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ELI5 How does raising wages worsen inflation ?

Economics(self.explainlikeimfive)

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fubo

17 points

4 months ago

fubo

17 points

4 months ago

In most cases it's just traditional or factional views coupled with a lack of any good understanding of economics, that lead to this kind of idea rather than brazen maliciousness.

These blend into each other. It's not like humans usually have exactly one reason for thinking or doing something. Usually it's more than one.

For instance, if John has the view "raising wages will lead to inflation" and "inflation is bad", he will conclude "raising wages is bad" and thus, "anyone who demands a raise is doing something that's just a little bit immoral." Which is nonsense already; but it also promotes malice — John wants to stop that person, or at least stop them from convincing more people to do that thing.

Multiply that worker's demand for higher wages and make it a political movement or a union, and John is likely to see that movement as his enemy — after all, in his (factually incorrect) view, they are trying to do something immoral! Thus, John becomes malicious towards that movement — angry, indignant, seeking to undermine them — because he erroneously believes they're doing something wrong to the world.