- Capitalism and Alternatives -

Think so...

Posted by: Red Deathy ( Socialist Party, UK ) on July 19, 1999 at 19:45:49:

In Reply to: Could it be- wage rises don't cause inflation? Shock fucking horror! posted by Deitel99 on July 19, 1999 at 14:03:13:

: I think not - Wage increases do cause one of two things. Either, inflation can kick up, or the trade deficit jumps. And I remember hearing that the deficit rose to the highest for several years. This basically means that the people who buy stuff are not paying their way. They are buying more stuff than they produce, and this is not sustainable.

How on earth is that possible- I must, by definition, be paid less than the value of my produce, otherwise my employer would not make any profit. Now, manufacturing is in abyssmal decline (in fact its just had a recession), which would actually cause a balance of payements deficit, but that is a decline in production due to Government policy.

: I'm all for the workers being paid for what they produce, without large amounts of money going to managing directers (most of whom didn't start the company and so did not take the "risk" which the workers are forever paying the "fat cats" for), but they should be paid for what they produce. Any more and inflation kicks in or trade deficits start up. Both are economically damaging, and wage increases are OK if they are paid for with a rise in productivity.

You haven't shown how inflation kicks in- given that Labour is a commodity istself, how can it cause inflation?

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