Re: Interesting Economics Questions


<parkinsonandy@xxxxxxxxx> wrote in message
news:1115497617.366743.278990@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> 555666hahaha wrote:
>> Forgive me for not knowing as much as you think I should about
>> economics, but I have a few ideas I'd like the higher forms of life
>> here to comment on.
>>
>> The price of everything is going up all the time, which prompts 2
>> questions:
>>
>> 1 - If minimum wage keeps going up with the cost of living increase,
>> does that mean that there will come a day when this wage will be
>> $100.00 per hour? And then even more ridiculously high wages in the
>> farther future? Are personal cars and trucks one day going to cost
>> millions of dollars each?
>>
>
> This has been fairly well covered in other answers - in essence, if
> inflation continues, then yes. But the key concept here is the 'real'
> (inflation-adjusted) value of things. Real = nominal - inflation. If
> inflation is 2% this year, and my wage goes up 2% as well, my real wage
> is unchanged because I can buy the same amount of goods and services as
> I did last year. Real wages do in fact increase over time because
> peoples' productivity rises, as an input of one man-hour into
> production produces more goods (in real terms).

That increased productivity will always increase wages is
simply wrong. Such increased productivity may reduce
overall wages and increase rent and interest. As capital
reduces the need for labor then there is (or can be)
an effective oversupply of labor that reduces wages
while holding output constant. As total wages are less,
rent and/or interest will have risen leaving the cost of
the produts the same as before. The rentier and the
capitalist will consume more output and the wage
earner will consume less. That is a reduction in
_real_ wages.

<<snip>>

Lots of stuff snipped (no insult or disagrement intended) cause
I want to concentrate on this distribution problem.


.

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