Krugman notes headline price inflation, 5.6% for the year, with an instantaneous rate of over 10%.
But, we are not to panic.
Because wages are declining, and the inflation is only commodity driven price inflation, not a wage inflation spiral.
Yeah, that will work.
So, anyone care to bet whether Krugman got a pay cut, a pay raise less than inflation, or a pay raise larger than inflation?
More like this
"It’s hard to build models of inflation that don't lead to a multiverse. It’s not impossible, so I think there’s still certainly research that needs to be done.
Unfortunately, Mark Twain's aphorism, "lies, damn lies, and statistics", has been used so many times that it's become trite. But, as I say repeatedly around these parts, you have to understand your data.
"Despite its name, the big bang theory is not really a theory of a bang at all. It is really only a theory of the aftermath of a bang." -Alan Guth
Following up on my first post a while back, All aboard the York University Space Elevator!, the York University Earth and Space Science and Engineering research tea
Gee, these dudes are dumb. All they have to do is ask any low income earner what's going on here and they'd get the correct answer: wages are dropping as retail/hospitality/transport/etc/etc businesses cut costs before being forced to close down. Then what will happen to wages? Or unemployment rates? Dumb asses.
Some wages are dropping.
I would be much more impressed if they cut the gross pay and bonuses of the management who ran the companies into the ground while skimming off the profits from employee productivity gains.
"I would be much more impressed if they cut the gross pay and bonuses of the management"
Regrettably, "they" *is* the management. What is hapenning here is that you bet your pension on the stockmarket, the money spent on shares winds up as available business captial, and the executive and investor class are simply trousering it.
Forced retirement savings is *the* scam of our time.
You argue like a republican.
1. You are not an expert in field X.
2. You disagree with expert in field X.
3. Your argument is effectively "That's wrong!"
It's sad that our collective level of discourse has sunk to that level.
1. You are not an expert in field X.
2. You disagree with expert in field X.
3. Your argument is effectively "That's wrong!"
It's sad that our collective level of discourse has sunk to that level.
This analysis depends on the existence of a field X which effectively corresponds to nature. There are values of X for which expertise in X is negatively correlated to utility, astrology to take an example.
So substitute for point 3 in your summary:
3a) Is there any evidence these X people know what they are talking about?
This seems a fair enough sequence.
As a climate scientist, I believe the answer when X is climate science is yes, but I don't think those climate scientists dismissing the question are doing a service. A field X needs to be able to justify its conclusions to outsiders lest it wander off into a land of artifacts. Such an outcome is not without precedent.
Well, generally speaking, in order to argue the starting point is to disagree and say "that is wrong".
Fortunately, of all the experts around, economists are one of the safest to disagree with.
However, I generally agree with Krugman.
My counterpoint is twofold: one is that he implies that price inflation is ok, because this time other economic forces are hindering wage inflation to compensate for it, and he seems to think this is "good".
So, my first question is whether he really thinks it is good at the level that he would accept below inflation pay increase himself? - He took the comment on his own blog, but I haven't checked to see if he answered.
Secondly, if he will demand higher pay for himself, why does he think most other people will not. ie who is this "good" for, and why should people accept the hit to their living standards?
In the current situation, it is considered good for high wage earners to demand higher pay, but the bulk of the workers are expected to refrain from doing so for the good of company profitability, even though this depresses internal demand due to lower purchasing power.
The question becomes normative - "good for who".
Company profitability is good, but if the management "trousers" the profit, or distributes it all to shareholders, and does not return a substantial fraction to compensate more productive workers, or invest in more development, then we get where we are - very high income inequality, investment bubbles and collapsing demand.
The cure is not more of the same.
M. Tobis - Agreed. For values of X that reasonably correspond to reality.
S. Sigurdsson - I certainly wouldn't disagree that the level of income inequality is too high (and a Bad Thing). I suspect Krugman would agree. However here I think Krugman is concerned with a systemic wage/commodity inflation spiral, which once established is difficult stop - and would do real harm to the economy - and people.