[Intro note: I had a strong initial thought on this, but I did not want to make this super long and go off an explanatory tangents so I struggled to clearly get the thoughts across and succinctly explain it... So if you decide to read it, keep an open mind that I only am suggesting one solution and thought towards to issue of the livable wage, inflation, and taxes as an alternative to the mainstream solution of just increasing wages - compounded by my disdain for taxes and government waste]
What could be the actual benefit of an annual rise in cost of goods and wages? The only thing that comes to mind is that the Government is benefitting the most. How so? Well it is pretty obvious because one of the only few things guaranteed in life is taxes. Minimum wage going up? That means higher wages to tax from the income. Cost of goods going up? That means higher tax from the sales tax on those goods. Why is minimum wage now at $12+ dollars an hour and a cost of the average car now like $40k? Why do we have to have inflation and not keep the wages and prices like $2 an hour and a car being only $2k (as an example of a time when it was that low).
Now, a lot of you might be thinking that I am against people earning a livable wage because I am saying that raising the minimum wage is bad. But that is not true as that is only the touted mainstream way of attempting to fix the livable wage problem. I have always thought that instead of encouraging the increasing of wages, since only the government benefits, why isn't the focus more on keeping wages low and keeping the prices of goods low based on the lower wages, keeping the costs of living in the range of those wages. I do recognize that it is probably too late to ever do this and there is no going back currently.
This translates into our services as lawyers too, as back when I first was old enough to start understanding the legal field, your average local good lawyer was like $300/hr max, but now I see a lot of lawyers around the $450/hr mark. But my quality of service and the service received has not changed. I know, the cost of becoming a lawyers has jumped up year after year, as we have seen with our tuition going up year after year. But in kind, every other profession has raised their service costs to curb the rising costs. So more money does seem initially good, but that number is quickly offset by the increase in the cost of everything AND you had to pay more into the tax system. (yes I am aware that some corporations ride the tidal wave of inflation to raise prices as an excuse for cost to take advantage and bolster profits far beyond the cost increase, but a lot of businesses do it to just stave off the increase cost and keep a surviving margin of profit). But in the end, the increased wages and prices all come down to an ever increasing tax revenue stream, while most people suffer a net negative from the inflation, as taxes act in a compounding nature to take more and more way from people as wages and costs rise (even if they were to rise in a more evenly manner of cost of living to a living wage, taxes impart of negative effect on that balanced rise as it results in more being paid out to the gov't in both respects).
It seems the ultimate issue is the cost of essential goods being artificially inflated, thus causing people to spend more, decreasing disposable income, and raising prices across the board. While a solution is to just cap prices corporations may charge on essential goods, that is at odds with capitalism and (in my opinion) unconstitutional.
ReplyDeleteInflation at a small rate is a good thing for the economy because of psychology. People like bigger numbers, and are motivated by numbers getting bigger. If all goods, services, and wages raise by 2% each year, the psychological effect is that we are all doing better, which motivates all actors to continue producing and consuming.
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