Quote Sal Paradise="Sal Paradise"If you keep increasing wages you end up with an upward spiral of inflation we saw pre-Thatcher - is that the price you think we should pay for our economic illiteracy? Most serious economists - Minty and Mr Fish excluded - see inflation as a very negative economic position not sure why Minty is suggesting a return to the days of Jack Jones & Joe Gormley?'"
First, I wasn't even calling for increased wages, but talking about wages keeping pace with the cost of living. You appear to think that wages should be driven down, leaving people to struggle to pay for the basics – let alone buy the things that keep the economy going.
If you try to read some economics you may learn something. [url=http://www.amazon.co.uk/Things-They-About-Capitalism-ebook/dp/B0040QDMBE/ref=sr_1_fkmr0_1?ie=UTF8&qid=1364911059&sr=8-1-fkmr0This, for instance, explains why the drive for ultra-low inflation is dangerous.[/url
Indeed, unemployment was 'the price worth paying' for it – unemployment that directly helped to raise the deficit, as has been explained more than once here and not least by Sally.
I've not suggested a "return" to anything – try to engage your comprehension skills rather than what you want to believe someone is saying.
The deficit is continuing to rise – this is a direct consequence of the lack of confidence in the economy and levels of unemployment.
All that dross about inflation in the 1980s and 1990s saw unemployment rise and, with it, the deficit. These are facts.
We have an economy that needs people to have disposable income to spend on services. I'm sure most of us here agree that the economy needs rebalancing, but that does not happen overnight. The latest figures now show that manufacturing output is down.
So in the short to medium term, we need to get money into the economy – this service economy. Driving down incomes does not do that. In the end, it will simply see more jobs lost and further increase in the deficit.
And since we have had stagnating or falling wages for all but a few for the past 30 years, if it's rising wages that cause inflation, how come the cost of living (inflation) has way outstripped any incomes rises?
It isn't the cost of wages driving up housing costs. It isn't the cost of wages driving up utility costs. It isn't the cost of wages driving up food costs.