Wages or Prices?
- Thread starter TheCock
- Start date
R
RononDex
It wouldn't matter. If the percentage increase from the cheap price to the expensive price was the the same as the low wages to high wages. Then it wouldn't matter.
E
Escorts Australian
its funny how things work out!
Demon
Legend Member
- Points
- 0
Because of how the Australian tax system works, lower wages and lower prices of the same percentage is better.
e.g. 10% lower wages lowers tax by more than 10%, so after-tax income has fallen by less than 10%. Lower prices by 10% and you can buy more than you could before.
Looked at the other way, if wages go up 10%, taxes go up more than 10%, so after-tax income rises less than 10%. With prices higher by 10% you are losing.
This is where most popularist pollies and others get it wrong with the value of the Australian dollar. Higher is better for Australians. As the same amount of Aust money buys more goods and services on the world economy. If you want a low value currency go to Zimbabwe, and see what $Z1 billion buys you.
e.g. 10% lower wages lowers tax by more than 10%, so after-tax income has fallen by less than 10%. Lower prices by 10% and you can buy more than you could before.
Looked at the other way, if wages go up 10%, taxes go up more than 10%, so after-tax income rises less than 10%. With prices higher by 10% you are losing.
This is where most popularist pollies and others get it wrong with the value of the Australian dollar. Higher is better for Australians. As the same amount of Aust money buys more goods and services on the world economy. If you want a low value currency go to Zimbabwe, and see what $Z1 billion buys you.
N
Naughty Thoughts
I have a Zimbabwe on hundred trillion dollar note. The funny thing about it is that printing it as Zimbabwe money decreases the value of the paper as you can't use it for something else, like writing on it. I believe Zimbabwe is using US currency now.
An interesting question. At the bottom extreme, would people want to live in an economy where everything was free - but you didn't get paid for your work? Like a Star Trek style system where nobody seems to have a credit card or a mortgage but you don't receive an income of any type either.
An interesting question. At the bottom extreme, would people want to live in an economy where everything was free - but you didn't get paid for your work? Like a Star Trek style system where nobody seems to have a credit card or a mortgage but you don't receive an income of any type either.
Demon
Legend Member
- Points
- 0
Impressive. But one hundred trillion has ONLY 14 zeros.
The world record was Hungary 1945-46, when over a 9 month period inflation was 1 x 23 zeros. Makes Zim look conservative.
P
Perth boy
Because I employ people I would have to say I would rather the lower wages. Then maybe I may have enough money left to pay myself.
W
WRXXXR
Amen to that Perth Boy!!
C
Contrarian
For virtually all nations, economic growth is necessary. No growth usually equals no jobs equals no money equals very huge social unrest. All societies need an Industrial Reserve Army. This doesn't mean they've to be downtrodden or destitute but it's the lubricant which oils the machinery i.e. a group of people who will work and who don't have jobs but are willing to work.
Then there's geography and resources. If you've a huge unique supply of a product that's in demand around the world of let's say tobacco but are very far removed in a remote corner of the globe then for other nations to buy your tobacco, it'll cost lots in shipping. To help create your market, you've got to either subsidize your transport or lower your wages to be competitive. Lowering wages is of course easier when your IRA is huge. It would be a different story if it was oil or minerals perhaps, but that has problems with it too.
Australia has minerals but the market for it is very small e.g. Japan and China. Those two countries can dictate your price and if you don't come to the party there are a few countries ranging from Brazil to the USA who will gleefully take your place. A large business like Coles-Myer may decide the only way to get their products cheaper to the public is to lower the individual wages or cut down staff. Or they do it to make shareholders happy.
Geography can be cruel. Australia is in Asia/Oceania. It's surrounded by countries that are mostly poverty stricken or with a large poor population e.g. Indonesia, Fiji, the Philippines. So when it comes to making a living out of manufacturing, they either compete on wages with those countries or decide not to compete and kill its manufacturing services.
Usually lower wages do mean lower prices. But the problem is consumerism and credit. If people SAVE money to buy something then you can still have lower wages and prices that don't go berserk - the market decides. And then there's the profit motive. If you sell a product at let's say a 5 cent profit - what you lose in a higher price, you may well make up in volume of sales. In any supermarket in Australia, if you've a box of 24 jars of vegemite and you drop it and one bottle breaks, the profit of the entire box is now wiped out.
Countries like Singapore with no resources had lower wages for eons. And as the country progressed, wages crept up. Their government decided not to compete on basic manufacturing because they too couldn't compete with places like Indonesia's Batam where it cost $36 a month hire a driver. So they've consciously pushed the workers to attain higher skills to work in higher value, skilled companies ranging from Apple to IBM to Casinos.
If you're in the IRA, you'll still own a car, you'll just have to wait longer for it while you save. If you're not, then you may (and that's may) have the luxury of getting it sooner depending on your priorities.
Just my $0.02c worth.
Then there's geography and resources. If you've a huge unique supply of a product that's in demand around the world of let's say tobacco but are very far removed in a remote corner of the globe then for other nations to buy your tobacco, it'll cost lots in shipping. To help create your market, you've got to either subsidize your transport or lower your wages to be competitive. Lowering wages is of course easier when your IRA is huge. It would be a different story if it was oil or minerals perhaps, but that has problems with it too.
Australia has minerals but the market for it is very small e.g. Japan and China. Those two countries can dictate your price and if you don't come to the party there are a few countries ranging from Brazil to the USA who will gleefully take your place. A large business like Coles-Myer may decide the only way to get their products cheaper to the public is to lower the individual wages or cut down staff. Or they do it to make shareholders happy.
Geography can be cruel. Australia is in Asia/Oceania. It's surrounded by countries that are mostly poverty stricken or with a large poor population e.g. Indonesia, Fiji, the Philippines. So when it comes to making a living out of manufacturing, they either compete on wages with those countries or decide not to compete and kill its manufacturing services.
Usually lower wages do mean lower prices. But the problem is consumerism and credit. If people SAVE money to buy something then you can still have lower wages and prices that don't go berserk - the market decides. And then there's the profit motive. If you sell a product at let's say a 5 cent profit - what you lose in a higher price, you may well make up in volume of sales. In any supermarket in Australia, if you've a box of 24 jars of vegemite and you drop it and one bottle breaks, the profit of the entire box is now wiped out.
Countries like Singapore with no resources had lower wages for eons. And as the country progressed, wages crept up. Their government decided not to compete on basic manufacturing because they too couldn't compete with places like Indonesia's Batam where it cost $36 a month hire a driver. So they've consciously pushed the workers to attain higher skills to work in higher value, skilled companies ranging from Apple to IBM to Casinos.
If you're in the IRA, you'll still own a car, you'll just have to wait longer for it while you save. If you're not, then you may (and that's may) have the luxury of getting it sooner depending on your priorities.
Just my $0.02c worth.
Happy2
Legend Member
- Points
- 15
If you're in the IRA, you'll still own a car, you'll just have to wait longer for it while you save. If you're not, then you may (and that's may) have the luxury of getting it sooner depending on your priorities.
Just my $0.02c worth.[/QUOTE]
What you saying Contrarian If you are in a protestant militia you get to have your car sooner? No wonder there is no lasting peace in Northern Ireland
Just my $0.02c worth.[/QUOTE]
What you saying Contrarian If you are in a protestant militia you get to have your car sooner? No wonder there is no lasting peace in Northern Ireland