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Inflation is rising faster than wages in many countries due to increases in the cost of raw materials and energy supplies. How can governments correct this imbalance?

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decentralize it. encourage and support local production of goods in your area, encourage recycling and upcycling, subsidize alternative energy sources (solar and wind) that are owned by households, grow a community farm. the list goes on.

4 ( +6 / -2 )

Base government jobs on results and performance-stimulus packages are not helping!

3 ( +6 / -3 )

lower taxes on those who are struggling. Simple.

7 ( +10 / -3 )

First, recognize that inflation, as a measurement showing a persistent increases in the level of consumer prices or a persistent decline in the purchasing power of money, is a separate factor from the economic factor of wages, as a unit of measurement for monetary quantities towards a unit of labor. Stated different, inflation, in itself, is not a diametric balance factor towards those forces influencing wage scales.

But there are economic theories that indicate that large increases in wages will have a downward influence on inflation. Complicated, as it has not been modeled on a scale as these modern times, upon global inflation on the verge of stagflation and recession.

During high inflation periods, wage stresses are most keenly felt. Governments measure wage growth (changes in average cash earnings) and report it along side PPI and CPI. The higher the difference, the more it becomes a political liability.

So, what can governments do? One thing is to initiate wage and price controls. By themselves, they do stop inflation caused by monetary policy, though. Some economists will tell you that anything done, while neglecting monetary policy, is short sighted and will cause multiple bounces (and corresponding discomfort to the population. The main reason to initiate wage & price controls is to boost employment, instead. But in a time of relatively low unemployment, wage & price controls are generally a cure that is worse than the disease.

Another way is to ration those commodities that are contributing to the higher inflation rate. Rationing by governments controls the distribution of a good or service in order to cope with its scarcity. More money chasing fewer goods, and to concentrate valuable goods into strategic areas of the economy. Many economists believe this to be a last straw measure, as rationing almost always creates scarcity that results in pressure on hiring and retention, and its own inflationary pressures.

Or . . . the government can wait, take its lumps, as best it can, while the economy returns in natural cycle to something resembling normal times. Hard political times are almost always guaranteed.

But no one ever said it was easy to be in politics.

-1 ( +2 / -3 )

Correction to my earlier post, paragraph # 4, should read, "By themselves, they do not stop inflation . . . "

Thank you. Sorry for any confusion.

-1 ( +2 / -3 )

They will not correct any imbalance while they themselves get rich because of this!

3 ( +4 / -1 )

Governments are fairly limited in what they can do about inflation. Central banks have the most powerful policy tools.

As for wages, encourage and empower labor unions, implement basic income polices, and penalize large employers that refuse to give raises in line with their profit growth.

0 ( +4 / -4 )

stop antirussian sanctions now.

you will solve problems with delivery and cost of gas and oil.this will be crucial.very vital and hlpful for national sources poor japanese economy.we will pay much less for both commodities and so japanese companies/makers of goods as well.

next need solve problem with higher price of grain,corn.very necessary as well.scrap sanctions,you will have enough of grain needed to feed own population at very reasonable price.

if want to make EV cheaper than scrap sanctions.you will get all necessary metals like nicke,lithium etc at best prices.

its very simple.pay in rubles.

use own common sense dear japanese government and not just follow handwritten faxes received from White house,act in name of own national interests instead of national interests of USA!act as sovereign and independent country from now!act in favour of interests of japanese tax payers.its about time to do right thing!

-3 ( +6 / -9 )

stop antirussian sanctions now.

No. We're already three months into removing Russia from interaction with the first world. They are being quarantined. Dropping sanctions now would be like a battered wife going back to her husband three months after leaving him.

Unfortunately, Putin condemned Russia to irrelevance for decades. Very sad for the Russian people. Meanwhile, the world is moving on.

-1 ( +8 / -9 )

@Eastman: I don't think even you believe this (dropping sanctions) is actually in Japan's long-term interest. Of course it could give short-term relief from inflation, but it exposes Japan to way bigger problems in the future.

-1 ( +3 / -4 )

Something really needs to be done about the way energy contracts are traded, it's just wrong. Essential services should be affordable for all, with costs controlled by the government.

-2 ( +0 / -2 )

Change the way minimum salary is set. It should not only be set by hour but also by day, by week, by month and by year and the time expected on site not just working as it should reflect the ability of the worker to actually get another job. It should also take in account experience and diploma.

On top of that set an optimum salary which take in account cost of life (aka not needed any governement help and being an economically active part of the community) and can be more easily moved.

In normal time, the 2 should be the same. In bad time, the optimum should be raised. In good time the optimum one should be lowered. Then have some work tax linked on the optimum one. If employee pay under optimum salary, the difference end up in government pocket to pay welfare (including for the underpaid employee). If over : tax break potentially with money back depending of the situation.

That should encourage companies to always pay at least slightly higher salary to kept the tax break and have better planing on cost.

Also, fix the fake independent worker issue, when at it.

-2 ( +1 / -3 )

StrangerlandToday 12:55 pm JST

stop antirussian sanctions now.

No. We're already three months into removing Russia from interaction with the first world. They are being quarantined. Dropping sanctions now would be like a battered wife going back to her husband three months after leaving him.

Unfortunately, Putin condemned Russia to irrelevance for decades. Very sad for the Russian people. Meanwhile, the world is moving on.

///

well let me say you know-nothing.nothing about Russia,nothing abour Russian people or character.Your mentioned "irrelevance" will come at huge cost step by step as I have mentioned above however Russia is not alone and have good friends and reliable partners in other part of the world.There is nothing sad for majority of Russians at all.But yes -world is moving on buddy.Be ready to pay for your "western values" from now on...

-3 ( +5 / -8 )

Should have created that proposed copy of the bubble economy, before that now unhealthy inflation started. But although late it’s not too late. Some significant helicopter money and a revival like in the 80’s and 90’s ignites and will astonish everyone and everywhere. Then there will still be inflation, but the percentage of unhealthy inflation caused by energy or food prices is fought back into an insignificant part of the whole inflation or let’s say in other words, the now much bigger, vivid and innovative economy easily outweighs those high prices for everyday life basics.

0 ( +0 / -0 )

Another area where government will have few good options is with real wages after real deductions for benefits. If government takes a firm hand and orders wages increased across the land to catch up and surpass the rate of inflation. Sounds good, unless government freezes or reduces the tax rate. And until inflation comes down, the cost for benefits will continue to rise. You may get more wages, but your total compensation will decrease due to various insurance requirements and their increasing rates. Providing government subsidiaries to meet these increases will just cause more inflation, and ordering business to not pass these along, will cause reductions in hours, and layoffs.

0 ( +0 / -0 )

If government takes a firm hand and orders wages increased…

Haha, sorry but we are not in China or North Korea here. lol Still, in capitalism the wages are defined through negotiations and single work contracts between employee and employer, or in a more broader way by their bigger entities like worker’s unions and representatives of many companies or employers in economies’ branches. The government itself has no real decisive influence and can only give out to the public some loud paroles, wishes, recommendations or pleads.

0 ( +0 / -0 )

The only way is to return to globalisation and stop weaponising trade for nationalist, political reasons. Allow goods and workers to move freely and easily across borders to optimise production of food and goods, so people do not starve or get dragged into poverty.

You can still supply Ukraine with enough military kit to beat the Russians, or just bump off Putin. The energy sanctions are doing more harm to the West than to Russia and were not thought through.

We need to re-optimise our use of global resources, or we will not be able to build or afford the green technologies that we need to transition to.

To be honest, I doubt this will happen. Expect things to go downhill from here on. No light at the end of the tunnel. Just higher costs, shortages and, ultimately, war.

But politicians should note: if you beggar your citizens with rubbish policies, they will turn on you. All the propaganda in the world will not save you. They may not even wait for an election to vote you out. There are faster ways to get rid of incompetent governments.

-3 ( +1 / -4 )

The only way is to return to globalisation and stop weaponising trade for nationalist, political reasons. Allow goods and workers to move freely and easily across borders to optimise production of food and goods, so people do not starve or get dragged into poverty.

People freely moving across borders? Wouldn’t this destroy the working and later middle classes with all that cheap labor?

4 ( +4 / -0 )

People freely moving across borders? Wouldn’t this destroy the working and later middle classes with all that cheap labor?

Not if the elites weren't hording all the money.

The rich, who hold 99% of the resources, have the peons fighting amonst each other for scraps, thinking the other peons are the enemy.

-2 ( +1 / -3 )

People freely moving across borders? Wouldn’t this destroy the working and later middle classes with all that cheap labor?

Doesn't appear to have been the case in the EU.

-3 ( +0 / -3 )

well let me say you know-nothing.nothing about Russia,nothing abour Russian people or character.Your mentioned "irrelevance" will come at huge cost step by step as I have mentioned above however Russia is not alone and have good friends and reliable partners in other part of the world.

If that were true, Russians wouldn't care about getting the sanctions lifted.

Face it, Putin done screwed up. And the poor Russian people will have to pay the cost. Well, them and the Ukrainians of course.

-1 ( +2 / -3 )

They will do the same as dealing with stagnant wages versus rising profit margins during the last two decades. Nothing

0 ( +0 / -0 )

In regard to the economy the best thing a politician can do is nothing at all.

0 ( +1 / -1 )

How can governments correct this imbalance?

But do they even want to correct this imbalance when G7 nations are corporate captured oligarchies?

Every crisis an excuse for more corporate welfare and austerity for the vast majority of the populace.

This neo feudal, neo liberal agenda is a feature, not a bug for governments and their corporate masters.

3 ( +4 / -1 )

But do they even want to correct this imbalance when G7 nations are corporate captured oligarchies?

Every crisis an excuse for more corporate welfare and austerity for the vast majority of the populace.

This neo feudal, neo liberal agenda is a feature, not a bug for governments and their corporate masters.

I couldn't have said it any better

2 ( +3 / -1 )

The only honest way to deal with inflation is to somehow increase the supply of goods, or reduce the cost of producing/extracting these goods.

It's pure fantasy to imagine that mass wage hikes or tax cuts will curb inflation. You'll just end up with the same number of people chasing the same limited supply of goods, except now they are willing to pay even more, aka inflation.

2 ( +2 / -0 )

Inflation is caused by central banks printing money and thus causing the value of that money to debase and hence the price of everything else denominated in that currency to rise. That's it.

So stop printing money and buying government debt. Government raise taxes or cut spending. Reduce regulations that impede easy capital formation and easy starting new business.

1 ( +3 / -2 )

Stop the money printing machine, pay decent wages, stop funding foreign wars, stop aid to developing countries and put the lazy people who abuse welfare (centrelink, EBT, ハローワーク) to work.

1 ( +2 / -1 )

El Rate: I know of one of lazy people just sitting around collecting unemployment benefits. He was always thinking about how to get rich quick. I keep on telling him mate just get a normal job. He didn’t take my advise and keep at it for three more years . Then one of his get rich planes paid off. 5 years on he is worth more then 20 million and pays more tax in a year then I would during my working life. So can you tell me why your such a hater of people who are lazy.

0 ( +0 / -0 )

Doesn't appear to have been the case in the EU.

It is exactly the case in the EU. The have to create money from nothing to keep their economies afloat while bailing out Greece, Italy and Spain. Furthermore, your comment is somewhat illogical as most of the EU were already middle class, and most those that weren’t share a common culture.

0 ( +0 / -0 )

Governments are obsessed with economic growth rather than economic sustainability.

2 ( +2 / -0 )

As already stated the most powerful governments welcome this situation.

Peoples first error was to believe the higher ups had everyones best interest at heart.

0 ( +1 / -1 )

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