Krugman- Falling Wages

[n2doc]

July 8, 2011, 9:00 AM
Falling Wages

Ugh. That was a seriously ugly jobs report (pdf). Almost no job creation, with slow private-sector growth offset by falling public-sector employment; a falling employment-population ratio; and (I don’t know how many people have picked this up), an actual decline in wages, albeit a small one.

Let me emphasize that last point. My bottom line on the inflation-deflation issue has always been to look at wages; you can’t have a wage-price spiral if wages ain’t spiraling. And they aren’t, to say the least.

It’s important to realize, by the way, that stagnant wages are NOT good for recovery; all they do is ensure that the burden of debt relative to income remains high, keeping demand and employment down.

The situation cries out for aggressively expansionary monetary and fiscal policy. Instead, however, all the political push is in the opposite direction.

http://krugman.blogs.nytimes.com/2011/07/08/falling-wages/

[Skittles]

1. the middle class is dying

aided and abetted by so-called "Democrats"

[Pale Blue Dot]

2. Krugman is an ass. Inflation IS going up while wages are going down.

The two aren't linked anymore the way they were 30 years ago. Now inflation is tied to speculation, dwindling oil supplies, and the fed pumping trillions of new dollars into the market.

Yesterday I went to the supermarket and meat and potatoes (non-sale prices) were up significantly from last week. Oil prices have risen $9/barrel in the past WEEK.

Inflation is happening, whether wages are rising or falling.

[mmonk]

3. To have generalized inflation, normally it takes rising wages.

But yes, speculation throws a monkey wrench into the mix. But Krugman is not an ass because if you handle it like the problem is generalized inflation due to rising wages, you'll add harm to the economy.

[Jim Lane]

4. Krugman doesn't say what you imply.

He doesn't say there's no inflation. He says there's no wage-price spiral, and in that he's completely correct.

That's completely consistent with your point, that inflation can arise from causes other than a wage-price spiral.