You can't help soften the blow of inflation by giving people more money! That will just cause more inflation and make everything worse!
We've all heard it a thousand times, giving normal working class people, especially poor people, more money will only make everything worse by causing more inflation. Somehow this will leave the majority worse off than if nothing had been done.
This is considered common sense among liberal-conservatives but as leftists we instinctively know that it is bullshit. Maybe higher wages and benefits would increase inflation but the net total is that the working class would be better off than before.
Instinct is not a very convincing argument though so how do you argue the case against the wage inflation spiral to liberal-conservatives?
Point out that real wages have been stagnant since the 70's and inflation has happened virtually every year regardless. If workers getting paid more caused inflation then why has there been inflation every year despite worker getting paid LESS?
We have had historically low inflation for the past 30 years, so that might not be a rock solid argument. Like for the past decade Europe has almost had negative inflation.
So...that would mean we actually need more inflation by their own argument, since it's clearly restricting production capacity at this point.
Inflation would help to wipe out a lot if debt. Inflation I good for debtors and bad for lenders because people pay back loans with cheaper money.
debtors tend to be the middle classes. it takes money to afford debt. it's why there's a ton of talk about how the government should stop giving people student loans as a solution to the student loan debt crisis - debt is a privilege of class, despite the fact that it's how this economic system functions. so yes, inflation tends to be good for people with debt - but it's too slow to help those with predatory loans and those who are struggling to pay in the present.
I mean I don't completely disagree with you, but I don't think in our modern economic context that it can be said that debt is the purview of only the bourgeois and labor aristocracy, basically everyone has some level of debt now. That being said I also don't think that spiking inflation is a good strategy for the working class either, as we are seeing now with our current bout of inflation the bourgeois state does defend capital such that even in conditions that would be objectively bad for it capital still comes out ahead; without class power simple fluctuations in the flows of commodities of all kinds will always favor capital. All that being said I feel comfortable with my assertion that in general capital does dislike inflation because it erodes financial capital stock, and or the growth thereof, as well as generating long term destabilization in the system.
I'd like to point out that the result of this command economy was that in 1945 they had more productive capacity, not less. And a bunch of war surplus stuff too. So many goods deflated in price.
So cheap in fact that the US had to make the core of what would become the Military industrial complex from the surplus production capacity.
Workers with high wages don’t need to take out as much mortgages and loans and are thus unprofitable to the financial capitalists.
I see where you went with this in the next sentence, and agree with your overall point there, however I wanted to point out that high wage workers generally just end up qualifying for and taking out larger mortgages which drives property values sky-high. I think that what I'm saying is sort of irrelevant to your point though, cause under a more equitable economy then yeah people would be operating on credit less.
1976 was the last year you saw a real increase in wages. Not correcting your general point, my autism brain just remembers the exact year.
but to force them into perpetual debt as the banks make profit from interest payments. Workers with high wages don’t need to take out as much mortgages and loans and are thus unprofitable to the financial capitalists. Production
consumers who cannot pay their debts are however not profitable to moneylenders if they grow to a majority as we notably saw in 2008. The trouble with extracting from the working classes is that eventually they run out of money
yes but that itself is unsustainable too as even the state cannot endlessly throw money into a hole. Obviously it can for a very very long time but US military spending is getting to the point of being an actual issue for it
The trouble with extracting from the working classes is that eventually they run out of money
Lol :anti-thatcher-action:
This is my go to argument that is easy to understand for most people. Labour cost is not 100% of the total costs, so a $1 increase in salary will not result in a $1 price increase but at most, let's say, $0.50. This means that a salary increase will always improve purchasing power, as the salary relative to the product price changed in favour of the worker, despite any smaller product price increase.
From this article:
Even under a worst-case inflation scenario where every penny in extra pay that results from moving the federal minimum wage to $15 by 2027 is passed on in the form of higher prices, the result would be a five-year stretch of inflationary pressure equal to 0.1% per year (or about 1/100th of the increase we’ve seen since 2021), then the inflationary effect would return to zero.
Also, if increasing the minimum wage caused inflation such that the original increase would be eclipsed by increasing prices, why would the minimum wage ever be raised? But it has, a bunch of times.
Last I checked companies are in control of the product prices, not the people shopping in their stores. Inflation can be caused by increased labor costs as pricing is typically a push system wherein the capitalist starts with the cost of production and then prices in the profit margin. Thus increase cost of labor (or energy, or shipping in a global supply chain) can cause the capitalist to increase their price to maintain their existent profit margin after cost of production goes up. However, it’s important to note that that profit margin pricing comes down to what the capitalist thinks people will pay for the commodity so you have plenty of examples of companies increasing cost because they believe there’s available disposable income out there that they could be grabbing even if their production costs didn’t increase. So you have vibe based pricing models where companies hear about inflation and just go for it assuming they can get away with increased price, and importantly because we exist under late stage capitalism where monopolization is rampant, there’s nowhere else for customers to go to when they increase the price. This is why raises are imo useless concessions to win from the capitalist class, eventually the increased cost of labor will be priced into the market and those gains will be washed away. Labor should be fighting for more permanent victories. Inflation is a pseudo-intentional weapon of the bourgeoisie used to claw back the limited victories of labor.
Source: I’ve read a few economic papers and books, I do not have any sort of formal economics training. I just know statistics
"Price controls"
More seriously though, I usually just point out that if capitalism requires, by design, some significant portion of the population to be in poverty (after all, you can't raise their wages or else inflation will happen and their purchasing power will stay the same), then capitalism is fundamentally broken and we must restructure our economy.
This is an essential contradiction of capitalism. The libs aren't wrong, they're just ok with some people (:us-foreign-policy: ) being sacrificed to the free market. It's essentially why UBI is a terrible idea.
the wage-inflation spiral hypothesis is bunk because it assumes that any increase in wages will necessarily result in an immediate reduction in real wages to maintain or increase profit. this does not hold up to any amount of study.
Libertarians in shambles when they realize econ 101 theory doesn't actually offer a perfect model the real world.
Not recognizing that a real world business makes profit, and therefore has the option to make less profit, is a classic libertarian misunderstanding.
As usual, it's an incorrect use of the word inflation, taking it to mean "things getting more expensive," as opposed to "things getting more expensive because of the government printing more money." The government giving people money will not cause any more inflation than spending the same amount of money on bombs and shit, because the same amount is being minted either way.
Whether it will cause "inflation" in the sense of "things getting more expensive" is another question. Essentially the claim that is being made here is that people having more money in their pockets will result in companies raising their prices - which implies that those prices are set based on how much money people have. And if that's the case, then it means it's time to start doing nationalization, trust busting, and price controls. Prices shouldn't be determined by how much people can pay, they should be determined by how much the product costs to make. It's supposed to be the case that if a company tries to raise prices because their customers have more money, then another company can move in and produce the same thing and sell if for less, stealing their customers while still making a profit. If a company (or a group of companies colluding) can raise their prices without fear of being undercut by a competitor, that's what you call monopolization and extortion.
I don't have the numbers to say whether their claim holds up in practice, but what they're claiming when they say this is that our economy is so riddled with monopolies that there is no possibility of the poor advancing as a class. If people having more money means things get more expensive, then it doesn't matter where that money comes from - if everyone starts making money because they learned to code, or because of some technological advancement, or because the economy improved, it doesn't matter, the same argument applies. The logical conclusion of what they're saying is that there is no possibility of improving things except through systemic change and restructuring the economy.
It isn't, it's class war in action
But right now wage-price spiral is definitely not causing inflation. Nominal wages have gone up, but real wages have continued to fall. What's been happening this year is an energy shock combined with a supply shock for goods in general. Demand has gone crazy since the pandemic, while the pandemic continues to wreak havoc on supply chains.
Why would increasing wages for some people raise inflation more than increasing wages for other people? This is an argument against ever raising wages for anyone. If you're against minimum wage increases for inflationary reasons, it logically follows that you're against the idea of you yourself ever getting a raise, which is fine, but it makes you a weirdo.
Another banger Michael Roberts - The inflation conundrum
Pay close attention to the Phillips curve discussion. That's the idea that inflation and unemployment are inversely correlated.
Firstly, it is not necessary to convince the average chud or lib in order to seize power. The workers want higher wages, it's their useless middle managers and bosses that come up with fictions like a "wage push" theory of inflation. They are so few in number that convincing them is kind of pointless, a lot of them hold the keys to power in the bourgeois state but that's why revolution is a necessity. That being said, there's definitely some confused workers and union people that get it in their heads that higher wages necessitates inflation and its these people you should engage with.
Marx covers this in Value, Price, Profit (really good short theory, you should read it) - here's Michael Roberts quotes from it cause I can't be assed to dig out my copy and retype it out: "a struggle for a rise of wages follows only in the track of previous changes, and is the necessary offspring of previous changes in the amount of production, the productive powers of labour, the value of labour, the value of money, the extent or the intensity of labour extracted, the fluctuations of market prices, dependent upon the fluctuations of demand and supply, and consistent with the different phases of the industrial cycle; in one word, as reactions of labour against the previous action of capital.”
“By treating the struggle for a rise of wages independently of all these circumstances, by looking only upon the change of wages, and overlooking all other changes from which they emanate, you proceed from a false premise in order to arrive at false conclusions.” Broadly speaking, argued Marx, “A general rise in the rate of wages would result in a fall of the general rate of profit, but not affect the prices of commodities.”
I.E. wages increasing comes out of the rate of profit rather than prices in general - which is why the bourgeois and their middleanager professional class are so dead set against wages and benefits.
Silly assumptions this inflation/wage increase logic requires:
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People would only spend the increased income of "stuff" instead of paying down bills or debts. Example: An increase in income for my household would have us paying down our credit cards and working on some loans as the first dollars spent and not going out and buying a brand new car (which we don't need yet.)
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People would keep buying things after they've already bought them. Example: The thinking that a household that buys one gallon of milk would buy two gallons of milk for no other reason than the household has enough money to buy another gallon of milk, not because the household needs another gallon of milk.
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All extra expenses that an increased income could pay for are things that have a definite supply. Example: TV's take more time/resources to manufacture, deliver, and stock to a shelf when demand goes up. Going out to eat at a restaurant does not increase time/resources to the same degree.
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Increased demand for "goods" can't ever be "caught up to" by the manufacturers of the goods. Example: Thinking that a temporary shortfall in computer monitor production would never catch up to the demand for computer monitors so the inflation in prices would never deflate.
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https://assets.weforum.org/editor/HFNnYrqruqvI_-Skg2C7ZYjdcXp-6EsuSBkSyHpSbm0.png
