Not many people, even here on FR, understand this. Arbitrarily raising wages, especially in the middle of an existing inflationary spiral, will only make things much worse. It’s no different than the dem proposals for government to provide everyone with a “basic income”, or for that matter what would happen if we just gave everyone a million dollar salary tomorrow. None of that will improve the standard of living of anyone; it will only push more arbitrary dollars out there to chase the same amount of goods, resulting in more and more inflation. And those who weren’t granted these “helicopter dollars”, such as those on fixed incomes, would be absolutely crushed in the process.
But you also mention the one and only exception to what I’ve just said, and that is increased productivity. Wage increases should only happen if they are in response to productivity increases that generate new value in exchange for those dollars. Anything less than that is purely inflationary.
I know very few seem to grasp basic wage and production, to prevent inflation.
With some it might as well be a brick wall.
But I will keep posting as long as it takes for the 💡 to turn on.
Thanks for the post. The basics, as I understood them, are not what they used to be.