There are a lot of other factors in the cost of production.
Wages can outstip inflation.
How much has the cost of a chicken or tv gone up in the last 50 years. In comparison to wages?
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British Steel
- Thread starter TheQuest
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There are a lot of other factors in the cost of production.
Wages can outstip inflation.
How much has the cost of a chicken or tv gone up in the last 50 years. In comparison to wages?
Not a clue, but if wages don't go up, prices can't go up. Every seller needs a market.
Unless you are selling a giffen good. People will pick andchose what they spend their money. Might mean they buy netflix and cut down on going out. Or something else.
In which case any seller will be vulnerable to be undercut.
The moral of the story is that wage increases are bad for everyone except those only capable of thinking about the very short term.
Henry ford increased wages and cut hours worked of his workers to 8 hours a day. They increased productivity. That increased supply. As prices are dictated by demand and supply it decreased the cost of a car.
So imagine how much more he could increase demand by if he paid them less and decreased the price further.
All that experiment shows is that his staff were not working hard enough and should have been sacked.