[wolverine876]

I don't know this author, but the arguments that increasing wages will cause inflation, independent of their economic accuracy, are also perfectly tuned messaging for a specific group, the owners of businesses (and the high-level managers). That could be coincidence, but if the beneficiaries are paying attention - and that group is very sophisticated politically - it's probably not.

Openly opposing wage increases for workers is political suicide, especially given the context of decades of flat wages and income inequality, and of the pandemic and essential workers, and given that it displays brazen greed and self-interest at the expense of the rest of the country.

But if they convince enough people - not everyone - that wage increases cause inflation, while they also stoke fear of it (remember during the Great Recession, fear of inflation was a tactic against Obama's policies), they can reduce the wages paid and keep more profit. It takes convincing people not directly affected by the issue, such as white collar workers who are already highly paid (ironically) and retirees, which IMHO is easy and often done. It also takes convincing people directly affected that their own wage increase somehow harms them, or that they should sacrifice for the country; that's harder, but as we've seen, many people vote against their economic self-interest and even risk theirs and their family's lives for political movements. Remember, they don't need to convince everyone, just enough people.

If inflation risks significant harm, and if wage increases are a significant factor (which I don't believe), I think suppressing wages is the last thing we should consider, if we consider it at all.

Imagine if they said, 'SV company pricing is causing inflation' or 'wages in SV are causing inflation'.

[handrous]

> I don't know this author, but the arguments that increasing wages will cause inflation, independent of their economic accuracy, are also perfectly tuned messaging for a specific group, the owners of businesses (and the high-level managers). That could be coincidence, but if the beneficiaries are paying attention - and that group is very sophisticated politically - it's probably not.

The narrative slants aren't even subtle.

Asset prices skyrocket: "Look, the economy's booming! Hooray!"

Wages go up somewhat: "Oh no, inflation! Watch out!"

[EDIT] I mean for general coverage of these topics in the media, not picking on this particular author.

[vvarren]

I am the author and I appreciate your feedback. I actually wrote this piece to push back against the popular opinion that there’s a labor shortage due to “lazy people on unemployment benefits”. I don’t view asset prices skyrocketing as a healthy sign of the economy booming, instead I view it as all the rich people shielding themselves before inflation sets hold. And my argument hinges on working class people being unfairly priced out of their communities due to the skyrocketing asset prices. I also make an argument against the Airbnbification of real estate and how it is hurting the majority. I apologize if it seems that I am supporting the capital-owning class but it is actually the opposite. Let me know if you have any suggestions to clear this up on my article. (Edit) thanks for the edit that clears it up. I was worried you thought I was pushing a narrative when I’m actually pushing back against the narrative. Cheers!

[novok]

People like to hand wave airbnb as a boogeyman for real estate demand increases, but when you dive into actual numbers you find out it's less than %1 of units in the vast majority of cases. And buying houses to rent them out as 'revenue properties' has been around for a very long time, similar with airbnb style services in the 1800s.

If a %1 demand increase causes big price distortions in a RE market, you have much bigger problems in your city than airbnb, which is usually linked to supply control via restrictive and often corrupt planning boards putting up large barriers that you have to 'pay to win' to get past under the table, as has been shown recently in SF.

[vvarren]

Fair point. This housing boom is largely caused by wealthy investors bidding up the price of single family homes, with AirBnb completely unrelated. There are also some urban-suburban migration dynamics at play. I mentioned AirBnb to point out that this isn't just a new issue. And while vacation rentals have always been a thing, they were formerly centered around vacation destinations. Now, they can be anywhere, and the internet makes it possible to browse and compare prices anywhere in the world. It is now economically feasible to own several vacation rental properties in small cities, which creates a pressure on supply for housing locals. And if you can earn a month's worth of rent in two weeks of AirBnb renting, the price of rent for long-term tenants is either going to go up or you are going to switch to AirBnb.

[novok]

Airbnb has a much higher labor component involved, while renting a unit out long term is far less. It's definitely a tradeoff.

[nickff]

This comment makes it seem like you're using extremely motivated reasoning, and that any conclusions cannot be trusted.

[vvarren]

I'll pushback against this point. I noticed that the popular discourse was all about unemployment benefits being the root cause of the labor shortage, when in reality the statistics said differently (i.e., stats from states which had ended unemployment). So I did research to find the true root causes, while I still fleshed out the counter-argument on unemployment. EDIT - also, i'm not a journalist this is just my personal blog and opinions so it's inherently motivated reasoning.

[nickff]

To be clear, I don't think you have any obligation to the public; it just seems like you were out to make a partisan point (and wanted to 'team-up' with the commenter you originally responded to in this thread).

[wolverine876]

> To be clear, I don't think you have any obligation to the public

Tangentially: I know that's a norm (or almost one) but I think that they do, and that we all do. We are all responsible for our communities. Their state, good or bad, improving or not, depends completely on our actions.

[vvarren]

I am the author, and my argument is in no means against rising wages. In fact, I think it’s about damn time that wages are rising. The $15/hr living wage movement has fought for this so long, that now $15/hour is barely a living wage anymore. My argument is actually that the economy is built on the backs of underpaid workers, and now that these workers are demanding their fair value we will either see inflation or the failure of many businesses. I don’t believe a business should be allowed to survive if it can’t afford to pay its employees a living wage, so if my argument implies that it is truly not my intention. Let me know what you think and if you have any suggestions to clear this up in my article.

[wolverine876]

Thanks for a thoughtful response.

> My argument is actually that the economy is built on the backs of underpaid workers, and now that these workers are demanding their fair value we will either see inflation or the failure of many businesses.

I don't see how it's inflationary from some money to be shifted from the owners to the employees. Also, I don't see how that causes a business to fail, unless it was operating very close the margin. Corporations are doing very well; Bezos has over one hundred billion; paying employees more won't bankrupt these businesses or have any effect on people like Bezos.

[xienze]

> Imagine if they said, 'SV company pricing is causing inflation' or 'wages in SV are causing inflation'.

Not sure I follow where you’re going with this — are you suggesting SV salaries aren’t causing inflation in the local area? They absolutely have kicked off an inflationary feedback loop in SV real estate.

* Pay tech workers more to attract them to SV.

* Housing prices rise.

* Pay tech workers more to compensate for higher real estate prices.

* Repeat.

Suddenly you find yourself in a situation where $400k in total compensation for a single FAANG employee isn’t out of the ordinary. Great for them, terrible for everyone making normal amounts of money — houses cost $1M+.

[wolverine876]

> Not sure I follow where you’re going with this — are you suggesting SV salaries aren’t causing inflation in the local area?

Sorry I wasn't clear. My point was that people now focused on rising wages causing inflation are typically wealthy professionals (such as in SV). I imagine a different response if someone attributed it to the wealthy people's income.

It's often: 'We need to cut their taxes so they can stimulate the economy more!'

[ZoomerCretin]

The only problem with the SV real estate market is the segregationist-era zoning policies preventing the market from sorting out the self-inflicted shortage.

[verall]

I agree with everything you said, but I don't think they just need to stoke fear, and I don't think the . Those white-collar workers and retirees want their maids and caretakers, their kids watched, their groceries bagged. And they want it cheap. Rising wages mean a direct increase in costs for this middle class.

They want to say they don't want to pay their maids more without saying that their maids don't deserve more money.

[rufus_foreman]

>> I don't know this author, but the arguments that increasing wages will cause inflation, independent of their economic accuracy, are also perfectly tuned messaging for a specific group

Which do you think is a better approach, evaluating arguments on their merits or evaluating them on the basis of who might benefit if the arguments are valid?

[wolverine876]

I think both are essential: Evaluating arguments on their merits is obviously important, so I'll focus on the second method.

We live in a world flooded by propaganda; we are committing political and social suicide by not addressing it. One powerful method of addressing propaganda is to identified beneficiaries - the people behind it are necessarily doing it for their own benefit.

And at the same time, evaluating arguments on their merits exposes us to propaganda: First, a well-known reason: it is much easier to make up lies than to determine the truth; the propagandist can easily consume all the resources of the person looking at merits. Second, humans are significantly worse at determining merits than they imagine (says much research).

Looking at merits depends on some good faith: The person submitting the argument is trying to present a valid argument. Propaganda is built on abusing that good faith.

[zz865]

Maybe but most of the ruling class is more scared of deflation than inflation. Most of the last few years we've been fighting to avoid a deflationary spiral like the 30s. Any coming sustained inflation is a good thing.

[vvarren]

Absolutely. In fact, inflation may be the strategy of choice to get the US out of its debt crisis. Ruling class is totally fine with inflation, because it allows them to raise wages to $15, 20, 25, 30 per hour and act like benevolent leaders when in reality wages are just catching up to where they should be after decades of stagnation.

[avidphantasm]

What debt crisis? The national “debt” is not a crisis. The US has a great degree a monetary sovereignty. As long as this is true, it will always be able to pay its “debts”. The US government spends money into existence, which is a direct subsidy to either states, citizens, the private sector, or foreign interests (in the case of USG buying imported goods).

[wolverine876]

They also are more scared of nuclear war than inflation, but those aren't their choices. Inflation is bad creditors; the value of the debt inflates away. Also, the right wing, which seems to attract more wealthy people, has long used fear of inflation to support their ever-smaller-government campaign; they say government spending will cause inflation (when someone from the left is in office).