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> The idea of bringing down wages to tame inflation is rooted in the theory that if we reduce the costs of labor in the production process, firms won’t have to
by mschuster91 3y ago
> The idea of bringing down wages to tame inflation is rooted in the theory that if we reduce the costs of labor in the production process, firms won’t have to increase prices as much, and thus the rate of inflation would fall.
The root cause IMHO is that especially in the US there is barely any competition any more. No matter where you look, it's at most five to six different (multi)national megacorporations... and so they can extract many billions of dollars from the economy every month. Enshittification, just on macroeconomic scale.
- deleted 3y ago[deleted]
- mhuffman 3y agoCan you imagine a situation where the cost of labor suddenly came down and then the managers of a company telling the investors, "hey, looks like the cost of labor went down, which means the cost of all of our inputs went down, so I am just going to lower prices even though we already know the wtp price point, and you are going to get less profits!". Those managers would be fired that day, and replaced.