One concept that has fascinated me lately is it possible to increase wages, decrease inflation and improve corporate profits at the same time? I'm not really sure if its possible but I believe that there are ways to do anything if you find a way to put the elements of an economy in the right order (We draw data in economics so those are in many ways measurable elements. They of course are based on more finite elements that make up those categories. At least that is the way I see them but I'm not fully indoctrinated into orthodox economic thinking. Generally, I sort of stink at following all the mathematical rules because there is always a problem of variance. Statistical significances is only significant and that means there are other things involved.)
The inflation, wage and profit question is not an easy one to answer because we have in many ways created arguments from our historical past that limit exploration of possibilities. They call it bounded rationality. Yet these are often false arguments when we delve into how systems function because of the complexity of the factors that influence outcomes. There are just many confounding variables that make such understandings difficult to define precisely. We can only create general causation but specificity in that causation is more difficult (I think such economic elements and their influence on each other will be easier to understand with big data.)
An expansion of an industry comes with benefits to corporate profits, job increases and many times increased wages. That would be a total industry and system improvement that would likely be based in comparative value of American labor on the market (i.e. human capital in relative relation to world human capital supply). The market no longer defined by the physical era that existed during Adam Smiths, Keynes, or Schumpeter models. Thus new models are needed for the Digital Era.
In the past I have said I'm not pro or anti union (indifference in theory) because I'm more pro people and pro industry and the concept of unionization isn't really factored into that. Unions are the collective organization of individual needs but don't supplant those needs. They only formalize the voice of those needs to create financial or work place benefits for members. Of course we should want to improve the total industry and in turn the lives of those who work for those industries regardless of the labor structure. I'm in a union- Great! I'm not in a union- Great!
Consider how productivity and wages often rise together. Productivity and Wages. The same can be said for new technology and human capital. As labor develops and learns it is worth more and when new technology comes into play it is worth more still. That can lead to inflation, but its not the only factor, so there are uncharted factors out there.
Imagine a scenario where investors are earning more money, CEO's earn high wages, and workers wages are rising quickly. One of the reasons why I felt that a base wage that quickly rises based on human capital development and system contribution/input could help improve the whole system. Many small parts created the system as a collection of transactions.
What do you think would make that happen? Maybe...
1.) A high market demand and need for American products. Marketing, value, innovative lead times, etc.
2.) Improved innovation in the industry that feeds new investments.
3.) Rising profits and lead to higher returns for investors and executives.
4.) Labor development new skills (i.e. human capital) to meet those advanced manufacturing needs.
5.) New technologies that improve productivity.
6.) The incentives labor needs to learn new skills and that comes with improving wages.
7.) A sense of community where solutions from the bottom to the top are encouraged and that would change the nature of current union-management discussions.
8.) Adjusting the structure of companies and labor contracts to include individual and collective contributions to innovation and broad based development through participation.
When I have said that in the past people often feel that I'm pro company or pro worker. That isn't true because those are limiting categorization that make things easy to understand but might mask the underlining mechanics. I look at the total system and what would attract more in a perpetual and sustainable economic system that develops net positives. That included attracting the best labor and human capital to certain high value and high income industries.
The issue of inflation is a different but related animal. Improved productivity, innovation and human capital comes with increased wages that typically raise inflation. However, inflation is based on money supply but wages are not the only factor that raise and lower such money supply. In some ways, I think they would be some of the smaller factors depending on the assumption of the pool (We are much more global so what is the right pool for the metrics?).
The question I have is whether allocating more money to debt as a total system (corporate and national) would that reduce inflation while still allow for wages to rise and profits to move higher? The money goes somewhere and typically that would be to pay off debt and invest back in high performing clusters/industries. Not really sure...but I'm going to think about it. I might be on the total wrong path but maybe. Consider Inflation and Debt.
If we all had the answer then we wouldn't have this problem so that means we are missing something in our thinking. We are just unsure of what that is. I don't know either. I just have question that as of yet is unanswered in my mind. Put on your thinking caps....maybe you have the answer.
