Recently a left leaning commentator on TV said "Tariffs are inflationary."
Another panel member agreed.
What is actually inflationary? Paying more for the same. Or paying the same for less.
Consider the dock workers strike.
They want a 77% increase in wage, and to ban automation.
Is this Inflationary? Of course. Lets say the cost of living as gone up 30% since they agreed to work for their existing wage. So they are being paid the same, but it will buy less due to inflation. And lets say their potential new contract will be for 6 years. Thus if inflation averages about 2% over each of those 6 years, and accounting for their existing loss of buying power, an increase of about 40% is fully justified, just to stay even. And to demand for more than that is inflationary.
Now consider the ban on automation, meaning a ban on lowering the cost of material delivery using automation rather than keeping people no longer really needed on the payroll. Thus the lack of a reduction in delivery cost acts just like inflation.
Tariffs seem to be temporarily inflationary, until home grown product replaces the offshore supply. On the other hand, raising domestic taxes on individuals and corporations seems inflationary, adding to the cost of product through cost shifting. Pay increase for labor to offset higher tax on labor, and price increase on product to pay for higher corporate tax.
What is anti-inflationary, increased productive through improved skills and innovation. Thus more product for the same cost.
Just saying...
Another panel member agreed.
What is actually inflationary? Paying more for the same. Or paying the same for less.
Consider the dock workers strike.
They want a 77% increase in wage, and to ban automation.
Is this Inflationary? Of course. Lets say the cost of living as gone up 30% since they agreed to work for their existing wage. So they are being paid the same, but it will buy less due to inflation. And lets say their potential new contract will be for 6 years. Thus if inflation averages about 2% over each of those 6 years, and accounting for their existing loss of buying power, an increase of about 40% is fully justified, just to stay even. And to demand for more than that is inflationary.
Now consider the ban on automation, meaning a ban on lowering the cost of material delivery using automation rather than keeping people no longer really needed on the payroll. Thus the lack of a reduction in delivery cost acts just like inflation.
Tariffs seem to be temporarily inflationary, until home grown product replaces the offshore supply. On the other hand, raising domestic taxes on individuals and corporations seems inflationary, adding to the cost of product through cost shifting. Pay increase for labor to offset higher tax on labor, and price increase on product to pay for higher corporate tax.
What is anti-inflationary, increased productive through improved skills and innovation. Thus more product for the same cost.
Just saying...
