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by tehjoker
1688 days ago
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This is a crazy concept, it would seem to imply that any attempt to increase wages ever would destroy the economy, but what remains is barbarism and serfdom. There's a market in labor just as there is a market in goods (though the former is a market in human beings). If the supply of labor is low, then (under many economic conditions)* raising wages to increase the number of workers willing to do unpleasant jobs is part of the logic of markets. It's a two way street. * An example of a condition where it might not apply is if everyone were already perfectly sorted into their preferred jobs and there was no remaining pool to encourage new people to become workers from. Then raising wages wouldn't affect the sorting of the economy other than to transfer money from capital to labor (which is a good thing anyway in our age of inequality). I highly doubt we are there. |
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The problem being if you get into a circle raise -> more new money -> goto 1 it may be hard to slow it down.
In reality nobody wants money. They want houses, food, education, children, ... each of those also represent a relatively constant fraction of the money supply of an economy. So you can only get a raise by actually doing more work, or in the case of the government jobs, having more hostages/threats (if you fire me X will happen, X being somewhere between a fight over who replaces you, to new elections, to I guess revolution in some extreme cases).
This is not very visible because plumber wages DO change, for example with the number of plumbers available. House prices do change, for example with migration. But wages do not change, in real terms, because of inflation. A raise is a necessity, merely for you to maintain whatever position you have in society. It is not nice, in that it improves your position in society. A house, ownership, maybe stocks and of course innovation improves your position. Raises and inflation are a smokescreen.
I use the term "new money" because "parked money" does not matter. Only money that was involved in some transaction in the recent past actually matters. We can argue about what measure is the best for this, and economists constantly do that, but other than that it's not simply total money, it is not necessary to have an answer for this point.