hackernews are experters on central banks and I shouldn't comment
whack 3y ago
> Pill’s words were more blunt in suggesting that workers must shoulder more of the burden. That puts the BOE in conflict with thousands of public sector workers angry at the government over its decision to restrain pay. When economists talk about market distortions, they are talking about free markets. One where there are many competing producers/consumers all of whom are trying to maximize profits, minimize costs, and compete against one another if someone is underpaying/overpaying. Pill's comments here seem to be directed at government workers, many of whom are also unionized. Wages for such workers are driven as much by politics as by free markets

by jarym 3y ago

legitster 3y ago

No where is he quoted advocating for wage controls. If anything his actual conversation is explaining why changes in wages do not impact inflation.

jarym 3y ago
Well he isn't directly but: > someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers. Coupled with prior remarks from the BoE governor: > In the sense of saying, we do need to see a moderation of wage rises, now that's painful. I don't want to in any sense sugar that, it is painful And add to that politicians using that (amongst other things) to deny pay rises for healthcare workers who've had a real-terms cut to wages of 25%+ over the past decade (when inflation was supposedly under control yet easy money was pumping risk assets like stocks). Together, it all paints a picture of: hey we can't control prices for food and energy, and because of inflation we have to increase taxes, and also we can't pay you more, oh and because we're going to support energy prices we will also have to tax you more. In totality, one should understand the frustration felt here is a culmination of the inequity that's been slowly building over a long time. I'm lucky, I'm relatively well off but I don't want to live in a system that screws (or at least appears to screw) the least-well off at every turn.
justsee 3y ago
Pill (BOE economist) is advocating for wage price restraints, which is what the parent observed. The parent then said it is in effect calling for price controls on labor, which is true. Pill is then recorded as saying wages do contribute to inflation: > "He said that firms and workers are in a “pass the parcel game” that’s causing more persistent price pressures, contributing to the UK’s main inflation rate remaining stuck in double digits." The final parent comment captures a very common line in corporate media messaging: which is that wages always need to be suppressed lest inflation rear its head, but corporate profits never should because that is market distortion and not related to inflation.
- legitster 3y ago
  The full context of his interview: bloomberg.com/opinion/articles/2023-04-26/uk-inflation-boe-s-chief-economist-fails-find-the-right-words?leadSource=uverify%20wall > So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers. And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share, to try and pass that cost on to one of our compatriots. > That pass-the-parcel game is generating inflation and that part of inflation can persist. How much bargaining power and pricing power exists for different actors in the value chain in the corporate side and in the labor market? He is literally saying that corporations passing on energy costs is also causing inflation. Absolutely nowhere does he even advocate for policy intervention. Not only is everyone putting words in his mouth, it goes against his larger point that interventions on individual actors are meaningless.

MountainHoliday 3y ago

Central banks were designed to suppress wages. This is where we get the 0 to 3% target. It will erode wages and the thinking was not lead to layoffs and unemployment. When the elites meddle with the economy and peoples lives it's a good thing edit: There is a source for this, and quote by Janet Yellen, in a New York Times article discussing the modern theory on central bank governance if I can be bothered to find it

HDThoreaun 3y ago
Stop commenting about things you, at best, don't understand.
- MountainHoliday 3y ago
  yea I guess everyone else on hackernews are experters on central banks and I shouldn't comment

whack 3y ago

> Pill’s words were more blunt in suggesting that workers must shoulder more of the burden. That puts the BOE in conflict with thousands of public sector workers angry at the government over its decision to restrain pay. When economists talk about market distortions, they are talking about free markets. One where there are many competing producers/consumers all of whom are trying to maximize profits, minimize costs, and compete against one another if someone is underpaying/overpaying. Pill's comments here seem to be directed at government workers, many of whom are also unionized. Wages for such workers are driven as much by politics as by free markets