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ProfessorGAC

(65,076 posts)
5. Not Sure There's Evidence That...
Tue Dec 1, 2020, 07:38 AM
Dec 2020

...wage increases have that much leverage over inflationary price pressures.
It is true in a vacuum, if the world worked like Econ 101.
The problem is that data show higher wages lead to per capita productivity increases. Thus, the greater income by those workers increases monetary velocity chasing more goods.
It's not that tenuous a scenario to reach equilibrium that still keeps inflation low.
The notion that wages create great pressure on inflation is a Chicago school canard with no real world evidence to support.
Not that I oppose BI, but your motivation is flawed. We could do both.

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