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?

  • jabrd [he/him]
    ·
    2 years ago

    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