Port strike and automation

[Loren Pechtel]

If they have enough power the unions can and do cause inflation. They can only benefit by continuing to cause inflation which will hurt everyone. If they quit causing inflation they return to where they were.

You are confusing inflation with price. Price is when a CEO, or a union, or a school teacher asks (and gets) higher wages. Price is also when bit coin starts at $1 and goes to $70k. That is NOT inflation. It is NOT inflation because those prices have a chance and (according to Buffet in the case of bit coin) a certainty of also going down again after market exuberance is lost.

No, I am not. The union drives up the price of their labor. The products the company sells become more expensive. As this percolates through the marketplace you'll end up with everything costing more.

Inflation OTOH is the printing of more money in the same pool which dilutes its ability to purchase the same amount of goods. The government legally counterfeits money which causes each existing dollar to be worth less. It may take time for the dilution effect to show up as a higher priced good, but the actual inflation of the balloon happens at the fed level. The fed is solely responsible for inflation. The private entity fed not only counterfeits our currency without going to jail (as you and I would). But then they successfully convince deluded and ignorant people like yourself that inflation is the fault of CEO's, unions, and school teachers..... which it is NOT.

In a simplistic world. In the real world it's more complex: by far the biggest factor is how fast money moves. The Fed might print a buck, but the economic effect is determined by how many times that same buck gets spent. Thus the Fed normally does not print money as an economic control, they print money as society needs. The Fed exercises it's control by means of interest rates, not the printing press.

But along came Covid. Economic activity cratered. The Fed turned the interest rate control all the way down and it wasn't enough to keep the market stable. Thus they resorted to the printing press. The Fed is responding to the market, aiming to keep inflation at 2% because deflation is far more harmful than inflation and 2% gives enough wiggle room for the economic cycle.

Your fantasy world of no Fed suffered far greater economic swings than what we have now. Everybody large does something similar to try to keep their economy reasonably stable.

The Fed is quite correctly isolated from a lot of political control so it won't respond to pressure to turn up the economy for political reasons rather than economic ones.

 

[Loren Pechtel]

In order to raise capital, everyone needs to save more and spend less. No one saves anymore because interest is low and inflation is high. That is controlled more by the fed than the union workers.

In the long run interest will be a bit more than inflation. Expect about 3% more for no-risk interest assuming no transaction costs. (Do not expect this from your bank--there are most definitely transaction costs! Without transaction costs there would be no bank.) The marketplace decides this, not the Fed, not the unions.

If they have enough power the unions can and do cause inflation. They can only benefit by continuing to cause inflation which will hurt everyone. If they quit causing inflation they return to where they were.

I'm willing to manage a small amount of inflation so that people can work for a living.

The thing is that's not how it works. Unions driving up wages becomes a race to just stay put because driving up wages drives up prices. Without an increase in productivity you end up right back where you started except with the economic damage of inflation.

Of course they don't match up. I'm just saying monopoly power is wrong, whether by union or by business.

Of course it is wrong but it is the reality of human behavior. All human behavior including the ones who run companies. So the only solution is to arm both sides equally.

I'm not interested in being caught in the crossfire.

Seeing we don't live in a Utopia, I'm not certain how else it can be.

I don't want either one to have monopoly power.

 

[Loren Pechtel]

The point is that leftist arguments are stupid, so they don't survive in the marketplace of ideas by being well-reasoned, but by triggering the pattern-matching circuits hard-wired into our brains by a million years of hunting and gathering. We are all natural-born zero-sum-game economic thinkers, because for 99% of our time on earth we lived in a zero-sum-game economy where nobody produced his own food and every deer anyone killed was a deer taken from the shared supply. Keeping in mind that ten thousand years ago we started farming and it rendered our economic intuition obsolete, and reminding ourselves that we therefore need to draw conclusions by reasoning instead of by intuition, takes effort. I'm pointing out that you're letting your brain be colonized by a meme that has evolved to parasitize brains by taking advantage of their subconscious zero-sum-game intuitions, even though your conscious mind knows economics is not a zero-sum game.

In the short run it is a zero-sum game. What the left doesn't understand is that the Bill Gates of the world don't take from the existing pile, they create a bigger pile. I don't like Microsoft and I think they're a very dishonest player in the market--but that doesn't mean their existence reduced what others got other than by riding their coat tails. (There are companies that were hurt by Microsoft stealing their improvements to what Microsoft offered.)

Income and wealth inequality are already major problems, and continues to rise.

...
(Source: nih.gov)

And here's that graph you post every time "GINI" hits the filter.

No, only every time somebody claims inequality is increasing.

And the whole thing is based on some artificial lines. Skilled workers waste a lot less of their time on low skill tasks these days so the value they create for companies relative to those low skill tasks has gone up. This shows up in the labor market as an increase in the spread between skilled and unskilled but it doesn't mean the average is declining. The curve has become wider in both directions. And there is a consistent problem with people claiming inequality that's actually between the start of one's career and the end of it. Most people start in the bottom quintile of wealth. And quite a few of them end up in the top quintile by retirement.