True inflation is where everyone gets their wage increased... a reasonable minimum wage only increases inflation at the margin but the poor people r benefited more proportionally than inflation increased
It is irrational to Say inflation will cancel out a minimum wage increase
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@n8nrgmi
True inflation is where everyone gets their wage increased...
Sadly, raising wages doesn't restore consumer or investor confidence. Bare shelves mean whatever is left is unaffordable due to scarcity, regardless of how much you have. Maybe we can print money out of thin air, but we still have yet to figure out how to create goods out of thin air.
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@n8nrgmi
True inflation is where everyone gets their wage increased...
Substantiate.
a reasonable minimum wage only increases inflation at the margin
How have you come to this conclusion?
but the poor people r benefited more proportionally than inflation increased
Elaborate on the comparative benefits and drawbacks an increase in minimum wage has with respect to increased inflation.
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@Greyparrot
Sadly, raising wages doesn't restore consumer or investor confidence. Bare shelves mean whatever is left is unaffordable due to scarcity, regardless of how much you have. Maybe we can print money out of thin air, but we still have yet to figure out how to create goods out of thin air.
Well put. Just to add, the minimum wage not only penalizes low-skilled labor (i.e. makes it illegal to employ labor whose marginal productivity falls below the state-imposed price) but also, it adversely affects the productivity of the labor market, where the market as a whole loses money.
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@Athias
If everyone's wage were increased by ten percent the inflation would go up ten percent. If minimum were increased by ten percent then inflation might go up two percent. It would be illogical to say total inflation would go up ten percent in both of those situations. Thus a decent minimum would disproportionate help the poor and not be cancelled out by inflation
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@n8nrgmi
If minimum were increased by ten percent then inflation might go up two percent.
Wrong, it would be an equal amount. Prices reflect goods and services. Increasing labor costs is directly translated to the costs of goods and services. That 8% cost increase you reference does not magically disappear. Otherwise we could set the price of everyone's wage at one million dollars an hour and get an 8% discount on the expected price of goods and services.
Before you then say "then it has no good or bad effect on prices" since the costs are passed on in an equal ratio, what monkeying around with price controls does do is make investor markets very volatile as the investor can never predict long term price values on goods and services, leading to a severe drop in investor confidence and a descent into dilapidation.
Not to mention it directly devalues the savings of everyone as the value of the dollar is weakened, but almost everyone knows that effect of artificially raising prices and devaluing the dollar. Most people, especially young people don't have asset investments that can rise in value along with inflation. They usually have a cash savings account or a checking balance in a bank. All of that money loses value in a direct proportional rate to inflation.
Maybe we can print money out of thin air, but we still have yet to figure out how to create goods out of thin air.
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@Greyparrot
How r the effects on inflation different if everyone's wage were increased by ten percent versus if only the minimum were increased by ten percent? That's not clear in your theory
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@n8nrgmi
If your goal is to transfer wealth from productive workers to less productive workers, price fixing is one of the worst mechanisms to do that. A simple tax and spend policy wouldn't destroy investor confidence, financial markets or savings of low productivity workers and the price of the goods they supply.
Price fixing the wages of the poor mostly hurts the poor in various ways. Taxing the rich is the only way to keep the poor from having to directly suffer the bad financial effects of the destruction of the very industries they are qualified to work in.
387 days later
what say ye?