Sunday, Jun 15, 2008
Workers too poor and weak to cause stagflation
Gurdian: Can we keep stagflation at bay this time?
The essence of this article is that we won't have a rerun of 70s style stagflation because globalisation and union weakness have removed power from the workers to push through inflationary wage rises.
So this is an argument for not raising IRs.
Cue more HPI.
The only people with any wealth after this will be primary industry shareholders and workers, and owners of assets. The rest of us will be much much poorer.
Posted by voiceofreason @ 08:23 AM (262 views) Add Comment
9 Comments
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1. Davidg said...
ok so the main message of this article is that rising input prices can't be passed on so firms will outsource production to cut costs and layoff UK workers. The medicine is lower interest rates according to the author but this will just push up input costs without having any knock on effect in bank lending costs.
2. Bug16 said...
"Union Weakness"? Remind me who Gordon went cap in hand to for loans to keep his inept party going? Oh that'd be the Unions wouldn't it?! Well, well, well. The Unions now have Gordon by the short and curlies and they'll use that to squeeze what they want from him.
3. Game Over said...
Cue more HPI?
Not a chance.
Why?
Rising inflation + static nominal wages = falling real wages
Houses become less affordable, even harder to save for the 20% deposit, which will be the norm next year
4. planning4acrash said...
Well exactly, because our Corporatist government has the CPI, the Consumer, ahem, Corporate Price Index, which tracks the main consumer items purchased by Corporations, such as computers, hotel nights, etc. This Corporatist, nay I say Fascist Government has no interest in keeping a lid on Consumer Prices, or indeed the general devaluation of Sterling. Itself, being determined by the growth in money supply, which itself is the cause of most general inflation and the vast majority of economic boom and bust cycles. They won't tell you about it, because the financiers benefit on the upswing by ladening us with debt, whilst our money supply grows, then they benefit on the downturn, where they repossess assets or buy them at reduced prices whilst our money supply goes down, and they continue printing money for themselves:
From the economic papers link on the front page of HPC:
Ludwig von Mises Institute
You can find out more about the Ludwig von Mises Institute on Wikipedia.
5. shipbuilder said...
p4ac, once a state of mind or system becomes entrenched, it is very difficult to change. Once people believe 'that's the way things work', a particular system, such as our current monetary system, or capitalism, becomes automatically 'the best way', partly because we like to believe that we are at the peak of civilisation. The point I am labouring to make here is that our monetary system is not 'designed', it is evolved. All such large systems of governance are and have always been. The system that works best for those in power will always become the norm, sadly. Of course we'd all like to believe that this is 'hidden' from us and forced upon us because that means we can divert responsibility away from ourselves and on to a shadowy 'evil'. The reality, however, as you've shown by posting links on this website, is that it is far from hidden - we all buy into it because we get our own little slice of the pie and we believe the myth that we can all be rich and so we must all take the responsibility. I suggest you watch 'The Corporation' - it explains pretty well how companies have become the way they have all on their own.
6. shipbuilder said...
p4ac - to me this accepting of the responsibility is absolutely central to being able to change our society to a fairer one. This is why I believe that the idea of a 'controlling elite' is not just damaging because it is untrue, but because it diverts responsibility away from ourselves. It's a symptom of our society these days, our lack of personal responsibility - I think it's partly why the NWO theories started in the first place.
It's also a bit ironic that the very core of Libertarian and conservative believe is personal responsibility.
7. last_days_of_disco said...
@shipbuilder
I couldn't have said it better myself. We are to blame, its our own fault. The more we blame shadowy elites, the more power we give them making us easy targets for manipulation. Its the oldest story in the world. Think for yourself and get involved. Don't give up on simple core values like honesty, kindness and fairness. This is not rocket science.
8. Planning4acrash said...
There is an elite. BUT, you are right about the personal responsibility. We will only have sound money when the people take responsibility and leadership from the elite. Because at that point, we would have the money system that benefited the leaders, us, the masses.
9. planning4acrash said...
There is an elite. BUT, you are right about the personal responsibility. We will only have sound money when the people take responsibility and leadership from the elite. Because at that point, we would have the money system that benefited the leaders, us, the masses.