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The argument often used by governments is that pay rises drive inflation, so must be supressed in order to pull inflation back down. Problem is, that's not ent

The argument often used by governments is that pay rises drive inflation, so must be supressed in order to pull inflation back down. Problem is, that's not entirely true. The OECD[1] looked at whether workers, business or governments had contributed most to inflation, and the data revealed that in the UK at least, business profits were most to blame. If wages don't drive inflation, and profits do, you can lower inflation, increase quality of life and create a more equitable society by putting pressure on business to pay their staff more, and have smaller profits. Of course that won't happen, because we're now living in a dystopian Ayn Rand/Margaret Thatcher-inspired wet dream, so y'know, be safe out there and godspeed. [1] https://www.oecd-ilibrary.org/sites/ce188438-en/1/3/1/index.html?itemId=/content/publication/ce188438-en&_csp_=f8e326092da6dbbbef8fbfa1b8ad3d52&itemIGO=oecd&itemContentType=book#figure-d1e804-6539cc9538 https://www.oecd-ilibrary.org/sites/ce188438-en/1/3/1/index....

Dalewyn 3y ago
The problem with raising pay across the board is that it reduces the value of money. Everyone is making $15 more? Great! Now everything is $15 more expensive to make up for the loss in currency value; more money in circulation means each dollar and cent is worth less. This is then compounded because most business have no reason to not just offload the cost of increased pay onto the customers, who also got increased pay from their work. So by increasing pay, money and manhours both lose value while the value of goods stay the same. To be clear: Increasing pay is one of many levers that can be pulled to address inflation, but just increasing pay is not going to address inflation (and will likely make inflation worse).
- WD40forRust42 3y ago
  >The problem with raising pay across the board is that it reduces the value of money. No, printing more money to make more loans and bail out the crony financiers causes a reduction in money value.
Sankozi 3y ago
"If wages don't drive inflation" They do. "you can lower inflation, increase quality of life and create a more equitable society by putting pressure on business to pay their staff more, and have smaller profits" If profits are high, then it means that prices are too high. To reduce inflation you need to lower prices, not to redistribute profits from (too) high prices.
- PaulRobinson 3y ago
  Wage increases don't drive inflation. The data now clearly show this to be a myth. I think we can agree that profits being too high is a root cause of driving inflation, but disagree on how to address that. You want to redistribute profits into lower prices, I want to redistribute it to salaries and allow people to save more rather than borrow, because ultimately its borrowing money (which is in essence creating new money), that drives inflation.

Dalewyn 3y ago

The problem with raising pay across the board is that it reduces the value of money. Everyone is making $15 more? Great! Now everything is $15 more expensive to make up for the loss in currency value; more money in circulation means each dollar and cent is worth less. This is then compounded because most business have no reason to not just offload the cost of increased pay onto the customers, who also got increased pay from their work. So by increasing pay, money and manhours both lose value while the value of goods stay the same. To be clear: Increasing pay is one of many levers that can be pulled to address inflation, but just increasing pay is not going to address inflation (and will likely make inflation worse).

WD40forRust42 3y ago
>The problem with raising pay across the board is that it reduces the value of money. No, printing more money to make more loans and bail out the crony financiers causes a reduction in money value.

Sankozi 3y ago

"If wages don't drive inflation" They do. "you can lower inflation, increase quality of life and create a more equitable society by putting pressure on business to pay their staff more, and have smaller profits" If profits are high, then it means that prices are too high. To reduce inflation you need to lower prices, not to redistribute profits from (too) high prices.

PaulRobinson 3y ago
Wage increases don't drive inflation. The data now clearly show this to be a myth. I think we can agree that profits being too high is a root cause of driving inflation, but disagree on how to address that. You want to redistribute profits into lower prices, I want to redistribute it to salaries and allow people to save more rather than borrow, because ultimately its borrowing money (which is in essence creating new money), that drives inflation.