FabSwingers.com > Forums > Politics > When are wage rises good and when are they had?
When are wage rises good and when are they had?
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"A few months ago a high wage economy was a good thing. Now it is a bad thing. Do pay rises only "cause inflation" when it's convenient for the Government? Also, is it only pay rises for those who are not wealthy that cause a problem? Why is Downing Street keen to remove any pay restraint on company directors? It's terribly confusing..." If wages go up to much multi nationals operating in the uk could sue the government under ftp rules or they may just set up somewhere the wages are low. | |||
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"There are many Basic Economics books that cover this topic. I have read the one written by Thomas Sowell which I thoroughly recommend. It's hard to explain this in a single post. But I will do my best. Inflation happens when the goods/services produced by a country does not meet the demand within the country. Here demand usually means cash/buying power of the people. So inflation can have two causes obviously - Demand going up because of lot of cash running through the economy. Low interest rates or government just printing money and giving away can cause this. The other cause is goods/services output of the country going down. During covid, both happened. Supply went down because of lockdowns. We weren't producing as much goods/services as before. At the same time, government was still paying money for everyone. Not saying it's bad. It was necessary at that point. But inflation is inevitable when you do that. And just when covid was over, the Ukraine war happened which resulted in further shortage of supply leading to goods/services reduction. Put covid and the war together, we have unprecedented inflation which is happening now. Obviously government has to increase interest rate to reduce money in circulation as a temporary measure. High wages good or bad? Back to the goods/services produced vs buying power of people. High wages are good if there is a corresponding increase in goods/services produced. You achieve that by getting people to work in jobs which are of high demand. This increases output of the country that matches with the buying power. Everyone in the country is better off. Instead if you artificially inflate wages for jobs which are not in demand, you are increasing buying power without increasing output of the country. Keep doing this and you are in for another round of inflation. " You obviously read a lot,but I'm not sure that you really grasped or answered the question. Yes, inflation is caused when demand exceeds supply and/or a combination of the two. However, this imbalance can have different reasons and impacts for different goods and services. The effect is not uniform even though we use a single number. During COVID there was inflation due to excess discretionary demand (buying online treats) and reduced supply due to transport limitations (plus our Brexit bonus in that sector). Some, but not excessive increases, but felt most in basic foods. Since lockdown ended we have had labour shortages which increase wages as demand for staff exceed supply. This was hailed by Government and many on hear as a good thing but added to demand driven inflation. Fuel and food scarcity due to Ukraine has been the biggest driver of further inflation. Especially as these basic inputs increase prices of all other goods. Inflation is consequently being driven by supply costs of basics which people cannot reduce or substitute. Without pay rises they will reduce other spending which squeezes the rest of the economy. The poor have no discretionary spending to reduce. They need a pay rise to survive. Public sector staff and the low paid have had below inflation pay for over a decade so have been becoming poorer for a long time. There are far more people on below average wages because income is skewed so much to the wealthiest. Under these circumstances productivity is completely irrelevant, especially as many low wage jobs such as social care and cleaning are insensitive to automation and process improvements. All organisations have been improving productivity for centuries with relatively little passed to workers. So, the question still stands as to why a few months ago wage rises causing inflation were good, but not now? Also, why do above inflation pension increases not cause inflation? Also, why does removing limits on already well above inflation pay rises for directors not cause inflation? | |||
" You obviously read a lot,but I'm not sure that you really grasped or answered the question. " I answered the question on why wage rise in one scenario is considered good but the same in another scenario is considered bad. Not sure why you find it hard to understand. " However, this imbalance can have different reasons and impacts for different goods and services. The effect is not uniform even though we use a single number. " Agreed. But usually basic necessities like food, transport and fuel play a major role in inflation. " During COVID there was inflation due to excess discretionary demand (buying online treats) and reduced supply due to transport limitations (plus our Brexit bonus in that sector). Some, but not excessive increases, but felt most in basic foods. " On what basis are you claiming that excess demand happened because people were buying online treats? People were buying online what they were usually buying in person. " Since lockdown ended we have had labour shortages which increase wages as demand for staff exceed supply. This was hailed by Government and many on hear as a good thing but added to demand driven inflation. " If a job is in demand, the wages will rise. As wages rise, more people will look to gain skills for that job. Eventually the supply will make up for the demand and the wages will reach a more moderate level. People pay higher when there is shortage and it is corrected when the salary stabilises. This happens all the time in all sectors at a micro level. " Fuel and food scarcity due to Ukraine has been the biggest driver of further inflation. Especially as these basic inputs increase prices of all other goods. Inflation is consequently being driven by supply costs of basics which people cannot reduce or substitute. Without pay rises they will reduce other spending which squeezes the rest of the economy. The poor have no discretionary spending to reduce. They need a pay rise to survive. " But by giving pay rises, you are increasing the price of goods for the job they are working on. " Public sector staff and the low paid have had below inflation pay for over a decade so have been becoming poorer for a long time. There are far more people on below average wages because income is skewed so much to the wealthiest. Under these circumstances productivity is completely irrelevant, especially as many low wage jobs such as social care and cleaning are insensitive to automation and process improvements " This is the problem of government run industries. In a free market, a "fair salary" is based on supply and demand. In a government controlled economy, a "fair salary" is based on the whims of politicians. I agree that healthcare workers salary must be increased. It would be much higher in a free market economy. But as a country, we decided to go with nationalised healthcare and this is a negative trade off to that. The sector will be run inefficiently. The salaries will not make sense. But we are willing to take the hit because we want free healthcare for everyone. " All organisations have been improving productivity for centuries with relatively little passed to workers. " A lot has been passed on to people. Not just workers. People in 80s and 90s were scared that population increase will result in famines and hunger deaths. Here we are in a time where one of the biggest problems in most developed countries is obesity. Most people have mobile phones and things which were considered luxuries in the past. Standards of living has increased throughout the world and all statistics point to that. " So, the question still stands as to why a few months ago wage rises causing inflation were good, but not now? Also, why do above inflation pension increases not cause inflation? Also, why does removing limits on already well above inflation pay rises for directors not cause inflation?" Back to square one - Supply/demand. Ukraine issue means we are short of fuel. Increase in prices communicates to the people that there is a shortage of resources and nudges people towards using it judiciously. Increasing wages to compensate for the problem will not solve the root cause. But it will make it even worse because you are increasing buying power in a market which is already suffering from shortage of supply whereas demand driven wages are different. Salaries are ways for the economy to tell people what jobs are more important and we really need. It nudges people towards this job. After sometime, this will result in more people trying for that job and wages will go down. The wages will settle at exactly the point where if it goes further lower people will just find it unworthy. Demand based wage rise is actually fixing a problem. Randomly increasing wages is not fixing the problem. It only makes it worse. About directors, as I said, public sector workers salaries are always based on whims of politicians. One of the many reasons why socialist economies fuck up eventually. | |||
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" You obviously read a lot,but I'm not sure that you really grasped or answered the question. I answered the question on why wage rise in one scenario is considered good but the same in another scenario is considered bad. Not sure why you find it hard to understand. However, this imbalance can have different reasons and impacts for different goods and services. The effect is not uniform even though we use a single number. Agreed. But usually basic necessities like food, transport and fuel play a major role in inflation. During COVID there was inflation due to excess discretionary demand (buying online treats) and reduced supply due to transport limitations (plus our Brexit bonus in that sector). Some, but not excessive increases, but felt most in basic foods. On what basis are you claiming that excess demand happened because people were buying online treats? People were buying online what they were usually buying in person. Since lockdown ended we have had labour shortages which increase wages as demand for staff exceed supply. This was hailed by Government and many on hear as a good thing but added to demand driven inflation. If a job is in demand, the wages will rise. As wages rise, more people will look to gain skills for that job. Eventually the supply will make up for the demand and the wages will reach a more moderate level. People pay higher when there is shortage and it is corrected when the salary stabilises. This happens all the time in all sectors at a micro level. Fuel and food scarcity due to Ukraine has been the biggest driver of further inflation. Especially as these basic inputs increase prices of all other goods. Inflation is consequently being driven by supply costs of basics which people cannot reduce or substitute. Without pay rises they will reduce other spending which squeezes the rest of the economy. The poor have no discretionary spending to reduce. They need a pay rise to survive. But by giving pay rises, you are increasing the price of goods for the job they are working on. Public sector staff and the low paid have had below inflation pay for over a decade so have been becoming poorer for a long time. There are far more people on below average wages because income is skewed so much to the wealthiest. Under these circumstances productivity is completely irrelevant, especially as many low wage jobs such as social care and cleaning are insensitive to automation and process improvements This is the problem of government run industries. In a free market, a "fair salary" is based on supply and demand. In a government controlled economy, a "fair salary" is based on the whims of politicians. I agree that healthcare workers salary must be increased. It would be much higher in a free market economy. But as a country, we decided to go with nationalised healthcare and this is a negative trade off to that. The sector will be run inefficiently. The salaries will not make sense. But we are willing to take the hit because we want free healthcare for everyone. All organisations have been improving productivity for centuries with relatively little passed to workers. A lot has been passed on to people. Not just workers. People in 80s and 90s were scared that population increase will result in famines and hunger deaths. Here we are in a time where one of the biggest problems in most developed countries is obesity. Most people have mobile phones and things which were considered luxuries in the past. Standards of living has increased throughout the world and all statistics point to that. So, the question still stands as to why a few months ago wage rises causing inflation were good, but not now? Also, why do above inflation pension increases not cause inflation? Also, why does removing limits on already well above inflation pay rises for directors not cause inflation? Back to square one - Supply/demand. Ukraine issue means we are short of fuel. Increase in prices communicates to the people that there is a shortage of resources and nudges people towards using it judiciously. Increasing wages to compensate for the problem will not solve the root cause. But it will make it even worse because you are increasing buying power in a market which is already suffering from shortage of supply whereas demand driven wages are different. Salaries are ways for the economy to tell people what jobs are more important and we really need. It nudges people towards this job. After sometime, this will result in more people trying for that job and wages will go down. The wages will settle at exactly the point where if it goes further lower people will just find it unworthy. Demand based wage rise is actually fixing a problem. Randomly increasing wages is not fixing the problem. It only makes it worse. About directors, as I said, public sector workers salaries are always based on whims of politicians. One of the many reasons why socialist economies fuck up eventually. " No. As usual, you have not. You have answered your own version of the question. I have no problem in understanding what I wrote or you missing the point. Apart from anything else your "answer" was for an economically isolated economy and obsessed with "productivity". The question was why a few months ago with no rising productivity and rising wages and rising inflation the situation was good, but now it is not. The purchasing profile changed significantly with more consumer durables being purchased during lockdown and fewer clothes. Food costs rose due to transport bottlenecks (supply). What you identified as having a major role in inflation. Supply is not matching demand in the labour market. That is not being debated. The mechanism of rising wages is clear but the scenario since the end of lockdown has been the definition of rising wages with no increase in productivity. Yet you seem to be claiming that this was not inflationary. Supply constraints are causing price rises of food and fuel, but there is an adequate supply to meet all needs. There is no excess. People are just having to pay for them with more of their income and buy less of other goods and services. Increasing wages to pay for basic costs which have risen significantly more than average inflation does not automatically lead to the increase in the cost of anything. It just allows for basics to be paid for. Especially for the poorest. Discretionary spending will still fall. Standards of living have risen throughout the world. However, the increase in wealth of the richest have grown at a significantly higher rate. That is also well documented and exactly what the phrase "RELATIVELY little passed to workers" means. Not starving is certainly a benefit, but obesity is driven due to lack of access to good quality foods at affordable prices and poor exercise rates. Neither are a consequence of increased wealth. Documented too. Mobile phones were a "luxury". They are now very cheap and enable commerce and trade in a manner that did not exist previously. They pay for themselves just like any judicious business investment. Demand based wage rises do not fix a problem if there is no increase in labour supply. They are not being "randomly" increased. They are being increased to meet the cost of living rising. You have said that wage rises without increases in productivity and labour supply did not cause inflation before but wage rises now to meet supply driven cost rises do cause inflation. You don't address why above inflation rises in pensions do not increase inflation. You haven't actually said why increased director pay will not increase inflation now whereas it will for anyone else. Are the Police and Armed forces unnecessary? Judges? Civil servants? Fire service? Ambulance? Teachers? Just based on your ability to pay? Medical health does not carry a wider social good in your opinion, I understand, so pandemic treatment and vaccination would be better handled by the private sector based on your ability to pay? The arguement for that would all be intriguing,bit for a different thread. Whims of politicians or not, the public sector has become significantly poorer and you think that they should do so again to help fight inflation? You have just regurgitated some theoretical information from text book without application to the specific case. | |||
" No. As usual, you have not. You have answered your own version of the question. I have no problem in understanding what I wrote or you missing the point. " As usual, you have failed to understand or you are acting like you don't understand because it goes against your political views. " Apart from anything else your "answer" was for an economically isolated economy and obsessed with "productivity". " Productivity is what decides the standard of live. If you have huge population and less productivity, the society will inevitably suffer. You can't provide a good standard of living without productivity. " The question was why a few months ago with no rising productivity and rising wages and rising inflation the situation was good, but now it is not. " No. Your question was why rising wage on one sector of economy was good while the other was not good. The answer is one was driven by supply demand and the other was not. " The purchasing profile changed significantly with more consumer durables being purchased during lockdown and fewer clothes. " But you claimed these purchases as "online treats". I don't think the durables belong to that category. " Food costs rose due to transport bottlenecks (supply). What you identified as having a major role in inflation. Supply is not matching demand in the labour market. That is not being debated. The mechanism of rising wages is clear but the scenario since the end of lockdown has been the definition of rising wages with no increase in productivity. Yet you seem to be claiming that this was not inflationary. Supply constraints are causing price rises of food and fuel, but there is an adequate supply to meet all needs. There is no excess. People are just having to pay for them with more of their income and buy less of other goods and services. " Raising wages without productivity? You did see that the economy was rebounding after lockdown right? Wages rose for jobs which were short of supply, more people trained for it and started taking them. The the war happened which sent us back reeling. How exactly are you claiming that there is adequate supply to meet all needs? The prices rose simply because there isn't adequate supply of fuel. " Increasing wages to pay for basic costs which have risen significantly more than average inflation does not automatically lead to the increase in the cost of anything. It just allows for basics to be paid for. Especially for the poorest. Discretionary spending will still fall. " This statement goes against every economy theory out there. You have low supply and high demand and you are saying that increasing demand by pumping in more money doesn't result in increasing inflation? Many countries have tried it and failed miserably. Look at Sri Lanka. " Standards of living have risen throughout the world. However, the increase in wealth of the richest have grown at a significantly higher rate. That is also well documented and exactly what the phrase "RELATIVELY little passed to workers" means. " Why does someone getting rich bother you if it comes along with the increase in standard of living for everyone. Looks more like jealousy than anything else to me. I don't when this "relatively little passed on to workers " became well documented. Every statistic out there shows even the poorest in today's world are in a much better position than the poorest a few decades back. " Not starving is certainly a benefit, but obesity is driven due to lack of access to good quality foods at affordable prices and poor exercise rates. Neither are a consequence of increased wealth. Documented too. " Not documented. One can easily get healthy food for cheap too. You make some really big claims and just running away saying that they are "well documented". Are you saying that lack of exercise is not connected with increasing wealth? Everything from a vacuum cleaner to mixers have reduced our need to do physical work and most people have access to them. It definitely plays a role in obesity. " Mobile phones were a "luxury". They are now very cheap and enable commerce and trade in a manner that did not exist previously. They pay for themselves just like any judicious business investment. " The fact that mobile phone became cheap itself is good for everyone. You complained that workers haven't gained much out of supply demand based pricing and wages. The fact that workers can access lot of products which used to be considered luxurious is itself a good thing for them. " Demand based wage rises do not fix a problem if there is no increase in labour supply. They are not being "randomly" increased. They are being increased to meet the cost of living rising. " But labour supply did increase after wages increased. " You don't address why above inflation rises in pensions do not increase inflation. " I never claimed above inflation rises in pensions are a good thing. " You haven't actually said why increased director pay will not increase inflation now whereas it will for anyone else. " I said that increase in director pay for public sector job is a bad thing. Whereas increase in wages in private sector due to supply/demand is a good thing. " Are the Police and Armed forces unnecessary? Judges? Civil servants? Fire service? Ambulance? Teachers? Just based on your ability to pay? Medical health does not carry a wider social good in your opinion, I understand, so pandemic treatment and vaccination would be better handled by the private sector based on your ability to pay? " You seem to be making an argument against something I did not say. I never said that government run services are bad. Government run services are inefficient. But services like health, police, ambulance are something which we can't deny for someone based on how much money they can buy with. So it makes moral sense to have them run by the government. But one must understand that there will be trade offs. Workers being underpaid, long queues etc. There are some free market proponents who argue that it's better to keep health services private and use UBI as means of social welfare. But that's a totally different debate and not something I have made up my mind on. | |||
" No. As usual, you have not. You have answered your own version of the question. I have no problem in understanding what I wrote or you missing the point. As usual, you have failed to understand or you are acting like you don't understand because it goes against your political views. Apart from anything else your "answer" was for an economically isolated economy and obsessed with "productivity". Productivity is what decides the standard of live. If you have huge population and less productivity, the society will inevitably suffer. You can't provide a good standard of living without productivity. The question was why a few months ago with no rising productivity and rising wages and rising inflation the situation was good, but now it is not. No. Your question was why rising wage on one sector of economy was good while the other was not good. The answer is one was driven by supply demand and the other was not. The purchasing profile changed significantly with more consumer durables being purchased during lockdown and fewer clothes. But you claimed these purchases as "online treats". I don't think the durables belong to that category. Food costs rose due to transport bottlenecks (supply). What you identified as having a major role in inflation. Supply is not matching demand in the labour market. That is not being debated. The mechanism of rising wages is clear but the scenario since the end of lockdown has been the definition of rising wages with no increase in productivity. Yet you seem to be claiming that this was not inflationary. Supply constraints are causing price rises of food and fuel, but there is an adequate supply to meet all needs. There is no excess. People are just having to pay for them with more of their income and buy less of other goods and services. Raising wages without productivity? You did see that the economy was rebounding after lockdown right? Wages rose for jobs which were short of supply, more people trained for it and started taking them. The the war happened which sent us back reeling. How exactly are you claiming that there is adequate supply to meet all needs? The prices rose simply because there isn't adequate supply of fuel. Increasing wages to pay for basic costs which have risen significantly more than average inflation does not automatically lead to the increase in the cost of anything. It just allows for basics to be paid for. Especially for the poorest. Discretionary spending will still fall. This statement goes against every economy theory out there. You have low supply and high demand and you are saying that increasing demand by pumping in more money doesn't result in increasing inflation? Many countries have tried it and failed miserably. Look at Sri Lanka. Standards of living have risen throughout the world. However, the increase in wealth of the richest have grown at a significantly higher rate. That is also well documented and exactly what the phrase "RELATIVELY little passed to workers" means. Why does someone getting rich bother you if it comes along with the increase in standard of living for everyone. Looks more like jealousy than anything else to me. I don't when this "relatively little passed on to workers " became well documented. Every statistic out there shows even the poorest in today's world are in a much better position than the poorest a few decades back. Not starving is certainly a benefit, but obesity is driven due to lack of access to good quality foods at affordable prices and poor exercise rates. Neither are a consequence of increased wealth. Documented too. Not documented. One can easily get healthy food for cheap too. You make some really big claims and just running away saying that they are "well documented". Are you saying that lack of exercise is not connected with increasing wealth? Everything from a vacuum cleaner to mixers have reduced our need to do physical work and most people have access to them. It definitely plays a role in obesity. Mobile phones were a "luxury". They are now very cheap and enable commerce and trade in a manner that did not exist previously. They pay for themselves just like any judicious business investment. The fact that mobile phone became cheap itself is good for everyone. You complained that workers haven't gained much out of supply demand based pricing and wages. The fact that workers can access lot of products which used to be considered luxurious is itself a good thing for them. Demand based wage rises do not fix a problem if there is no increase in labour supply. They are not being "randomly" increased. They are being increased to meet the cost of living rising. But labour supply did increase after wages increased. You don't address why above inflation rises in pensions do not increase inflation. I never claimed above inflation rises in pensions are a good thing. You haven't actually said why increased director pay will not increase inflation now whereas it will for anyone else. I said that increase in director pay for public sector job is a bad thing. Whereas increase in wages in private sector due to supply/demand is a good thing. Are the Police and Armed forces unnecessary? Judges? Civil servants? Fire service? Ambulance? Teachers? Just based on your ability to pay? Medical health does not carry a wider social good in your opinion, I understand, so pandemic treatment and vaccination would be better handled by the private sector based on your ability to pay? You seem to be making an argument against something I did not say. I never said that government run services are bad. Government run services are inefficient. But services like health, police, ambulance are something which we can't deny for someone based on how much money they can buy with. So it makes moral sense to have them run by the government. But one must understand that there will be trade offs. Workers being underpaid, long queues etc. There are some free market proponents who argue that it's better to keep health services private and use UBI as means of social welfare. But that's a totally different debate and not something I have made up my mind on. " Nothing to do with political views. You simply have not answered. Productivity is irrelevant when inflation is being driven by a supply shortage of basic goods which cannot be substituted. Once a cleaner is working without breaks and at minimum wage they cannot be "more productive". Perhaps you should read the question? It is written at the top of the thread. Why claim that it asks anything other than what it says? I did describe them as treat which may have been partially misleading. Strictly speaking I was referring to discretionary spending. A TV replacing a functioning TV or some random piece of technology or exercise bike is both a treat and a consumer durable. Not a necessity or spending as usual. Spending profiles changed significantly. Largely irrelevant to the topic in hand though. Of course the economy was recovering after lockdown. Did you notice that inflation has been growing at a very high rate since then too? Ukraine has caused a particular spike in certain items to which we are particularly sensitive. Nobody anywhere is going without fuel if they can pay for it. There is a difference between supply not being available and it being restricted or reduced. The economic crisis in Sri Lanka is not being created by increasing the money supply. It's being created by government debt defaults and a lack of foreign currency to import fuel and fertilisers and medicines. Spending on white elephant vanity projects for political gain funded by debt. This discussion is about pay. Why are you claiming that I don't want the rich to get richer? I'm delighted for them to. I also happen to think that those who generate should become wealthier at the same rate so that more benefit and have the opportunity to enjoy the benefits of their hard work rather than those simply taking profit adding more to their already impossible to spend wealth. Not sure why this would appear controversial. Again, you need to get your head around the meaning of the word "relative" to understand the point being made. From the ONS: "Income inequality remains close to record highs over the 10-year period leading up to FYE 2020; however, income inequality across the whole population was lower than levels reported during the economic downturn of FYE 2008 (38.6%). While income inequality for people in retired households was stable over the five years leading up to FYE 2020, levels remained at near historical highs following a 4.2 percentage point increase between FYE 2010 and FYE 2016. The gap between the richest in society and the rest of the population has widened over the 10-year period; the income share of the richest 1% increased from 7% to 8.2% between FYE 2011 and FYE 2020." No public sector workers should get pay rises or only managers? Why would pay rises for private sector directors not effect inflation but the pay of workers would and should be restrained? That is what was being considered by Government. Why should directors take more credit for the success of a company and raise their incomes at a higher rate than those delivering? Not just once, but over years, even if company profits have fallen? Again, irrelevant to the topic but an intriguing insight into where you believe value is generated. The market makes provision based on ability to pay. That is all. Yet it also requires a functioning society too. The people who are needed to make that provision have every right to have their standard of living to rise at the same rate as the rest of society, but you appear to think otherwise. It would seem that they should become poorer both in good and bad times. It simply isn't possible to state that the public sector always provides goods and services inefficiently. Neither the health sector or rail sector indicate this to be true if you look at neutral studies. Again, not pertinent to this thread. You seem to be able to write "the statistics point to that". Not anyone else? 
Why don't you start with the Broken Plate Food Report and go from there for documentation?
Of course cheap, low quality food is a cause of obesity.
Labour supply absolutely has not increased since the end of the pandemic and Brexit. Exactly the opposite has happened. Where are you getting that idea from?
Exactly. You did not and still have not addressed why pensioners should receive above inflation pay rises whilst those working (except for already well paid private sector directors) should not.
Your ability to read my mind to interpret the "real" meaning of what I have written never ceases to amaze me. | |||
" No. As usual, you have not. You have answered your own version of the question. I have no problem in understanding what I wrote or you missing the point. As usual, you have failed to understand or you are acting like you don't understand because it goes against your political views. Apart from anything else your "answer" was for an economically isolated economy and obsessed with "productivity". Productivity is what decides the standard of live. If you have huge population and less productivity, the society will inevitably suffer. You can't provide a good standard of living without productivity. The question was why a few months ago with no rising productivity and rising wages and rising inflation the situation was good, but now it is not. No. Your question was why rising wage on one sector of economy was good while the other was not good. The answer is one was driven by supply demand and the other was not. The purchasing profile changed significantly with more consumer durables being purchased during lockdown and fewer clothes. But you claimed these purchases as "online treats". I don't think the durables belong to that category. Food costs rose due to transport bottlenecks (supply). What you identified as having a major role in inflation. Supply is not matching demand in the labour market. That is not being debated. The mechanism of rising wages is clear but the scenario since the end of lockdown has been the definition of rising wages with no increase in productivity. Yet you seem to be claiming that this was not inflationary. Supply constraints are causing price rises of food and fuel, but there is an adequate supply to meet all needs. There is no excess. People are just having to pay for them with more of their income and buy less of other goods and services. Raising wages without productivity? You did see that the economy was rebounding after lockdown right? Wages rose for jobs which were short of supply, more people trained for it and started taking them. The the war happened which sent us back reeling. How exactly are you claiming that there is adequate supply to meet all needs? The prices rose simply because there isn't adequate supply of fuel. Increasing wages to pay for basic costs which have risen significantly more than average inflation does not automatically lead to the increase in the cost of anything. It just allows for basics to be paid for. Especially for the poorest. Discretionary spending will still fall. This statement goes against every economy theory out there. You have low supply and high demand and you are saying that increasing demand by pumping in more money doesn't result in increasing inflation? Many countries have tried it and failed miserably. Look at Sri Lanka. Standards of living have risen throughout the world. However, the increase in wealth of the richest have grown at a significantly higher rate. That is also well documented and exactly what the phrase "RELATIVELY little passed to workers" means. Why does someone getting rich bother you if it comes along with the increase in standard of living for everyone. Looks more like jealousy than anything else to me. I don't when this "relatively little passed on to workers " became well documented. Every statistic out there shows even the poorest in today's world are in a much better position than the poorest a few decades back. Not starving is certainly a benefit, but obesity is driven due to lack of access to good quality foods at affordable prices and poor exercise rates. Neither are a consequence of increased wealth. Documented too. Not documented. One can easily get healthy food for cheap too. You make some really big claims and just running away saying that they are "well documented". Are you saying that lack of exercise is not connected with increasing wealth? Everything from a vacuum cleaner to mixers have reduced our need to do physical work and most people have access to them. It definitely plays a role in obesity. Mobile phones were a "luxury". They are now very cheap and enable commerce and trade in a manner that did not exist previously. They pay for themselves just like any judicious business investment. The fact that mobile phone became cheap itself is good for everyone. You complained that workers haven't gained much out of supply demand based pricing and wages. The fact that workers can access lot of products which used to be considered luxurious is itself a good thing for them. Demand based wage rises do not fix a problem if there is no increase in labour supply. They are not being "randomly" increased. They are being increased to meet the cost of living rising. But labour supply did increase after wages increased. You don't address why above inflation rises in pensions do not increase inflation. I never claimed above inflation rises in pensions are a good thing. You haven't actually said why increased director pay will not increase inflation now whereas it will for anyone else. I said that increase in director pay for public sector job is a bad thing. Whereas increase in wages in private sector due to supply/demand is a good thing. Are the Police and Armed forces unnecessary? Judges? Civil servants? Fire service? Ambulance? Teachers? Just based on your ability to pay? Medical health does not carry a wider social good in your opinion, I understand, so pandemic treatment and vaccination would be better handled by the private sector based on your ability to pay? You seem to be making an argument against something I did not say. I never said that government run services are bad. Government run services are inefficient. But services like health, police, ambulance are something which we can't deny for someone based on how much money they can buy with. So it makes moral sense to have them run by the government. But one must understand that there will be trade offs. Workers being underpaid, long queues etc. There are some free market proponents who argue that it's better to keep health services private and use UBI as means of social welfare. But that's a totally different debate and not something I have made up my mind on. Nothing to do with political views. You simply have not answered. Productivity is irrelevant when inflation is being driven by a supply shortage of basic goods which cannot be substituted. Once a cleaner is working without breaks and at minimum wage they cannot be "more productive". Perhaps you should read the question? It is written at the top of the thread. Why claim that it asks anything other than what it says? I did describe them as treat which may have been partially misleading. Strictly speaking I was referring to discretionary spending. A TV replacing a functioning TV or some random piece of technology or exercise bike is both a treat and a consumer durable. Not a necessity or spending as usual. Spending profiles changed significantly. Largely irrelevant to the topic in hand though. Of course the economy was recovering after lockdown. Did you notice that inflation has been growing at a very high rate since then too? Ukraine has caused a particular spike in certain items to which we are particularly sensitive. Nobody anywhere is going without fuel if they can pay for it. There is a difference between supply not being available and it being restricted or reduced. The economic crisis in Sri Lanka is not being created by increasing the money supply. It's being created by government debt defaults and a lack of foreign currency to import fuel and fertilisers and medicines. Spending on white elephant vanity projects for political gain funded by debt. This discussion is about pay. Why are you claiming that I don't want the rich to get richer? I'm delighted for them to. I also happen to think that those who generate should become wealthier at the same rate so that more benefit and have the opportunity to enjoy the benefits of their hard work rather than those simply taking profit adding more to their already impossible to spend wealth. Not sure why this would appear controversial. Again, you need to get your head around the meaning of the word "relative" to understand the point being made. From the ONS: "Income inequality remains close to record highs over the 10-year period leading up to FYE 2020; however, income inequality across the whole population was lower than levels reported during the economic downturn of FYE 2008 (38.6%). While income inequality for people in retired households was stable over the five years leading up to FYE 2020, levels remained at near historical highs following a 4.2 percentage point increase between FYE 2010 and FYE 2016. The gap between the richest in society and the rest of the population has widened over the 10-year period; the income share of the richest 1% increased from 7% to 8.2% between FYE 2011 and FYE 2020." No public sector workers should get pay rises or only managers? Why would pay rises for private sector directors not effect inflation but the pay of workers would and should be restrained? That is what was being considered by Government. Why should directors take more credit for the success of a company and raise their incomes at a higher rate than those delivering? Not just once, but over years, even if company profits have fallen? Again, irrelevant to the topic but an intriguing insight into where you believe value is generated. The market makes provision based on ability to pay. That is all. Yet it also requires a functioning society too. The people who are needed to make that provision have every right to have their standard of living to rise at the same rate as the rest of society, but you appear to think otherwise. It would seem that they should become poorer both in good and bad times. It simply isn't possible to state that the public sector always provides goods and services inefficiently. Neither the health sector or rail sector indicate this to be true if you look at neutral studies. Again, not pertinent to this thread. You seem to be able to write "the statistics point to that". Not anyone else?
Why don't you start with the Broken Plate Food Report and go from there for documentation?
Of course cheap, low quality food is a cause of obesity.
Labour supply absolutely has not increased since the end of the pandemic and Brexit. Exactly the opposite has happened. Where are you getting that idea from?
Exactly. You did not and still have not addressed why pensioners should receive above inflation pay rises whilst those working (except for already well paid private sector directors) should not.
Your ability to read my mind to interpret the "real" meaning of what I have written never ceases to amaze me."In the private sector, if a job reaches a stage where the person feels the salary is not good enough, it's upto the person to reskill and find another job. There are no two ways to it. Your first line in the post was about how the government said a high wage economy was good a few months back. At that time, the high wages were because of supply demand. I think I didn't claim anything wrong. How is an exercise or a durable TV really a treat? For most people during lockdown, these are important for both physical and mental health. Economy was recovering but it never reached pre covid levels. So inflation was bound to go up due to impact of covid. Supply of fuel is much lower than what it was before. Prices signal this to the people and makes people reduce the consumption. People who use fuel more lavishly normally will have to reduce its usage. That's how you tackle supply problem. Not by pumping more money. As for rich people, money making is not just about the amount of "work" put in. One of the biggest difference between wealthy and others is risk taking ability and being smart enough to understand the market. For every rich person who you see, there are thousands who tried to do the same and fell down flat on the face. It is important that they keep taking the risks so that others can get a job and people get more and better products that make their lives better. That's how capitalism has progressed the world. My point is income inequality doesn't matter. As long as standard of living keeps increasing even for people in lowest income section, why does income inequality matter? Some people made lot more money than others. So what? Resources are limited and zero sum. But wealth is not zero sum. You can check the gapminder website or the book named "Factfulness" where they break all economic myths and provide a better view of world. I have to repeat myself here. Because private job salaries are based on supply/demand. A job really high in demand will have high salaries - more people take up the job - salary reduces again and reaches a reasonable rate. The consumers get the goods in the best price because of this. Public sector job salaries are decided by whims of politicians and hence you never know what's right salary and what's not. Everyone will have his own view on what a "fair pay" is. The broken food plate report is interesting. I will dig deeper. But either way, the starvation situation a few decades back was much worse than the obesity situation we have now. Unhealthy food being relatively cheaper doesn't mean healthy food is inaccessible. Anyway, I leave it here for now. As mentioned in my first post, this is topic that's really hard to be explained on a fab post. Economics books are huge for a reason. Nice debating with you  | |||
" No. As usual, you have not. You have answered your own version of the question. I have no problem in understanding what I wrote or you missing the point. As usual, you have failed to understand or you are acting like you don't understand because it goes against your political views. Apart from anything else your "answer" was for an economically isolated economy and obsessed with "productivity". Productivity is what decides the standard of live. If you have huge population and less productivity, the society will inevitably suffer. You can't provide a good standard of living without productivity. The question was why a few months ago with no rising productivity and rising wages and rising inflation the situation was good, but now it is not. No. Your question was why rising wage on one sector of economy was good while the other was not good. The answer is one was driven by supply demand and the other was not. The purchasing profile changed significantly with more consumer durables being purchased during lockdown and fewer clothes. But you claimed these purchases as "online treats". I don't think the durables belong to that category. Food costs rose due to transport bottlenecks (supply). What you identified as having a major role in inflation. Supply is not matching demand in the labour market. That is not being debated. The mechanism of rising wages is clear but the scenario since the end of lockdown has been the definition of rising wages with no increase in productivity. Yet you seem to be claiming that this was not inflationary. Supply constraints are causing price rises of food and fuel, but there is an adequate supply to meet all needs. There is no excess. People are just having to pay for them with more of their income and buy less of other goods and services. Raising wages without productivity? You did see that the economy was rebounding after lockdown right? Wages rose for jobs which were short of supply, more people trained for it and started taking them. The the war happened which sent us back reeling. How exactly are you claiming that there is adequate supply to meet all needs? The prices rose simply because there isn't adequate supply of fuel. Increasing wages to pay for basic costs which have risen significantly more than average inflation does not automatically lead to the increase in the cost of anything. It just allows for basics to be paid for. Especially for the poorest. Discretionary spending will still fall. This statement goes against every economy theory out there. You have low supply and high demand and you are saying that increasing demand by pumping in more money doesn't result in increasing inflation? Many countries have tried it and failed miserably. Look at Sri Lanka. Standards of living have risen throughout the world. However, the increase in wealth of the richest have grown at a significantly higher rate. That is also well documented and exactly what the phrase "RELATIVELY little passed to workers" means. Why does someone getting rich bother you if it comes along with the increase in standard of living for everyone. Looks more like jealousy than anything else to me. I don't when this "relatively little passed on to workers " became well documented. Every statistic out there shows even the poorest in today's world are in a much better position than the poorest a few decades back. Not starving is certainly a benefit, but obesity is driven due to lack of access to good quality foods at affordable prices and poor exercise rates. Neither are a consequence of increased wealth. Documented too. Not documented. One can easily get healthy food for cheap too. You make some really big claims and just running away saying that they are "well documented". Are you saying that lack of exercise is not connected with increasing wealth? Everything from a vacuum cleaner to mixers have reduced our need to do physical work and most people have access to them. It definitely plays a role in obesity. Mobile phones were a "luxury". They are now very cheap and enable commerce and trade in a manner that did not exist previously. They pay for themselves just like any judicious business investment. The fact that mobile phone became cheap itself is good for everyone. You complained that workers haven't gained much out of supply demand based pricing and wages. The fact that workers can access lot of products which used to be considered luxurious is itself a good thing for them. Demand based wage rises do not fix a problem if there is no increase in labour supply. They are not being "randomly" increased. They are being increased to meet the cost of living rising. But labour supply did increase after wages increased. You don't address why above inflation rises in pensions do not increase inflation. I never claimed above inflation rises in pensions are a good thing. You haven't actually said why increased director pay will not increase inflation now whereas it will for anyone else. I said that increase in director pay for public sector job is a bad thing. Whereas increase in wages in private sector due to supply/demand is a good thing. Are the Police and Armed forces unnecessary? Judges? Civil servants? Fire service? Ambulance? Teachers? Just based on your ability to pay? Medical health does not carry a wider social good in your opinion, I understand, so pandemic treatment and vaccination would be better handled by the private sector based on your ability to pay? You seem to be making an argument against something I did not say. I never said that government run services are bad. Government run services are inefficient. But services like health, police, ambulance are something which we can't deny for someone based on how much money they can buy with. So it makes moral sense to have them run by the government. But one must understand that there will be trade offs. Workers being underpaid, long queues etc. There are some free market proponents who argue that it's better to keep health services private and use UBI as means of social welfare. But that's a totally different debate and not something I have made up my mind on. Nothing to do with political views. You simply have not answered. Productivity is irrelevant when inflation is being driven by a supply shortage of basic goods which cannot be substituted. Once a cleaner is working without breaks and at minimum wage they cannot be "more productive". Perhaps you should read the question? It is written at the top of the thread. Why claim that it asks anything other than what it says? I did describe them as treat which may have been partially misleading. Strictly speaking I was referring to discretionary spending. A TV replacing a functioning TV or some random piece of technology or exercise bike is both a treat and a consumer durable. Not a necessity or spending as usual. Spending profiles changed significantly. Largely irrelevant to the topic in hand though. Of course the economy was recovering after lockdown. Did you notice that inflation has been growing at a very high rate since then too? Ukraine has caused a particular spike in certain items to which we are particularly sensitive. Nobody anywhere is going without fuel if they can pay for it. There is a difference between supply not being available and it being restricted or reduced. The economic crisis in Sri Lanka is not being created by increasing the money supply. It's being created by government debt defaults and a lack of foreign currency to import fuel and fertilisers and medicines. Spending on white elephant vanity projects for political gain funded by debt. This discussion is about pay. Why are you claiming that I don't want the rich to get richer? I'm delighted for them to. I also happen to think that those who generate should become wealthier at the same rate so that more benefit and have the opportunity to enjoy the benefits of their hard work rather than those simply taking profit adding more to their already impossible to spend wealth. Not sure why this would appear controversial. Again, you need to get your head around the meaning of the word "relative" to understand the point being made. From the ONS: "Income inequality remains close to record highs over the 10-year period leading up to FYE 2020; however, income inequality across the whole population was lower than levels reported during the economic downturn of FYE 2008 (38.6%). While income inequality for people in retired households was stable over the five years leading up to FYE 2020, levels remained at near historical highs following a 4.2 percentage point increase between FYE 2010 and FYE 2016. The gap between the richest in society and the rest of the population has widened over the 10-year period; the income share of the richest 1% increased from 7% to 8.2% between FYE 2011 and FYE 2020." No public sector workers should get pay rises or only managers? Why would pay rises for private sector directors not effect inflation but the pay of workers would and should be restrained? That is what was being considered by Government. Why should directors take more credit for the success of a company and raise their incomes at a higher rate than those delivering? Not just once, but over years, even if company profits have fallen? Again, irrelevant to the topic but an intriguing insight into where you believe value is generated. The market makes provision based on ability to pay. That is all. Yet it also requires a functioning society too. The people who are needed to make that provision have every right to have their standard of living to rise at the same rate as the rest of society, but you appear to think otherwise. It would seem that they should become poorer both in good and bad times. It simply isn't possible to state that the public sector always provides goods and services inefficiently. Neither the health sector or rail sector indicate this to be true if you look at neutral studies. Again, not pertinent to this thread. You seem to be able to write "the statistics point to that". Not anyone else?
Why don't you start with the Broken Plate Food Report and go from there for documentation?
Of course cheap, low quality food is a cause of obesity.
Labour supply absolutely has not increased since the end of the pandemic and Brexit. Exactly the opposite has happened. Where are you getting that idea from?
Exactly. You did not and still have not addressed why pensioners should receive above inflation pay rises whilst those working (except for already well paid private sector directors) should not.
Your ability to read my mind to interpret the "real" meaning of what I have written never ceases to amaze me.
In the private sector, if a job reaches a stage where the person feels the salary is not good enough, it's upto the person to reskill and find another job. There are no two ways to it.
Your first line in the post was about how the government said a high wage economy was good a few months back. At that time, the high wages were because of supply demand. I think I didn't claim anything wrong.
How is an exercise or a durable TV really a treat? For most people during lockdown, these are important for both physical and mental health.
Economy was recovering but it never reached pre covid levels. So inflation was bound to go up due to impact of covid.
Supply of fuel is much lower than what it was before. Prices signal this to the people and makes people reduce the consumption. People who use fuel more lavishly normally will have to reduce its usage. That's how you tackle supply problem. Not by pumping more money.
As for rich people, money making is not just about the amount of "work" put in. One of the biggest difference between wealthy and others is risk taking ability and being smart enough to understand the market. For every rich person who you see, there are thousands who tried to do the same and fell down flat on the face. It is important that they keep taking the risks so that others can get a job and people get more and better products that make their lives better. That's how capitalism has progressed the world.
My point is income inequality doesn't matter. As long as standard of living keeps increasing even for people in lowest income section, why does income inequality matter? Some people made lot more money than others. So what? Resources are limited and zero sum. But wealth is not zero sum.
You can check the gapminder website or the book named "Factfulness" where they break all economic myths and provide a better view of world.
I have to repeat myself here.
Because private job salaries are based on supply/demand. A job really high in demand will have high salaries - more people take up the job - salary reduces again and reaches a reasonable rate. The consumers get the goods in the best price because of this. Public sector job salaries are decided by whims of politicians and hence you never know what's right salary and what's not. Everyone will have his own view on what a "fair pay" is.
The broken food plate report is interesting. I will dig deeper. But either way, the starvation situation a few decades back was much worse than the obesity situation we have now. Unhealthy food being relatively cheaper doesn't mean healthy food is inaccessible.
Anyway, I leave it here for now. As mentioned in my first post, this is topic that's really hard to be explained on a fab post. Economics books are huge for a reason. Nice debating with you "Of course you'll "leave it here for now" because you not only misunderstood the question but you decided to give a lecture on something that you appear to have a tenuous understanding of but insist that you are correct. You have then ended with yet another lecture which addresses none of the points that are difficult to address. There is a shortage of labour. Wages will go up because there is a need that is not being satisfied and people can move jobs. That generates inflation. That has been happening since lockdown ended but was apparently something to celebrate. There is a shortage of public sector staff bit no mechanism to attract them because pay is falling in real terms. You are happy with that. Discretionary spending on buying a bigger TV was not "necessary". It was desired but with a COVID supply shortage it caused... inflation. As seen in the data. Yes, inflation rises in a growing economy. Not at the rates seen when there was celebration about wage inflation. A CEO or director of a listed company is an employee. They take no risk. You are plain wrong. Wealth IS zero sum. If it accrues to the top at a higher rate than to those at the bottom then you end up with people on salaries running companies who have no concept of how staff or customers live and think. That is stupid from a business perspective let alone a social one. If you do not understand the problems of social inequality then you need to do a lot more reading. That is completely independent of general wealth and prosperity rising which is a good thing and completely independent. "Factfulness" is something that you need to understand better. A good book if you understand it and worth looking up the TED talks by Hans Rosling on how not to be ignorant about the world. Increasing salaries increases demand which creates inflation if not met by supply. The same now as a few months ago. The topic of the thread. | |||
" No. As usual, you have not. You have answered your own version of the question. I have no problem in understanding what I wrote or you missing the point. As usual, you have failed to understand or you are acting like you don't understand because it goes against your political views. Apart from anything else your "answer" was for an economically isolated economy and obsessed with "productivity". Productivity is what decides the standard of live. If you have huge population and less productivity, the society will inevitably suffer. You can't provide a good standard of living without productivity. The question was why a few months ago with no rising productivity and rising wages and rising inflation the situation was good, but now it is not. No. Your question was why rising wage on one sector of economy was good while the other was not good. The answer is one was driven by supply demand and the other was not. The purchasing profile changed significantly with more consumer durables being purchased during lockdown and fewer clothes. But you claimed these purchases as "online treats". I don't think the durables belong to that category. Food costs rose due to transport bottlenecks (supply). What you identified as having a major role in inflation. Supply is not matching demand in the labour market. That is not being debated. The mechanism of rising wages is clear but the scenario since the end of lockdown has been the definition of rising wages with no increase in productivity. Yet you seem to be claiming that this was not inflationary. Supply constraints are causing price rises of food and fuel, but there is an adequate supply to meet all needs. There is no excess. People are just having to pay for them with more of their income and buy less of other goods and services. Raising wages without productivity? You did see that the economy was rebounding after lockdown right? Wages rose for jobs which were short of supply, more people trained for it and started taking them. The the war happened which sent us back reeling. How exactly are you claiming that there is adequate supply to meet all needs? The prices rose simply because there isn't adequate supply of fuel. Increasing wages to pay for basic costs which have risen significantly more than average inflation does not automatically lead to the increase in the cost of anything. It just allows for basics to be paid for. Especially for the poorest. Discretionary spending will still fall. This statement goes against every economy theory out there. You have low supply and high demand and you are saying that increasing demand by pumping in more money doesn't result in increasing inflation? Many countries have tried it and failed miserably. Look at Sri Lanka. Standards of living have risen throughout the world. However, the increase in wealth of the richest have grown at a significantly higher rate. That is also well documented and exactly what the phrase "RELATIVELY little passed to workers" means. Why does someone getting rich bother you if it comes along with the increase in standard of living for everyone. Looks more like jealousy than anything else to me. I don't when this "relatively little passed on to workers " became well documented. Every statistic out there shows even the poorest in today's world are in a much better position than the poorest a few decades back. Not starving is certainly a benefit, but obesity is driven due to lack of access to good quality foods at affordable prices and poor exercise rates. Neither are a consequence of increased wealth. Documented too. Not documented. One can easily get healthy food for cheap too. You make some really big claims and just running away saying that they are "well documented". Are you saying that lack of exercise is not connected with increasing wealth? Everything from a vacuum cleaner to mixers have reduced our need to do physical work and most people have access to them. It definitely plays a role in obesity. Mobile phones were a "luxury". They are now very cheap and enable commerce and trade in a manner that did not exist previously. They pay for themselves just like any judicious business investment. The fact that mobile phone became cheap itself is good for everyone. You complained that workers haven't gained much out of supply demand based pricing and wages. The fact that workers can access lot of products which used to be considered luxurious is itself a good thing for them. Demand based wage rises do not fix a problem if there is no increase in labour supply. They are not being "randomly" increased. They are being increased to meet the cost of living rising. But labour supply did increase after wages increased. You don't address why above inflation rises in pensions do not increase inflation. I never claimed above inflation rises in pensions are a good thing. You haven't actually said why increased director pay will not increase inflation now whereas it will for anyone else. I said that increase in director pay for public sector job is a bad thing. Whereas increase in wages in private sector due to supply/demand is a good thing. Are the Police and Armed forces unnecessary? Judges? Civil servants? Fire service? Ambulance? Teachers? Just based on your ability to pay? Medical health does not carry a wider social good in your opinion, I understand, so pandemic treatment and vaccination would be better handled by the private sector based on your ability to pay? You seem to be making an argument against something I did not say. I never said that government run services are bad. Government run services are inefficient. But services like health, police, ambulance are something which we can't deny for someone based on how much money they can buy with. So it makes moral sense to have them run by the government. But one must understand that there will be trade offs. Workers being underpaid, long queues etc. There are some free market proponents who argue that it's better to keep health services private and use UBI as means of social welfare. But that's a totally different debate and not something I have made up my mind on. Nothing to do with political views. You simply have not answered. Productivity is irrelevant when inflation is being driven by a supply shortage of basic goods which cannot be substituted. Once a cleaner is working without breaks and at minimum wage they cannot be "more productive". Perhaps you should read the question? It is written at the top of the thread. Why claim that it asks anything other than what it says? I did describe them as treat which may have been partially misleading. Strictly speaking I was referring to discretionary spending. A TV replacing a functioning TV or some random piece of technology or exercise bike is both a treat and a consumer durable. Not a necessity or spending as usual. Spending profiles changed significantly. Largely irrelevant to the topic in hand though. Of course the economy was recovering after lockdown. Did you notice that inflation has been growing at a very high rate since then too? Ukraine has caused a particular spike in certain items to which we are particularly sensitive. Nobody anywhere is going without fuel if they can pay for it. There is a difference between supply not being available and it being restricted or reduced. The economic crisis in Sri Lanka is not being created by increasing the money supply. It's being created by government debt defaults and a lack of foreign currency to import fuel and fertilisers and medicines. Spending on white elephant vanity projects for political gain funded by debt. This discussion is about pay. Why are you claiming that I don't want the rich to get richer? I'm delighted for them to. I also happen to think that those who generate should become wealthier at the same rate so that more benefit and have the opportunity to enjoy the benefits of their hard work rather than those simply taking profit adding more to their already impossible to spend wealth. Not sure why this would appear controversial. Again, you need to get your head around the meaning of the word "relative" to understand the point being made. From the ONS: "Income inequality remains close to record highs over the 10-year period leading up to FYE 2020; however, income inequality across the whole population was lower than levels reported during the economic downturn of FYE 2008 (38.6%). While income inequality for people in retired households was stable over the five years leading up to FYE 2020, levels remained at near historical highs following a 4.2 percentage point increase between FYE 2010 and FYE 2016. The gap between the richest in society and the rest of the population has widened over the 10-year period; the income share of the richest 1% increased from 7% to 8.2% between FYE 2011 and FYE 2020." No public sector workers should get pay rises or only managers? Why would pay rises for private sector directors not effect inflation but the pay of workers would and should be restrained? That is what was being considered by Government. Why should directors take more credit for the success of a company and raise their incomes at a higher rate than those delivering? Not just once, but over years, even if company profits have fallen? Again, irrelevant to the topic but an intriguing insight into where you believe value is generated. The market makes provision based on ability to pay. That is all. Yet it also requires a functioning society too. The people who are needed to make that provision have every right to have their standard of living to rise at the same rate as the rest of society, but you appear to think otherwise. It would seem that they should become poorer both in good and bad times. It simply isn't possible to state that the public sector always provides goods and services inefficiently. Neither the health sector or rail sector indicate this to be true if you look at neutral studies. Again, not pertinent to this thread. You seem to be able to write "the statistics point to that". Not anyone else?
Why don't you start with the Broken Plate Food Report and go from there for documentation?
Of course cheap, low quality food is a cause of obesity.
Labour supply absolutely has not increased since the end of the pandemic and Brexit. Exactly the opposite has happened. Where are you getting that idea from?
Exactly. You did not and still have not addressed why pensioners should receive above inflation pay rises whilst those working (except for already well paid private sector directors) should not.
Your ability to read my mind to interpret the "real" meaning of what I have written never ceases to amaze me.
In the private sector, if a job reaches a stage where the person feels the salary is not good enough, it's upto the person to reskill and find another job. There are no two ways to it.
Your first line in the post was about how the government said a high wage economy was good a few months back. At that time, the high wages were because of supply demand. I think I didn't claim anything wrong.
How is an exercise or a durable TV really a treat? For most people during lockdown, these are important for both physical and mental health.
Economy was recovering but it never reached pre covid levels. So inflation was bound to go up due to impact of covid.
Supply of fuel is much lower than what it was before. Prices signal this to the people and makes people reduce the consumption. People who use fuel more lavishly normally will have to reduce its usage. That's how you tackle supply problem. Not by pumping more money.
As for rich people, money making is not just about the amount of "work" put in. One of the biggest difference between wealthy and others is risk taking ability and being smart enough to understand the market. For every rich person who you see, there are thousands who tried to do the same and fell down flat on the face. It is important that they keep taking the risks so that others can get a job and people get more and better products that make their lives better. That's how capitalism has progressed the world.
My point is income inequality doesn't matter. As long as standard of living keeps increasing even for people in lowest income section, why does income inequality matter? Some people made lot more money than others. So what? Resources are limited and zero sum. But wealth is not zero sum.
You can check the gapminder website or the book named "Factfulness" where they break all economic myths and provide a better view of world.
I have to repeat myself here.
Because private job salaries are based on supply/demand. A job really high in demand will have high salaries - more people take up the job - salary reduces again and reaches a reasonable rate. The consumers get the goods in the best price because of this. Public sector job salaries are decided by whims of politicians and hence you never know what's right salary and what's not. Everyone will have his own view on what a "fair pay" is.
The broken food plate report is interesting. I will dig deeper. But either way, the starvation situation a few decades back was much worse than the obesity situation we have now. Unhealthy food being relatively cheaper doesn't mean healthy food is inaccessible.
Anyway, I leave it here for now. As mentioned in my first post, this is topic that's really hard to be explained on a fab post. Economics books are huge for a reason. Nice debating with you "It’s a pointless waste of time to ‘debate’ with someone who is always right in his own mind and unwilling to engage when other points are forwarded. Strange , verging on being a Troll with a profile name that suggests a piss take. Time to lighten up perhaps and focus on getting laid, this is a swingers website after all. Sadly though I suspect some just can’t lighten up due to a complete lack of any sense of humour. | |||
" No. As usual, you have not. You have answered your own version of the question. I have no problem in understanding what I wrote or you missing the point. As usual, you have failed to understand or you are acting like you don't understand because it goes against your political views. Apart from anything else your "answer" was for an economically isolated economy and obsessed with "productivity". Productivity is what decides the standard of live. If you have huge population and less productivity, the society will inevitably suffer. You can't provide a good standard of living without productivity. The question was why a few months ago with no rising productivity and rising wages and rising inflation the situation was good, but now it is not. No. Your question was why rising wage on one sector of economy was good while the other was not good. The answer is one was driven by supply demand and the other was not. The purchasing profile changed significantly with more consumer durables being purchased during lockdown and fewer clothes. But you claimed these purchases as "online treats". I don't think the durables belong to that category. Food costs rose due to transport bottlenecks (supply). What you identified as having a major role in inflation. Supply is not matching demand in the labour market. That is not being debated. The mechanism of rising wages is clear but the scenario since the end of lockdown has been the definition of rising wages with no increase in productivity. Yet you seem to be claiming that this was not inflationary. Supply constraints are causing price rises of food and fuel, but there is an adequate supply to meet all needs. There is no excess. People are just having to pay for them with more of their income and buy less of other goods and services. Raising wages without productivity? You did see that the economy was rebounding after lockdown right? Wages rose for jobs which were short of supply, more people trained for it and started taking them. The the war happened which sent us back reeling. How exactly are you claiming that there is adequate supply to meet all needs? The prices rose simply because there isn't adequate supply of fuel. Increasing wages to pay for basic costs which have risen significantly more than average inflation does not automatically lead to the increase in the cost of anything. It just allows for basics to be paid for. Especially for the poorest. Discretionary spending will still fall. This statement goes against every economy theory out there. You have low supply and high demand and you are saying that increasing demand by pumping in more money doesn't result in increasing inflation? Many countries have tried it and failed miserably. Look at Sri Lanka. Standards of living have risen throughout the world. However, the increase in wealth of the richest have grown at a significantly higher rate. That is also well documented and exactly what the phrase "RELATIVELY little passed to workers" means. Why does someone getting rich bother you if it comes along with the increase in standard of living for everyone. Looks more like jealousy than anything else to me. I don't when this "relatively little passed on to workers " became well documented. Every statistic out there shows even the poorest in today's world are in a much better position than the poorest a few decades back. Not starving is certainly a benefit, but obesity is driven due to lack of access to good quality foods at affordable prices and poor exercise rates. Neither are a consequence of increased wealth. Documented too. Not documented. One can easily get healthy food for cheap too. You make some really big claims and just running away saying that they are "well documented". Are you saying that lack of exercise is not connected with increasing wealth? Everything from a vacuum cleaner to mixers have reduced our need to do physical work and most people have access to them. It definitely plays a role in obesity. Mobile phones were a "luxury". They are now very cheap and enable commerce and trade in a manner that did not exist previously. They pay for themselves just like any judicious business investment. The fact that mobile phone became cheap itself is good for everyone. You complained that workers haven't gained much out of supply demand based pricing and wages. The fact that workers can access lot of products which used to be considered luxurious is itself a good thing for them. Demand based wage rises do not fix a problem if there is no increase in labour supply. They are not being "randomly" increased. They are being increased to meet the cost of living rising. But labour supply did increase after wages increased. You don't address why above inflation rises in pensions do not increase inflation. I never claimed above inflation rises in pensions are a good thing. You haven't actually said why increased director pay will not increase inflation now whereas it will for anyone else. I said that increase in director pay for public sector job is a bad thing. Whereas increase in wages in private sector due to supply/demand is a good thing. Are the Police and Armed forces unnecessary? Judges? Civil servants? Fire service? Ambulance? Teachers? Just based on your ability to pay? Medical health does not carry a wider social good in your opinion, I understand, so pandemic treatment and vaccination would be better handled by the private sector based on your ability to pay? You seem to be making an argument against something I did not say. I never said that government run services are bad. Government run services are inefficient. But services like health, police, ambulance are something which we can't deny for someone based on how much money they can buy with. So it makes moral sense to have them run by the government. But one must understand that there will be trade offs. Workers being underpaid, long queues etc. There are some free market proponents who argue that it's better to keep health services private and use UBI as means of social welfare. But that's a totally different debate and not something I have made up my mind on. Nothing to do with political views. You simply have not answered. Productivity is irrelevant when inflation is being driven by a supply shortage of basic goods which cannot be substituted. Once a cleaner is working without breaks and at minimum wage they cannot be "more productive". Perhaps you should read the question? It is written at the top of the thread. Why claim that it asks anything other than what it says? I did describe them as treat which may have been partially misleading. Strictly speaking I was referring to discretionary spending. A TV replacing a functioning TV or some random piece of technology or exercise bike is both a treat and a consumer durable. Not a necessity or spending as usual. Spending profiles changed significantly. Largely irrelevant to the topic in hand though. Of course the economy was recovering after lockdown. Did you notice that inflation has been growing at a very high rate since then too? Ukraine has caused a particular spike in certain items to which we are particularly sensitive. Nobody anywhere is going without fuel if they can pay for it. There is a difference between supply not being available and it being restricted or reduced. The economic crisis in Sri Lanka is not being created by increasing the money supply. It's being created by government debt defaults and a lack of foreign currency to import fuel and fertilisers and medicines. Spending on white elephant vanity projects for political gain funded by debt. This discussion is about pay. Why are you claiming that I don't want the rich to get richer? I'm delighted for them to. I also happen to think that those who generate should become wealthier at the same rate so that more benefit and have the opportunity to enjoy the benefits of their hard work rather than those simply taking profit adding more to their already impossible to spend wealth. Not sure why this would appear controversial. Again, you need to get your head around the meaning of the word "relative" to understand the point being made. From the ONS: "Income inequality remains close to record highs over the 10-year period leading up to FYE 2020; however, income inequality across the whole population was lower than levels reported during the economic downturn of FYE 2008 (38.6%). While income inequality for people in retired households was stable over the five years leading up to FYE 2020, levels remained at near historical highs following a 4.2 percentage point increase between FYE 2010 and FYE 2016. The gap between the richest in society and the rest of the population has widened over the 10-year period; the income share of the richest 1% increased from 7% to 8.2% between FYE 2011 and FYE 2020." No public sector workers should get pay rises or only managers? Why would pay rises for private sector directors not effect inflation but the pay of workers would and should be restrained? That is what was being considered by Government. Why should directors take more credit for the success of a company and raise their incomes at a higher rate than those delivering? Not just once, but over years, even if company profits have fallen? Again, irrelevant to the topic but an intriguing insight into where you believe value is generated. The market makes provision based on ability to pay. That is all. Yet it also requires a functioning society too. The people who are needed to make that provision have every right to have their standard of living to rise at the same rate as the rest of society, but you appear to think otherwise. It would seem that they should become poorer both in good and bad times. It simply isn't possible to state that the public sector always provides goods and services inefficiently. Neither the health sector or rail sector indicate this to be true if you look at neutral studies. Again, not pertinent to this thread. You seem to be able to write "the statistics point to that". Not anyone else?
Why don't you start with the Broken Plate Food Report and go from there for documentation?
Of course cheap, low quality food is a cause of obesity.
Labour supply absolutely has not increased since the end of the pandemic and Brexit. Exactly the opposite has happened. Where are you getting that idea from?
Exactly. You did not and still have not addressed why pensioners should receive above inflation pay rises whilst those working (except for already well paid private sector directors) should not.
Your ability to read my mind to interpret the "real" meaning of what I have written never ceases to amaze me.
In the private sector, if a job reaches a stage where the person feels the salary is not good enough, it's upto the person to reskill and find another job. There are no two ways to it.
Your first line in the post was about how the government said a high wage economy was good a few months back. At that time, the high wages were because of supply demand. I think I didn't claim anything wrong.
How is an exercise or a durable TV really a treat? For most people during lockdown, these are important for both physical and mental health.
Economy was recovering but it never reached pre covid levels. So inflation was bound to go up due to impact of covid.
Supply of fuel is much lower than what it was before. Prices signal this to the people and makes people reduce the consumption. People who use fuel more lavishly normally will have to reduce its usage. That's how you tackle supply problem. Not by pumping more money.
As for rich people, money making is not just about the amount of "work" put in. One of the biggest difference between wealthy and others is risk taking ability and being smart enough to understand the market. For every rich person who you see, there are thousands who tried to do the same and fell down flat on the face. It is important that they keep taking the risks so that others can get a job and people get more and better products that make their lives better. That's how capitalism has progressed the world.
My point is income inequality doesn't matter. As long as standard of living keeps increasing even for people in lowest income section, why does income inequality matter? Some people made lot more money than others. So what? Resources are limited and zero sum. But wealth is not zero sum.
You can check the gapminder website or the book named "Factfulness" where they break all economic myths and provide a better view of world.
I have to repeat myself here.
Because private job salaries are based on supply/demand. A job really high in demand will have high salaries - more people take up the job - salary reduces again and reaches a reasonable rate. The consumers get the goods in the best price because of this. Public sector job salaries are decided by whims of politicians and hence you never know what's right salary and what's not. Everyone will have his own view on what a "fair pay" is.
The broken food plate report is interesting. I will dig deeper. But either way, the starvation situation a few decades back was much worse than the obesity situation we have now. Unhealthy food being relatively cheaper doesn't mean healthy food is inaccessible.
Anyway, I leave it here for now. As mentioned in my first post, this is topic that's really hard to be explained on a fab post. Economics books are huge for a reason. Nice debating with you
It’s a pointless waste of time to ‘debate’ with someone who is always right in his own mind and unwilling to engage when other points are forwarded. Strange , verging on being a Troll with a profile name that suggests a piss take.
Time to lighten up perhaps and focus on getting laid, this is a swingers website after all. Sadly though I suspect some just can’t lighten up due to a complete lack of any sense of humour. "Ah, you are going to "lighten up" by following me around on various threads to criticise me for calling you out for nasty comments that you consider "amusing". Knock yourself out  | |||
"A few months ago a high wage economy was a good thing. Now it is a bad thing. Do pay rises only "cause inflation" when it's convenient for the Government? Also, is it only pay rises for those who are not wealthy that cause a problem? Why is Downing Street keen to remove any pay restraint on company directors? It's terribly confusing..." Interesting question, my view is there are those who have and those who have not, I do not see that as fair, so certain sectors are testing the government by withdrawing labour. The government then divides opinion by saying inflation will rise, and lives will be disrupted. what I find that under a conservative government, after they are out of power, there is a mountain of personal debt that the poor have to pay back, through loans, payday loans, loan sharks. I then find that poor people cannot afford gas or electric, so eat fast food or cheap supermarket food that can be microwaved. it is a scandal, and this was pointed out by the train strike leader, his words to effect was that we should the public support them because if they lose it will be bad for workers who are being paid under the 30k level bad for us all with that knock on effect. So what do you think this is all about OP? | |||
"A few months ago a high wage economy was a good thing. Now it is a bad thing. Do pay rises only "cause inflation" when it's convenient for the Government? Also, is it only pay rises for those who are not wealthy that cause a problem? Why is Downing Street keen to remove any pay restraint on company directors? It's terribly confusing... Interesting question, my view is there are those who have and those who have not, I do not see that as fair, so certain sectors are testing the government by withdrawing labour. The government then divides opinion by saying inflation will rise, and lives will be disrupted. what I find that under a conservative government, after they are out of power, there is a mountain of personal debt that the poor have to pay back, through loans, payday loans, loan sharks. I then find that poor people cannot afford gas or electric, so eat fast food or cheap supermarket food that can be microwaved. it is a scandal, and this was pointed out by the train strike leader, his words to effect was that we should the public support them because if they lose it will be bad for workers who are being paid under the 30k level bad for us all with that knock on effect. So what do you think this is all about OP?" Thank you for addressing the actual point. It would appear to be pure politics. It is, apparently, never a good time for the less well paid or public employees to have a pay rise but always a good time for the wealthy or those who vote for them (pensioners). Wage rises were no more or less inflationary a few months ago than they are now, it's just become more apparent with spikes in areas where we have no purchasing choice like fuel and basic foods. A more rational discussion might help. We do all need to reduce demand to bring down inflation, but we want to minimise the chance of this causing a recession. The Bank of England has a very blunt instrument in interest rates. We could start by doing what Japan has and asking the population to use less fuel/power. Perhaps even ration? We could also work out how much will actually be needed to cover cost of basics and ensure that is published as the basis of a basic pay increase. An absolute figure rather than a percentage. Rolls Royce engines just did something like this. Companies should then be encouraged to award percentage pay rises heavily biased towards the poorly paid. Perhaps top tax bracket salaries get nothing this year and take some pain on luxuries? | |||
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"It’s all manipulated by governments, banks and multinationals. It’s not helped by situations such as Russia invading Ukraine. I don’t recall a situation where the impact has been felt by so many because of the restrictions on exports from both Russia and Ukraine eg car manufacturers are waiting on microchips that Ukraine produces, there’s a shortage of cooking oil because Ukraine produces vast amounts of it. If the UK became more self sufficient we wouldn’t see the same price hikes in goods because we wouldn’t be importing them. Biggest pay rise I ever had was 8% many years ago. When I started work I expected to retire at 60 now it’s likely to be 67. I’m not sure how that helps the economy if there’s no jobs for young people. I’ll barely be able to survive on a pension at this rate. " Its all crap, the pandemic was the largest movement of wealth ever worldwide. billion dollar deals and how it changed the world is a programme which examines these deals and explained the change. why we work longer the reason for a minimum wage Facebook and other big tech there's cash out there we are just restricted by again lower wages and higher prices. the revolution will not be televised. | |||
"It’s all manipulated by governments, banks and multinationals. It’s not helped by situations such as Russia invading Ukraine. I don’t recall a situation where the impact has been felt by so many because of the restrictions on exports from both Russia and Ukraine eg car manufacturers are waiting on microchips that Ukraine produces, there’s a shortage of cooking oil because Ukraine produces vast amounts of it. If the UK became more self sufficient we wouldn’t see the same price hikes in goods because we wouldn’t be importing them. Biggest pay rise I ever had was 8% many years ago. When I started work I expected to retire at 60 now it’s likely to be 67. I’m not sure how that helps the economy if there’s no jobs for young people. I’ll barely be able to survive on a pension at this rate. " Self-sufficiency doesn't work with the product complexity that we have now. The raw materials and processes that are needed to manufacture modern products come from many places and the specialist plants to produce what may be mundane components require a huge investment. Much of what we take for granted would become uneconomical. Even more so as we are now the UK on its own with a limited market. The USA or EU or China or India can become more self reliant as they can justify the spending for a large internal market. | |||
"It’s all manipulated by governments, banks and multinationals. It’s not helped by situations such as Russia invading Ukraine. I don’t recall a situation where the impact has been felt by so many because of the restrictions on exports from both Russia and Ukraine eg car manufacturers are waiting on microchips that Ukraine produces, there’s a shortage of cooking oil because Ukraine produces vast amounts of it. If the UK became more self sufficient we wouldn’t see the same price hikes in goods because we wouldn’t be importing them. Biggest pay rise I ever had was 8% many years ago. When I started work I expected to retire at 60 now it’s likely to be 67. I’m not sure how that helps the economy if there’s no jobs for young people. I’ll barely be able to survive on a pension at this rate. Its all crap, the pandemic was the largest movement of wealth ever worldwide. billion dollar deals and how it changed the world is a programme which examines these deals and explained the change. why we work longer the reason for a minimum wage Facebook and other big tech there's cash out there we are just restricted by again lower wages and higher prices. the revolution will not be televised." Not sure how this relates to inflation... | |||
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"A few months ago a high wage economy was a good thing. Now it is a bad thing. Do pay rises only "cause inflation" when it's convenient for the Government? Also, is it only pay rises for those who are not wealthy that cause a problem? Why is Downing Street keen to remove any pay restraint on company directors? It's terribly confusing... Interesting question, my view is there are those who have and those who have not, I do not see that as fair, so certain sectors are testing the government by withdrawing labour. The government then divides opinion by saying inflation will rise, and lives will be disrupted. what I find that under a conservative government, after they are out of power, there is a mountain of personal debt that the poor have to pay back, through loans, payday loans, loan sharks. I then find that poor people cannot afford gas or electric, so eat fast food or cheap supermarket food that can be microwaved. it is a scandal, and this was pointed out by the train strike leader, his words to effect was that we should the public support them because if they lose it will be bad for workers who are being paid under the 30k level bad for us all with that knock on effect. So what do you think this is all about OP? Thank you for addressing the actual point. It would appear to be pure politics. It is, apparently, never a good time for the less well paid or public employees to have a pay rise but always a good time for the wealthy or those who vote for them (pensioners). Wage rises were no more or less inflationary a few months ago than they are now, it's just become more apparent with spikes in areas where we have no purchasing choice like fuel and basic foods. A more rational discussion might help. We do all need to reduce demand to bring down inflation, but we want to minimise the chance of this causing a recession. The Bank of England has a very blunt instrument in interest rates. We could start by doing what Japan has and asking the population to use less fuel/power. Perhaps even ration? We could also work out how much will actually be needed to cover cost of basics and ensure that is published as the basis of a basic pay increase. An absolute figure rather than a percentage. Rolls Royce engines just did something like this. Companies should then be encouraged to award percentage pay rises heavily biased towards the poorly paid. Perhaps top tax bracket salaries get nothing this year and take some pain on luxuries?" I see Japan are also bucking the trend of raising their interest rates, preferring to keep them at very low rates. It will be interesting to see if this works better or not. They do have even larger debts than the UK so maybe it's necessary. I know someone that where they work the staff have been offered a rise as an amount of money the same for all. If you work it out to a percentage it means the lowest paid get a high percentage raise and for the higher paid it works out at low to medium raise | |||
