Fresh water American economist, and American salt water economist may misunderstand why there is no wage inflation in the US of A. First of all there is wage inflation in certain sectors of the economy, as it should be, as in supply and demand.
Again because of trade counties are able to under cut manufacturing wages therefore there shouldn't be wage inflation in manufacturing.
What about the service sector that is creating all those jobs?
There should be wage inflation there, shouldn't it be Especially if a country is at full employment.
Again if earnings aren't high enough jobs would be lost. Losing of jobs means supply
and demand kicks in, wages stagnate or possibly go down. Supply and demand economics.
Now let's assume that manufacturing jobs are brought back the United States, inflation ( not necessarily wage) would in all probability ensue or profits would be reduced.
There is a good chance that in the near future there will be wage inflation brought by the government because of the minimum wage going up. My fear is panic by those who worry about wage inflation, destroying the economy.
My main purpose of writing this is indicate that one has to constantly look at what is happening and challenge one self if the economics of the past is the economics of the present and the future.
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