[dnautics]

I'm sympathetic to the idea that technology decreases the per unit cost of productivity output, but the whole point of stimulating economic growth (via factors like inflation) doesn't work if the stimulus doesn't outpace the improvement in efficiency.

Technology is fundamentally deflationary. So if you believe that inflation (and growth) is necessary for social stability, you must incentivise consumption beyond technology's capacity to improve efficiency.

[wpietri]

I think we're talking about two different things: economic value and the price of currency. I agree that you don't want currency deflation. But over decades, I don't think that has much to do with the value to users of goods.

I can think of a few obvious places where they split. One is where we increase quality. A well-trained chef doesn't use significantly more resources than a bad cook, but the result is much better. There's also quantity; by 1980s prices, I have lost millions of dollars worth of data storage in my couch cushions. (Entertainment is a great example of both dimensions.) And it can be perfectly healthy for an economy to decrease hours worked for the same or better result, as in Germany: https://www.economist.com/graphic-detail/2018/12/28/why-do-s...

So sure, we want currency stability, and we don't want recessions. But I don't think we face a Midas Plague [1] scenario.

[1] https://archive.org/stream/galaxymagazine-1954-04/Galaxy_195...

[dnautics]

> I agree that you don't want currency deflation

https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...

> Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis.

Just to be clear that we understand the policy here in blunt terms: The point of inflation is to cheat the working classes out of their income so that the ruling class can lay claim to high employment metrics. This is the price of currency stability.

[wpietri]

I think of it more as a workaround for a cognitive bias. Rational actors would be ok with wage cuts as their comparative advantage declines. But humans aren't rational actors, so we instead allow for a little inflation to make adjustment easier. Then people stay employed and productive.

I don't think the ruling class gives a shit about employment metrics. As we saw with the fashion for "austerity" in Europe, they were positively gleeful about other people's suffering. And no wonder; high unemployment reduces labor's bargaining advantage over capital, thereby increasing their relative power.