Everybody wants more money, but not higher prices.
One follows the other like sunset follows sunrise.
In the late 1800's in this nation, real prices actually fell.
More people increased their wealth because productivity actually rose. More goods faster meant real prices fell. The coal miner actually achieved higher wages through higher productivity (although perhaps not in his own sector.)
Prices vs wages is not a zero-sum game. Increased productivity can literally lead to reduced prices.
Here's how that works. Stand by for a counter-intuitive declaration.
The entire economy runs on the principle "high bid wins." Huh!?!?!? Hogwash, Citizen!! Hold on, hold on. I'll explain.
Say I'm a farmer. Its March. I look at my fields; I have an abundance of dirt, but a scarcity of green beans. I get busy planting, cultivating, weeding, fertilizing, etc. I harvest my green beans and head to market. I drive to market and the Birdseye rep offers me 10 cents a bushel. The Green Giant rep offers me 11 cents a bushel. The Del Monte rep offers me 12 cents a bushel. To whom am I going to sell my green beans? You bet--Del Monte, the highest bidder.
But, Citizen!?! What about when I hire a roofer to replace my roof? Same thing. The
price on the roofer's bids is not the bid. The amount of
work the roofer bids is the bid. Like the farmer, my dollars are my green beans. How much work is each roofer willing to give me in exchange for how many of my green beans (dollars)? Roofer Jones will do the whole job for $1600. Roofer Smith wants $1800 for the whole thing. Roofer Smith is essentially saying that for $1600 he will only do part of the job, whereas Roofer Jones is saying he will do the whole job. Roofer Jones is offering me more work for $1600 than Smith. The amount of work and materials is the bid.
So, you see? The whole economy runs on "high bid wins."
The thing that drives up prices long term and broadly--not short term; any commodity can go up and down short term--the thing that drives up prices long term and broadly is the supply of money in the system. Money is just like any other commodity--the more there is, the less its worth (make a note of that; certainly the bankers have). The reason for price inflation is not increased wages or even increased productivity. The reason for long term, broad price inflation is the manufacturing of money. The people with the newly-manufactured money have more of it (government contractors) and can offer higher bids.
Raising wages does not automatically lead to increased prices. I can--and have--increased the value of my productivity without forcing my employer to raise prices. Across one twenty-year period, I steadily increased my value to my employer by becoming more skilled and more efficient, and received pay increases. That employer did raise prices, but
those price increases were not coincident with my pay raises.
More recently, I received a significant pay increase without my employer raising his prices a penny. I simply demonstrated (without saying a word or asking) that my production was worth way more. That is to say, my employer did the calculations and realized that even if they raised my pay, they were still making a profit--because my productivity out-paced even a significant raise in pay.
So, increased wages and increased prices do not correlate. Productivity can go up, creating more valuable products in the same unit of time, for example the late Industrial Revolution in the late 1800s in this country. Prices actually fell, causing literally a rise in real wages, value of. On the other hand, increases in the supply of money cause price inflation--those people and businesses who first receive the newly-manufactured money have more to bid.
This is all very, very important. Remember where, above, I said bankers certainly understand that money is just a commodity? Buddy, you had better understand this superficial level of economics at least as well as your adversary, or you've had it. You've got to understand it at least as well as the guy taking advantage of you. To the degree you don't, he's got the advantage of you, and can get away with whatever you don't understand. Reader, if you have the least question, please do not hesitate to ask. It really is monumentally important.
