say, greg, how's the price of mustard, pickle relish and olive oil doing?
At 05:03 PM 8/5/1999 -0400, you wrote:
>Ellen, speaking of pricing power or price gouging. This afternoon I stopped
>at NAPA a large auto parts chain for a few things. One of the things I
>to buy was a can of acetone solvent. I asked the price of a can of acetone,
>the guy told me $ 7.49. I laughed at him and left. I went down the road to
>another parts joint and bought the same size can of acetone for $2.79! I
>could probably even buy it cheaper. Greed is a big cause of inflation!
>Ellen Frank wrote:
>> Doug writes:
>> >Between 1997 and 1998, union members had an average weekly wage
>> >increase of 3.0%, vs. 4.4% for nonunion workers. I suspect that's a
>> >reflection of a higher unionization rate in manufacturing, where the
>> >real wage is virtually flat; for the last two years or so, private
>> >service workers have seen real hourly wage increases in the 2-3%
>> >range, despite low union density. Obviously this service
>> >outperformance is a function of tight labor markets without
>> >significant import competition.
>> What I meant is that the weakness of unions in general (along with
>> other institutions like contractual raises) has made it difficult to
>> bargain for real wage increases without productivity increases.
>> The old radical inflation story goes that inflation is caused by
>> conflict over income distribution that can't be resolved politically and
>> is displaced into the economic arena. When unions are strong
>> and/or labor markets are tight, workers try to resist
>> real declines in income (rising oil prices for example) by
>> using institutional power to increase nominal wages. But of
>> course employers do the same thing, as does every other
>> organized group with some pricing power. Often wages
>> fall in real terms. The impact is often uneven, depending
>> on the strength of wage-setting instituions. Tight labor markets are
>> an important part of this story in the US. In some South American
>> countries though inflation gets going at very high rates of unemployment
>> simply because of powerful institutions with pricing power.
>> >In the U.S., debt substitutes for the social wage. Free tuition! Free
>> You're right. Limit the cash economy and we limit the power of wealth.
>> >I think it'd be more productive to talk about the tightness or slack
>> >in labor markets than about inflation. That's what Wall Street means
>> >by inflation - the balance of class power. That's what Greenspan
>> >means when he's talking about the dwindling supply of new workers.
>> But the question remains. What if BLS announced a 0.5% CPI increase for
>> July? What's the liberal-progressive line? In arguing against NAIRU,
>> a number of people have essentially said - the Fed shouldn't tighten
>> because rising wages doesn't lead to inflation. But what if it did? Does
>> mean the Fed SHOULD tighten? I'm not accusing you of painting
>> yourself into this rhetorical corner, Doug, but some prominent
>> commentators have.