TheBigShort
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Agreed.In the context of general economic theory, wage increases are inflationary. Central banks around the world are trying to stoke inflation.
Way too simplistic.Their primary tool is QE which is failing. It is only creating greater divides between rich and poor.
I don’t follow that argument.This is why property prices are rising in affluent areas of capital cities around the world, but elsewhere they are stagnant.
Excellent point.This is why debt burdens are increasing not reducing as all money issued today is on the basis of a loan taken out rather than the value of productivity.
Only if everyone does it. If most do it and others don’t then those that don’t will have an advantage as they’ll get the up-side of global inflation while increasing their competitiveness. As a small, very open and very expensive economy I think we should be the last to increase wages.The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.
The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
Has the debt burden in Ireland reduced over the last 30 years as wages have increased? Or is personal debt at an all time high?
The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
It's also the result of massive and unsustainable increases in wages of state employees (including pensions). Over the last 15 years that's cost more than the direct cost of the bank collapse.It is the result of the credit splurges of the 2000s, the crooked practices of banks, and the general demographic decline of the West.
This sounds wrong on a number of counts. First of all inflation and savings pull in opposite directions. Savings in this country are already increasing at a rapid rate -- the problem is that it is being used to pay down debt (which counts as savings in the statistics), instead of being spent into the economy. It is difficult to increase people's propensity to spend when there is such an overhang of historical debt.
Second, increasing inflation should not be an end in itself without increasing productivity.
If you merely wanted to increase spending then give to those with no discretionary income who are more likely to spend any additional income
Third, the government doesn't directly control wages in general. It could raise the minimum wage but if it wants to use it as a tool to control inflation then it better be prepared to reduce it again, which is historically not done nor politically acceptable
You have similar problems with raising public sector wages. And mandatory wage controls have rarely worked out well, as they interfere with efficiency and price signals. You will probably just increase unemployment.
If you really want to increase inflation, given our situation of considerably less than full employment, you need to increase the number of people getting paid, not the amount earned by people already in employment.
The main tool under the government's control is infrastructure spending.
It is the result of the credit splurges of the 2000s, the crooked practices of banks, and the general demographic decline of the West.
In the context of general economic theory, wage increases are inflationary. Central banks around the world are trying to stoke inflation.
The quickest and fairest way to stoke inflation into developed economies is through increased wages. This will stoke inflation, increase savings and reduce debt burden.
But it will also mean a massive transfer of capital to labour. Something that right wing free market worshipping monetarists cannot countenance right now.
alternatively productivity increases can be generated through higher wages......... increasing wages will begin to generate increased productivity.
So why state that higher wages reduce the debt burden?Personal debt is at an all time high. But it has nothing to do with wages.
I would argue that increased wages for lower paid workers will also drive spending and increase participation in the workforce.
Personal debt is at an all time high. But it has nothing to do with wages. It has to do with the availability of credit.
Tell that the Dublin Bus and LUAS employees (soon to be followed by all other CIE company employees).You cant have wage increases without productivity increases,
Can you explain that please?alternatively productivity increases can be generated through higher wages.
Different businesses have different cycles. The business I’m in thrived through the last few years but we are down by 40% on turnover from 18 months ago (hence the 45% pay cut I took). That is the opposite of what is happening generally for businesses selling into the Irish market.It really depends on the business cycle and in my view wage increases are overdue. As such increasing wages will begin to generate increased productivity.
That thread is about welfare traps.True to an extent, and there is another thread on welfare payments that argues for cutting welfare in order to push people into work. I would argue that increased wages for lower paid workers will also drive spending and increase participation in the workforce.
Yep, an FF government which was willing to make hard decisions; a rare thing. They got hammered though so they’ll be back to populism in future.Not politically acceptable but historically it was done under the last FF administration.
I suppose the first question is do we need to raise inflation in Ireland? Perhaps you could provide evidence of this requirement?
How does that happen ?
So why state that higher wages reduce the debt burden?
Higher wages should reduce the debt burden but in practice rarely does (and human behaviour is to blame for this).
How do you propose this should happen? Raising the minimum wage?
I'm not so sure about that - debt levels rose here due to availability of credit certainly, but this also happened at a time of wage increases. In fact, if wages have nothing to do with debt levels as you say, then would you foresee people borrowing more if they knew their wages were due to be cut?
Tell that the Dublin Bus and LUAS employees (soon to be followed by all other CIE company employees).
Can you explain that please?
Different businesses have different cycles. The business I’m in thrived through the last few years but we are down by 40% on turnover from 18 months ago (hence the 45% pay cut I took). That is the opposite of what is happening generally for businesses selling into the Irish market.
Yep, an FF government which was willing to make hard decisions; a rare thing. They got hammered though so they’ll be back to populism in future.
[broken link removed]
The CSO data above shows that country is languishing very close to a deflationary trap.
No it doesn't. If you look at 2015 you will see negative figures for 10 months out of 12, but in 2012 there are negative figures in only 4 out of 8 months, so it could actually be just as easily argued we are seeing more inflation!!
In fact if you look at 2009 - 2011 when we can see prices were really falling, do you think that was the time to force wages to be increased when the economy was close to falling off a cliff and there was talk of the eurozone itself imploding?
In any case, these are just tables. Do you have a link that backs up your assertion that we need inflation in Ireland?
Personal debt is at an all time high. But it has nothing to do with wages. It has to do with the availability of credit.
Increasing wages for sure will give the earner confidence of taking on more debt, but it still should all be relative. If I earn €50000 I may think I can borrow €150,000 for a property. If I earn €150,000 I may think I can borrow €600,000.
Its not a question of whether I think we need inflation or not, its a question of whether the ECB thinks we do or not. Its mandate is to manage inflation at around 2-3% and it has embarked on a QE program to induce inflation into the eurozone economies.
This has not worked in Europe and is not working in Ireland. It is my view that rather than engage in this program of QE that a preferential approach would be to start increasing wages.
I think you are contradicting yourself. First you say (emphasis mine)
Then you go on to provide an example of where someone would borrow more money based on higher wage levels!
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