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Jaguar Inflation -- A Layman's Explanation of Government Intervention


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2014 Dec 25, 9:41pm   21,121 views  65 comments

by darlag   ➕follow (1)   💰tip   ignore  

EWI Editorial

I am tired of hearing people insist that the Fed can expand credit all it wants. Sometimes an analogy clarifies a subject, so let’s try one.

It may sound crazy, but suppose the government were to decide that the health of the nation depends upon producing Jaguar automobiles and providing them to as many people as possible. To facilitate that goal, it begins operating Jaguar plants all over the country, subsidizing production with tax money. To everyone’s delight, it offers these luxury cars for sale at 50 percent off the old price. People flock to the showrooms and buy. Later, sales slow down, so the government cuts the price in half again. More people rush in and buy…

http://www.globaldeflationnews.com/jaguar-inflation-a-laymans-explanation-of-government-intervention/

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64   Heraclitusstudent   2015 Jan 5, 2:26pm  

tatupu70 says

It is obviously possible for those profits to be paid out in wages to the workers instead of in dividends to the owners.

You're asking for the few companies that make huge profits, like Apple, to hire factory workers in the US with wages above market just because they can?

You mean... in an utopic world where people willingly abandon their own interests? Assuming Apple does, would it even make a dent on wages in the US? Probably not unless all companies do. Even more utopic.

Is that your definition of possible?

What about other barely profitable US manufacturers? Would they also be forced to pay more than market? Decided by who?

65   tatupu70   2015 Jan 5, 2:32pm  

Heraclitusstudent says

You're asking for the few companies that make huge profits, like Apple, to hire factory workers in the US with wages above market just because they can?

I'm not asking for anything--I'm simply pointing out that it is NOT the competitive marketplace that is forcing companies to do this. It is because owners want to maximize their profits at the expense of the workers.

I'm also not saying it's the companies responsibility to raise wages--just that it's NOT because they have to--it's because they want to.

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