Most of this discussion seems to be off topic hot takes on conspiracy theories about inflation and big corp.
I am worried about a wage price spiral. But I’m not expecting it to commence yet. Common sense suggests most people are not going to look at inflation forecasts and say “well, I’d better ask for a preemptive wage rise”, rather people will notice price rises, adjust their budget, and when the rises become intolerable they will say “hang on, I really need a pay rise.” Most people are too busy to follow macroeconomics.
So I’m expecting wage bargaining and rises to become a central theme in 2022 once people really notice. Even at an annualised rate of 5%+ that takes time.
It’s very difficult to see how wage rises won’t be granted, which makes me wonder how politicians are imagining they’re going to prevent a spiral. This is exactly why we don’t print money and put it into retail accounts.
I’ve pointed it out before, but in the 80s in Britain Lawson and Thatcher spent years trying to end the spiral, and they really struggled despite throwing everything they could at it. Wage spirals are as much about politics and psychology as they are about economics.
I am worried about a wage price spiral. But I’m not expecting it to commence yet. Common sense suggests most people are not going to look at inflation forecasts and say “well, I’d better ask for a preemptive wage rise”, rather people will notice price rises, adjust their budget, and when the rises become intolerable they will say “hang on, I really need a pay rise.” Most people are too busy to follow macroeconomics.
So I’m expecting wage bargaining and rises to become a central theme in 2022 once people really notice. Even at an annualised rate of 5%+ that takes time.
It’s very difficult to see how wage rises won’t be granted, which makes me wonder how politicians are imagining they’re going to prevent a spiral. This is exactly why we don’t print money and put it into retail accounts.
I’ve pointed it out before, but in the 80s in Britain Lawson and Thatcher spent years trying to end the spiral, and they really struggled despite throwing everything they could at it. Wage spirals are as much about politics and psychology as they are about economics.