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Dont Rule Out Wage Inflation To Save Us From Debt

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Er thats it really.

I think most on here accept the idea that the East is preventing wage inflation.

I think we need to keep an open mind, that it could happen in developed economies, though it may not look obvious at the moment.

I m not saying its a cert either.

Just take a look at the top execs - who get £100K a month or million pound bonuses just for FOR FAILING.

There are lots of people on ridiculous amounts of money at the moment....particularly in London.

Wage inflation in a few but huge amounts of money = wage inflation for everyone with snall amounts of money

Which ever way - is the effect the same?

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Don't confuse higher wages with inflation.

Inflation represents an increase in the money supply relative to the amount of goods/ products in the system. Things like 'price inflation' and 'wage inflation' are just the symptoms of inflation.

And as for sharply higher wages to enable the general population to keep pace with inflation - forget it. Not going to happen. The government will continue to use fiddled CPI figures as their preferred measure of inflation and they'll vastly underestimate the real situation.

On top of that; With so much being imported, a vastly depleted manufacturing industry and strong competition due to globalisation, businesses in the UK are in no position to be able to offer better wages even if the official figures were reflecting the true rate of inflation.

Edited by Sour Mash

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I am ruling out wage inflation; Gordon Brown has already prepared his responses to wage demands from police, nurses, firemen and teachers:

"Sod off, bugger off, piss off and ****** off".

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I somewhat agree - the people who understand it all will want more money. thats what market rate means.

I personally want a pence per mile which covers the actual costs of motoring. i also want a wage/salary that covers living expenses ;)

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Don't confuse higher wages with inflation.

Inflation represents an increase in the money supply relative to the amount of goods/ products in the system. Things like 'price inflation' and 'wage inflation' are just the symptoms of inflation.

Agreed.

The term "wage inflation" doesn't even make any sense.

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I think most on here accept the idea that the East is preventing wage inflation.

Expect that, in due course, wages in the west will be, in real terms, the same as those in the east. And not in a good way.

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Er thats it really.

I think most on here accept the idea that the East is preventing wage inflation.

I think we need to keep an open mind, that it could happen in developed economies, though it may not look obvious at the moment.

I m not saying its a cert either.

Just take a look at the top execs - who get £100K a month or million pound bonuses just for FOR FAILING.

There are lots of people on ridiculous amounts of money at the moment....particularly in London.

Wage inflation in a few but huge amounts of money = wage inflation for everyone with snall amounts of money

Which ever way - is the effect the same?

Have you seen the new trend in employment in the UK over the last few years? It's when you have to reapply for your own job at a reduced salary and benefit options or "go elsewhere".

I know some believe it may come, wage inflation, but all I can see is more unemployed and wage deflation like you wouldn't fuc*ing believe!

Just my tuppence worth.

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I see more movement around from people who are competent. They have to leave and get a better job. Then the company has to pay the recruitment consultants to find someone new and then train them. The market works for competents and then you get strikes from the people who just go to work for a job.

Nothing wrong with either person - I hasten to add.

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Wage inflation is needed to carry the debt and tax burden.

Nothing to say that in ultra-competitive world markets that it is coming though, certainly not enough to outrun a central bank and govt. hell-bent on inflation to ease debt in resolution to a problem of their own making.

http://www.independent.co.uk/news/business...-it-799494.html

Real wage increases in the top 13 countries of the Organisation for Economic Cooperation and Development (OECD) have been below the rate of inflation since about 1970 – a situation compounded in Britain as the measure of inflation massively underestimates the real cost of living.

Thus wage earners – rather than asset owners – have faced a 35-year downward pressure on their standard of living. Indeed, the golden age for the salaried worker, as a share of GDP, was between 1945 and 1973 – and not this vaunted age of liberalisation.

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Yes, executive wages are ridiculous at the moment. But that's because we've been in a boom. Once we get into a recesion and profits are sliding more or less across the board, will exectutives be able to award themselves the same huge pay rises? I can't see it myself.

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I am ruling out wage inflation; Gordon Brown has already prepared his responses to wage demands from police, nurses, firemen and teachers:

"Sod off, bugger off, piss off and ****** off".

Spot on hence the pressure and effort keeping CPI/RPI artifically low, screw the mob while its not looking, most wage increases are base of these figures.

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Yes, executive wages are ridiculous at the moment. But that's because we've been in a boom. Once we get into a recesion and profits are sliding more or less across the board, will exectutives be able to award themselves the same huge pay rises? I can't see it myself.

My naive thought would have been that, in the absence of abundant cash, those who get the money will more frequently be those who earn and deserve the money. It is much less likely to be given away to people who dont earn it! That would indicate that skilled workers who can do something for their wage are more likely to be favoured than executives who just play with existing money to try and make more (which does not work so well when money is in short supply!)....

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The market works for competents and then you get strikes from the people who just go to work for a job.

....surely you have omitted those "who just go to work to attend ...not work"...there is something wrong with them and their management.... <_<

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I think it's fairly clear that while wage inequalities can be sustained in a boom time, they never last in a bust.

Pandering to those who are left out or get a small slice of the economic pie (for good or bad reasons) is just so succesful politically that higher wages for the lowest earners are more or less inevitable. This will come from the highest earners, as it always does.

We don't have Japan's culture of karma and fatalism so there is no chance of people blaming themselves for macro economic problems, they will just want more to manage their debts/consumption/increased bills and they will organise one way or another and get it. They can either be paid more or they will steal it directly.

I said on here when they nationalised NR that the door was opened for everyone who works for or is paid by the government to ask for more money because the moral argument that had held sway since Thatcher has been shot to pieces. "We cannot afford.....x" from the government will be followed by "but you bailed out the bankers for failing..cough up" from whoever is accross the negotiating table.

The economic argument is gone, the moral argument is gone, the political argument will be easy once bills are really biting and mass repossessions are a fact of life.

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I am quite interested in this too as it should have a big impact on how things turn out in the future.

What has been said here pretty well sums it up:

- No way wage inflation will be allowed

- Inflation as in CPI (or its true equivalent) probably up

I won't get into CPI but I've got some points I'd like to highlight on wages:

- Since the 70s inflation targeting has been aimed solely at wage inflation. Not it seems consumer goods or asset prices.

- Western government 'Inflation fighting' seems to center around inflation expectations management which I think can be fairly translated into: "making sure wage demands don't start going up" (you may have noted that this isn't happening in Asia for example)

- Western empoyees still cost ten times as much as Chinese or Indian ones (according to no doubt inacurate info I have come across), and globalisation does require that at some stage we have equilibrium: proximity has been vastly enhanced by technology, the WTO is breaking down trade barriers, this process seems to me to be unstoppable.

- On the subject of the above point, I would add without wanting to go into some conspiracy theory that TPTB seem to be doing everything they can to make it easier for us to swallow that particular pill (manipulated CPI figures, focus on wealth and speculation, push the use debts to compensate for loss of living standard, etc?). If there was some truth in that, it would underline a certain inevitability of this process towards global equilibrium as the Western TPTB are not fighting it but helping us adjust to it instead.

- Most large corporations are now actively engaged in human resources arbitraging. An anecdote from as early as the 90s, it was a pre-requisite imposed on dot com startups by some US venture capitalists that they have an offshore component in their business plans. This is the same as gobalisation but underlines the presence of very keen participants in this process.

- This applies to the Western world as a whole not just the UK so I don't think it has anything to do with party politics.

With this information in hand I'd say there is littlle chance for wages to go up and catch up with house prices. Either there is a masive HPC or most people rent properties that belong to a class of super wealthy landlords (as has been the case for most of our history BTW).

I'd be grateful if anyone would care to comment.

Oh, then again, I read recently that German steel workers just got themselves a 5%+ payrise. Will it work or will it just encourage more offshoring?

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Guest Charlie The Tramp

Wage inflation is a past dream, many will see the value of their Employment drop in the future.

As people retire or leave their Employment their replacement will be at a lower salary.

At the time of Mrs CTT`s retirement her salary £19k, she has just found out a few weeks ago 10 years later her old job today is being advertised at £15k and that from a prestige employer.

During the 1970s many inflationary pay rises were on productivity deals, new automation brought in, voluntary redundancies, and the remaining employees sharing 60/40 of the savings on basic rate only, 60% for the Employer and 40% for the Employee, how the Employers grabbed at this opportunity.

BTW these deals were accepted by the Government Department dealing with prices and incomes, as long as the Employer`s total wage bill did not increase.

Currency collapse will mean those still in a job will be earning significantly more paper than today.

Oh FFS give it a rest. :rolleyes:

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I am quite interested in this too as it should have a big impact on how things turn out in the future.

What has been said here pretty well sums it up:

- No way wage inflation will be allowed

- Inflation as in CPI (or its true equivalent) probably up

I won't get into CPI but I've got some points I'd like to highlight on wages:

- Since the 70s inflation targeting has been aimed solely at wage inflation. Not it seems consumer goods or asset prices.

- Western government 'Inflation fighting' seems to center around inflation expectations management which I think can be fairly translated into: "making sure wage demands don't start going up" (you may have noted that this isn't happening in Asia for example)

- Western empoyees still cost ten times as much as Chinese or Indian ones (according to no doubt inacurate info I have come across), and globalisation does require that at some stage we have equilibrium: proximity has been vastly enhanced by technology, the WTO is breaking down trade barriers, this process seems to me to be unstoppable.

- On the subject of the above point, I would add without wanting to go into some conspiracy theory that TPTB seem to be doing everything they can to make it easier for us to swallow that particular pill (manipulated CPI figures, focus on wealth and speculation, push the use debts to compensate for loss of living standard, etc?). If there was some truth in that, it would underline a certain inevitability of this process towards global equilibrium as the Western TPTB are not fighting it but helping us adjust to it instead.

- Most large corporations are now actively engaged in human resources arbitraging. An anecdote from as early as the 90s, it was a pre-requisite imposed on dot com startups by some US venture capitalists that they have an offshore component in their business plans. This is the same as gobalisation but underlines the presence of very keen participants in this process.

- This applies to the Western world as a whole not just the UK so I don't think it has anything to do with party politics.

With this information in hand I'd say there is littlle chance for wages to go up and catch up with house prices. Either there is a masive HPC or most people rent properties that belong to a class of super wealthy landlords (as has been the case for most of our history BTW).

I'd be grateful if anyone would care to comment.

Oh, then again, I read recently that German steel workers just got themselves a 5%+ payrise. Will it work or will it just encourage more offshoring?

For most of our history we lived in the houses built by our own hands or with neighbours help. That's because there wasn't the massive disparity in ability to coerce between land "owners" (a complete fiction) and the landless (actually everyone, the factual position) - anyone who wanted to stop you from just building on a spare bit of land would have had to come and stop you themselves, the ability to have a class of professional strongarm men stopping natural human actions like housebuilding is relatively new.

The key distinction I think is to say that earnings are not often a zero sum game. I can earn several billion next year and it takes nothing from the next man. The area where this is not true is in non renewable raw materials, of which most people do not use a great deal other than oil and land*. Rising wages in the East do not equal lowering wages in the west. Those in power just like to extract more profits from their workers and this is a convenient excuse.

An analogy - I gather together a few friends, we build a grand house for my benefit. It has gold window frames, a TV in every room, three fridges and a huge crunchy gravel driveway etc etc. To the east, a bunch of people do nothing, they live in caves. Once my house is built I have a house and they still have nothing. One day they decide to build a house, but they aren't that skilled and so their house isn't anything like as nice as mine. They gain a house, I lose nothing, I still have my house.

Wealth is created, not distributed. The problem in the west isn't that other people have started to create wealth, it's that we have stopped.

*Land is artificially limited, there is no scarcity of it yet. Far from it.

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debtkb4.jpg

Yep it's needed but doubt we'll get it. Switch to IO mortgage ?

Not sure what the UK productivity growth is like. Worse than Germany ?

Edited by Ash4781

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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