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Workers' savings become worthless through inflation. Voila! Wage slavery.

by danuker 12y ago

jjoonathan 12y ago
But savings != income. I can see the argument that eroding peoples' savings would eventually reduce their bargaining power, but on the graph the effect seems almost instantaneous.
- LanceH 12y ago
  Savings implies income if inflation doesn't eat it up (and then some).
leaveyou 12y ago
It kind of makes sense: In high inflation the savers subsidize the borrowers. Who tries to save is screwed and who borrows gets an advantage. The workers are usually net savers and the businesses & the investors are borrowers. edit: my mistake; When I said 'investors' I had in mind the people who buy shares with or invest borrowed capital..
- mtviewdave 12y ago
  >the investors are borrowers The investors are the lenders, not the borrowers. That's what the term "investor" means.
gesman 12y ago
Savings in money, yes. Savings in real estate - highly unlikely.
mtviewdave 12y ago
That's only true for savings in physical cash. Savings in an interest bearing instrument or account (which is where most workers actually keep their money) does not have this problem.
pjc50 12y ago
http://en.wikipedia.org/wiki/File:US-Inflation-by-year.png http://en.wikipedia.org/wiki/File:US-Inflation-by-year.png Doesn't really apply after 1980. In any case, workers typically don't hold large cash savings - what matters far more is the effect of inflation vs pay negotiations. The higher the inflation, the more frequently workers need pay rises and the larger they have to be. This makes the stakes higher and provokes strikes. This was a big driver of the UK industrial strife in the 70s. http://www.livingstandards.org/wp-content/uploads/2012/02/Decoupling-of-wages-and-productivity.pdf http://www.livingstandards.org/wp-content/uploads/2012/02/De... has a UK-US comparative study but only uses data from 1972 onwards, which doesn't help. It claims that runaway health costs are a big part of the equation, among other things. (I want to find some UK graphs covering the same time period to see whether they show the same effect, and for other non-Bretton Woods countries as well)
ChrisLomont 12y ago
>Workers' savings become worthless through inflation. Are your workers keeping their savings a hundred years? It takes about 21 years for inflation to cut the value of savings in half. Workers tend to have loans, such as car, house, college, etc. Inflation helps them by making their loans cost them less to make fixed payments on over time. Inflation costs lenders, not debtors. If a worker has substantial savings, then they should not hold it in cash, which has always been a terrible idea. Diversify, and invest in multiple classes of assets. Thus inflation is a net benefit to workers.

Workers' savings become worthless through inflation. Voila! Wage slavery.

by danuker 12y ago

Workers' savings become worthless through inflation. Voila! Wage slavery.

But savings != income. I can see the argument that eroding peoples' savings would eventually reduce their bargaining power, but on the graph the effect seems almost instantaneous.

LanceH 12y ago
Savings implies income if inflation doesn't eat it up (and then some).

leaveyou 12y ago

It kind of makes sense: In high inflation the savers subsidize the borrowers. Who tries to save is screwed and who borrows gets an advantage. The workers are usually net savers and the businesses & the investors are borrowers. edit: my mistake; When I said 'investors' I had in mind the people who buy shares with or invest borrowed capital..

mtviewdave 12y ago
>the investors are borrowers The investors are the lenders, not the borrowers. That's what the term "investor" means.

gesman 12y ago

Savings in money, yes. Savings in real estate - highly unlikely.

mtviewdave 12y ago

That's only true for savings in physical cash. Savings in an interest bearing instrument or account (which is where most workers actually keep their money) does not have this problem.

pjc50 12y ago

http://en.wikipedia.org/wiki/File:US-Inflation-by-year.png http://en.wikipedia.org/wiki/File:US-Inflation-by-year.png Doesn't really apply after 1980. In any case, workers typically don't hold large cash savings - what matters far more is the effect of inflation vs pay negotiations. The higher the inflation, the more frequently workers need pay rises and the larger they have to be. This makes the stakes higher and provokes strikes. This was a big driver of the UK industrial strife in the 70s. http://www.livingstandards.org/wp-content/uploads/2012/02/Decoupling-of-wages-and-productivity.pdf http://www.livingstandards.org/wp-content/uploads/2012/02/De... has a UK-US comparative study but only uses data from 1972 onwards, which doesn't help. It claims that runaway health costs are a big part of the equation, among other things. (I want to find some UK graphs covering the same time period to see whether they show the same effect, and for other non-Bretton Woods countries as well)

ChrisLomont 12y ago

>Workers' savings become worthless through inflation. Are your workers keeping their savings a hundred years? It takes about 21 years for inflation to cut the value of savings in half. Workers tend to have loans, such as car, house, college, etc. Inflation helps them by making their loans cost them less to make fixed payments on over time. Inflation costs lenders, not debtors. If a worker has substantial savings, then they should not hold it in cash, which has always been a terrible idea. Diversify, and invest in multiple classes of assets. Thus inflation is a net benefit to workers.