Daily Mail, your media etc

A quick guide to inflation:

Your goods cost £100. Ten per cent inflation means they cost £110.
Next year, inflation drops to 7%. They now cost £117.70.
Next year, inflation drops to a mere 5%. They now cost £123.59.

Falling inflation does not mean lower prices. This should be obvious but I am explaining it as some people seem to be confused.

You only get falling prices if there is *deflation*. Deflation is when the inflation index is a minus figure, not a smaller positive one.

I have nonetheless seen people - apparently sane people - arguing that people lucky enough to receive a 'good' pay rise should give it back 'when inflation falls.'

This demonstrates that the education system is not up to it, has not been in my lifetime, and needs to start teaching critical thinking. To say nothing of macroeconomics.
 
BrianW said:
A quick guide to inflation:

Your goods cost £100. Ten per cent inflation means they cost £110.
Next year, inflation drops to 7%. They now cost £117.70.
Next year, inflation drops to a mere 5%. They now cost £123.59.

Falling inflation does not mean lower prices. This should be obvious but I am explaining it as some people seem to be confused.

You only get falling prices if there is *deflation*. Deflation is when the inflation index is a minus figure, not a smaller positive one.

I have nonetheless seen people - apparently sane people - arguing that people lucky enough to receive a 'good' pay rise should give it back 'when inflation falls.'

This demonstrates that the education system is not up to it, has not been in my lifetime, and needs to start teaching critical thinking. To say nothing of macroeconomics.
Click to expand...
The inflation rate is a comparison with the same month one year earlier. There can be peaks and troughs in prices during that year that can result in short term price drops whilst the inflation rate is still well above zero.
 
You could, conceivably, have the price of eggs, or bread, drop by 50%. However, it's the overall inflation rate that matters, and people on a given income, whose income does not at least increase by that amount, suffer a pay cut in real terms. No amount of fudging of figures can change that.

Now, of course, one is free to argue that the nominal rate of inflation does not reflect the real world. For example, food prices have gone up way more than the official CPI figure, and if you are poor and spend a high proportion of your income on food, this hits you disproportionately hard. The bottom line is that - however you measure it - high inflation is bad for everyone and particularly hard on low earners with little power to increase their income.

But the idea that people should 'give back' hard-won pay increases when the rate of increase in prices declines remains laughable.
 
This film has yet to be made never mind released - the Mail truly is the drunk at the bus stop shouting at anyone or anything passing by

www.tomorrowspapers.co.uk

Mail on Sunday Front Page 23rd of July 2023 - Tomorrow's Papers Today!

The Mail on Sunday highlights an unreleased film that accuses Boris Johnson of lying about his COVID near-death experience.
www.tomorrowspapers.co.uk www.tomorrowspapers.co.uk
 
BrianW said:
Now, of course, one is free to argue that the nominal rate of inflation does not reflect the real world. For example, food prices have gone up way more than the official CPI figure, and if you are poor and spend a high proportion of your income on food, this hits you disproportionately hard. The bottom line is that - however you measure it - high inflation is bad for everyone and particularly hard on low earners with little power to increase their income.
Click to expand...
Thats not entirely true, its not bad for everyone, there is a group that can benefit. If you have large amounts of debt at a low fixed interest rate, assuming your income broadly keeps track with inflation, that debt loses its value making the debt less in real terms.

However on the whole, for the vast majority, rich or poor, high inflation is a bad thing.
 
BrianW said:
A quick guide to inflation:

Your goods cost £100. Ten per cent inflation means they cost £110.
Next year, inflation drops to 7%. They now cost £117.70.
Next year, inflation drops to a mere 5%. They now cost £123.59.

Falling inflation does not mean lower prices. This should be obvious but I am explaining it as some people seem to be confused.

You only get falling prices if there is *deflation*. Deflation is when the inflation index is a minus figure, not a smaller positive one.

I have nonetheless seen people - apparently sane people - arguing that people lucky enough to receive a 'good' pay rise should give it back 'when inflation falls.'

This demonstrates that the education system is not up to it, has not been in my lifetime, and needs to start teaching critical thinking. To say nothing of macroeconomics.
Click to expand...
When I studied Economics, at GCSE,A Level and degree level, in simple terms, the National cake remains the same size in times of inflation.
There are only two choices, make the cake bigger, through productivity increases or efficiency savings or, take a bigger slice of the cake for yourself leaving less for others .
So in terms of a “good pay rise”which of the two alternatives are you recommending should be taken
 
The cake stays the same, and the price of the cake goes up 10%. So to have the same piece of the cake you need another 10%.

What the present government and Starmer's Labour say is this: This is a time of sacrifice. All the sacrifice must be borne by working people, especially in the public sector. We ourselves won't be making any sacrifice, and the rich certainly won't be. Suck it up, you plebs.

Now if it was for one year, or two, that might be acceptable, at a pinch. But when it goes on for a decade? How much sacrifice are people expected to make?

If the cure for inflation is to take money out of the economy, the way it should be done is to increase tax. Then everyone pays a fair share, proportionate to their income. The extra money would allow the government to pay down debt. Win, win.

Efficiency savings are all very well. We see supermarkets closing check-outs and substituting self-payment. We see railways closing booking offices. Have you noticed supermarket prices or train fares coming down? I think not!

Meanwhile, over the last several years the very rich - I am not talking about hospital consultants, I mean the very rich - have increased their wealth hugely. Only today I was reading about some bloke who bought two mansions (paying himself millions in dividends) out of selling dodgy protective equipment to the NHS. Where does their extra share of the 'cake' come from? Riddle me that! If you're right and the cake is not growing, these people are stealing huge slices of cake, but no one seems interested in doing anything about that, do they? Somehow that cake develops infinite flexibility. It's a very odd cake.
 
In the cold hard world we live in , like it or lump it our labour we are prepared to toil is called in economics terms, economic rent.
You get paid for your labour, certainly in the private sector, what someone is prepared to pay for it, if you’re not happy with that, in the private sector you either live with it or move on.
Personally during my career if I thought I was worth more than the Employer was prepared to pay, I moved on.
Amazingly telling an Employer your moving on because you have received a better offer had far better results than a Union Rep fighting my corner.
 
At a time of 10% inflation a 10% rise is not an uplift in your wages, it merely gives you the same slice of the cake you had the previous year,

A lot of people are 'moving on'. Unfortunately for us, many doctors and nurses (for example) are moving on to Australia or other countries where there is better pay. And there are no (or very few) replacements waiting in the dole queue. So we either raid the Third World for replacements, or we train up many more people and wait 5-10 years for them to come through, at which point they too may see an advert for Australia.

The market works on supply and demand. Refuse to pay enough as an employer and eventually, your workers will walk. This is particularly true of people with rare skills. Short of turning into North Korea, and making emigration illegal, you cannot keep on cutting people's standard of living year on year on year. I cannot help but think that leaving the EU was a step towards the North Korea model, as it makes moving to Germany or France so much harder. But for the very people we need most the option is still there, it's just more bureaucratic and messy.

As a certain female PM once said 'You cannot buck the market. The market will buck you.'
 
halfmist said:
In the cold hard world we live in , like it or lump it our labour we are prepared to toil is called in economics terms, economic rent.
You get paid for your labour, certainly in the private sector, what someone is prepared to pay for it, if you’re not happy with that, in the private sector you either live with it or move on.
Personally during my career if I thought I was worth more than the Employer was prepared to pay, I moved on.
Amazingly telling an Employer your moving on because you have received a better offer had far better results than a Union Rep fighting my corner.
Click to expand...

images
 
BrianW said:
At a time of 10% inflation a 10% rise is not an uplift in your wages, it merely gives you the same slice of the cake you had the previous year,

A lot of people are 'moving on'. Unfortunately for us, many doctors and nurses (for example) are moving on to Australia or other countries where there is better pay. And there are no (or very few) replacements waiting in the dole queue. So we either raid the Third World for replacements, or we train up many more people and wait 5-10 years for them to come through, at which point they too may see an advert for Australia.

The market works on supply and demand. Refuse to pay enough as an employer and eventually, your workers will walk. This is particularly true of people with rare skills. Short of turning into North Korea, and making emigration illegal, you cannot keep on cutting people's standard of living year on year on year. I cannot help but think that leaving the EU was a step towards the North Korea model, as it makes moving to Germany or France so much harder. But for the very people we need most the option is still there, it's just more bureaucratic and messy.

As a certain female PM once said 'You cannot buck the market. The market will buck you.'
Click to expand...
Fortunately for those who are not being recognised, the pay rise will afford them a visa into a better way of life.

Unfortunate for us, we lose the lifeblood of society.
 
The Future’s Blue! said:
Fortunately for those who are not being recognised, the pay rise will afford them a visa into a better way of life.

Unfortunate for us, we lose the lifeblood of society.
Click to expand...
Yes, it's a brilliant policy, to force out our brightest and best, while retaining millions of unproductive or low-skilled people. How can that possibly harm society or the economy?

It's an economic model based on De Valera's Ireland, with the tedious petty nationalism, but without the agriculture or the Catholicism. Ireland only came good when it grew up and joined the real world,
 
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