I'd love to see more analytical humility in this area.<p>> "The problem – economics research has repeatedly shown that this is not the case."<p>And economics research has also repeatedly shown that this IS the case. I'm not supporting that argument, I'm just saying that you have conflicting bodies of research. Everyone here is engaging in motivated reasoning, depending on who they think the boogie-man is.<p>Humility means being clear about how much you can possibly say from the evidence at hand. Humility means thinking more about confounding factors than about things that you believe to be true.<p>I'd also love if we talked more about access to resources instead of money.
I wanted to know how my income history has been keeping up with inflation and I couldn't find an easy way to do it. I made <a href="https://askforapayraise.com/" rel="nofollow">https://askforapayraise.com/</a> to help visualize how much you are keeping ahead of inflation or falling behind.
There's a fair amount of confusion between map and territory in this article. It seems to take macroeconomic indicators like CPI, nominal wages, and real wages as fundamentals and then infer that the economy <i>must</i> behave a certain way because of historical relationships between them, when the reality is that the economy behaves as the economy behaves and the macroeconomic indicators only <i>measure</i> what's going on.<p>A good example is "By definition, inflation-indexed wages cannot result in a higher inflation rate. Wages indexed only to inflation will actually reduce the inflation rate, if productivity is positive, which it typically is." No - if you have an inflation-indexed wage, it will go up when inflation does, regardless of what productivity does. You can't just infer that productivity has risen because the inflation-indexed wage went up - in this specific instance, it's clear that it hasn't, because nothing has changed except the inflation index.<p>Inflation is best thought of as a feedback loop. Every expense is somebody else's income, so if expenses are going up across the economy, <i>somebody</i> is getting more money. That gives their suppliers leverage to raise prices and their customers a need to raise prices or go out of business. The rate is going to be uneven across different sectors, which is where the CPI vs. nominal vs. real wages behavior comes in. Real wage increases are nominal wages * CPI, by definition, so if most of the increase in prices is accruing to labor, real wages will be positive, while if most accrues to capital, real wages will be negative.
anecdotally, I have noticed massive wage growth for non-college educated workers.<p>My teenage son who was still in high school at the time went from $10/hr to $17/hr as a restaurant worker in small town Florida. This was 2022-2023. In the same period, my salary as a principal software engineer went up 3%
The elephant in the room that is driving inflation is energy prices. Every good has to be transported and that requires energy. Every production facility also requires electricity to run machines.<p>Energy prices happen to be going up because some people are ideologically committed to raising energy prices and reducing energy production in order to stop climate change. This includes the current US president, who signed a bunch of executive orders right after taking office that increased gas prices by restricting fossil fuel production.<p>The sanctions on a certain gigantic gas station that is currently at war with one of its neighbors are also a major driver of inflation. There was also transitory inflation due to pandemic era supply chain disruptions. When factories are shut down for health reasons, less stuff gets made and the price of that stuff goes up.<p>What did not cause inflation? People being able to buy houses, start businesses and find jobs because the interest rates were low. Raising interest rates and putting people out of work is just treating a symptom when the real solution to inflation is to lower energy prices by producing more energy. That means repealing anti-fossil fuel policies[0] and it also means trying to negotiate an end to wars rather than funding the belligerents forever with endless foreign aid.<p>[0]: Climate change is real and should be addressed via technology not austerity. We are not going to solve anything by making people in developed (1st world) countries poorer or by keeping people in developing (3rd world) countries poor. Those advocating climate austerity are the main motivating factor driving climate change denial because many people will assume its just a hoax powerful people made up to make them poorer.
Inflating the money supply by billions of dollars to fund several expensive conflicts around the world seems like it would have a larger effect on inflation right? We are in the process of regularly shooting down 300$ drones with weapons systems that cost hundreds of thousands of dollars (sometimes millions) per shot. Should we really have deep concern about wages that companies freely decide to pay their employees? Isn't this completely insane regardless of what any kind of "the research" happens to say?
> The idea of bringing down wages to tame inflation is rooted in the theory that if we reduce the costs of labor in the production process, firms won’t have to increase prices as much, and thus the rate of inflation would fall.<p>The root cause IMHO is that especially in the US there is barely any competition any more. No matter where you look, it's at most five to six different (multi)national megacorporations... and so they can extract many billions of dollars from the economy every month. Enshittification, just on macroeconomic scale.
When I think about falling trust in so called “mainstream” media, pieces like these come to mind. Used to be that newspapers were the fourth estate, existing independently and keeping powers in check by being a source of transparency. Now in the age of web driven advertisement that business model doesn’t work anymore, and what we get is the shells of the old behemoths used as corporate mouthpieces and the crumbling democracy and freedom that entails. What an absolute shame.