Peso taking off

Nah, it's really called benzine, petroleum is what my mom used for cooking before we got natural gas pipes into the home somewhere in the early sixties (just to add to the babylonian confusion of tongues )

 

As long as rising wages are compensated by rising productivity they don't have to lead to inflation.
The problem is that in most service oriented sectors productivity doesn't rise (if a hotel owner tells his cleaning crew that henceforth they need to clean 5 rooms per hour rather than 4, all that achieves is dirty rooms, not higher productivity).

 

There are many minimum wage jobs that can be sent overseas. bookkeepers, customer service agents, etc. As these jobs go overseas then the people who used to do them compete for the remaining fast food, hotel and other service jobs. This puts downward pressure on the wages for these jobs. Furthermore many service jobs can be automated with machines purchased from overseas. The next time you see a foreign machine think of a bunch of foreign workers doing the work the machine is doing.

We agree that these people deserve a living wage, but inflating wages is not a long term solution because increasing the labor cost will encourage the jobs to go overseas.

A living wage is relative to how much things cost. Keeping costs down increases a persons purchasing power. Keep costs low enough and the current minimum wage is sufficient.

This pie in the sky thinking is causing the problem. Yes there are a very small number of people who make too much money and need to pay more taxes. The big problem is that there are so many working poor people that when the wealth is spread around there is still not enough.

Someone will lose. Rich countries have a choice. If they keep their costs low they keep their lifestyle. Otherwise jobs and productivity will leave their country. They will end up borrowing from the future to fill the difference. Which is what they are doing now.

A government can redistribute wealth by taxing the rich and paying part of the wage for low income earners. This keeps wages low from the business perspective and reduces the desire to go overseas.

Agreed. The only question is how stupid their solution will be. Venezuela recently went through this process.

 

Unfortunately it INCREASES the desire of the highly-taxed wealthy to go overseas.

 

Somewhat true. But it is less of a double edged sword than you think.

The pie in the sky believers think the bulk of the wealth is held by a very small number of highly mobile people. The reality is that the bulk of the wealth is held by the upper middle class. They tend to stay where they are.

Individuals that leave are already subject to a exit wealth tax. The same rate as the gift (inheritance) tax.

The important part is that the business activity stays in the first world country.

 

Agreed that the tax laws need to be adjusted for the ultra-rich. Capital gains beyond a certain amount, gift tax, inheritance tax and tax on luxury goods.

But, it needs to be made clear that taxing the ultra-rich is not enough. We can't lose critical industries to other economies. Particularly the high tech industries. (Automation, robotics, computer chips, AI, modern electric automobiles, etc.) Wages need to be kept to a reasonable amount so that these industries stay.

 

You are getting warmer.

The concentration of wealth is mostly in the skilled upper middle class. The pie-in-the-sky believers think it is enough to only tax the ultra rich. They are wrong.

Absolutely, low skilled workers either by choice or personal issues (mental illness, mental ability, etc.) deserve a living wage. Furthermore, they deserve a well hewn path to better opportunities.

The problem is that that raising the minimum wage has unintended consequences that the pie-in-the-sky believers do not understand. It pushes jobs overseas.

For example consider the plastic injection molding industry. It was driven overseas in the 1980s. Labor wise, there are two main drivers in this industry, highly skilled tool & die mold makers, low skilled injection machine operators and support staff. The skilled mold makers make a good wage, the low skilled injection machine operators make minimum wage. Raise the minimum wage and this industry moves offshore. The problem is that it takes the high paid tool & die mold makers with it. This loss of high paid jobs is an unintended consequence.

Modern economies have themselves in a pickle. They have already allowed prices to inflate and this is hard to fix. One solution would be for the government to subsidize minimum wage workers. Not business! Do not raise the wage businesses have to pay. Instead tax the rich (this is actually the upper middle class because the tax increase on the ultra rich is not enough) and make government subsidy payments to the working poor.

Here is where liberal thinking totally fails. During the recent elections in the US some of the candidates were proposing Universal basic income (UBI). This is a sociopolitical financial transfer concept in which all citizens of a given population regularly receive a legally stipulated and equal financial grant paid by the government without a means test.

Giving money to everyone simply raises prices and the working poor are in the same place they were before. The pie-in-the-sky liberals are too stupid to understand the unintended consequences of things like raising the minimum wage on business and UBI without a means test.

Sure help out the working poor with wealth transfer from the wealthy via tax relief and payments, but do not make decisions that drive industry overseas.