Can We Not Raise Wages In Order To Prevent Inflation?

For the call for higher wages and higher wages, Cai Fang, director of the Institute of population and labor economics of the Chinese Academy of Social Sciences, said recently that raising wages would bring inflation trouble.

He believes that China has achieved two digit growth over the past 10 years and inflation is negligible, partly because wage growth is less than productivity growth.

Economists will usually give you data, facts and reasoning. Therefore, Cai said, despite the sentimental "Curse" of the common people, after all, people's economics has so called "wage price spiral rise" theory, that is, wage increases drive up prices and prices rise, and prices continue to rise, leading to inflation expectations, which further drives nominal wages to rise further, forming a vicious circle.

As a result, economists will ask you with a smile: are you willing to see inflation, or do you want to not raise wages? Without saying, the people are more afraid of inflation and who are not afraid of money.

It is just one of the elements of cost push. Why do we only focus on wage increases and inflation, and the price increase of hydropower, gas and other factors is less rigid?

Probably because wages belong to the expense category, and hydroelectric gas is a matter of income.

In the case of higher prices, people have reason to ask for higher wages. Even if the theory deduces, it will accelerate inflation. This is not the "original sin" of raising wages, but only a reasonable compensation.

In fact, the economics nowadays are basically imported from the west, and sometimes they are out of shape when applied to China's national conditions.

In Europe and the United States, wages and benefits are rising too fast and frequently, so inflation spreads fast; in China, wages and benefits are rising too slowly.

A set of data released by the National Federation of trade unions showed that the proportion of China's residents' labor remuneration in GDP reached a peak of 56% in 1983, and then dropped to 36% in 2005, and 20 percentage points in 22 years.

Therefore, the phenomenon of wage price spiral in China is not as obvious as in Europe and America.

It has been pointed out earlier that in 1997 -2007, the correlation between China's wage growth and inflation is only 0.08.

Moreover, the wage situation in China can not be generalized, and the wage level and growth rate of state-owned enterprises, general workers and migrant workers are not the same.

The wages and benefits of state-owned enterprises should not rise without limit, because their profits come from the monopoly of industries, and the wage increase of migrant workers needs to be supported, not only to adjust the economic structure, but also to make workers "decent work".

Theory is specific to specific analysis, not to frighten people, and selectively to defend vested interests.

The opposite of inflation and wage increases is in itself a way of "attacking one thing less than the rest".

There are many explanations for the cause of inflation. But the current inflation is no doubt because the currency is much more than the money people have on hand. Therefore, it is just like a person who is suffering from high fever when he is not excused as an excuse to resist inflation.