Chinese components

[a_Username]

Originally Posted by HeHasReturned

Like I said, I can only comment on education up until college, not after, but from what I see pre-college, we are behind. Then I'm willing to take your word for it that it gets better higher up

Don't take my word for it, there are multiple studies that put our colleges and universities at the top of the list.

[fielderLS3]

Originally Posted by a_Username

That is not what I'm saying. If you take away what causes the prices to go up, then your question needs not to be answered. What is the cause of this inflation? Again, there are numerous reasons to why and minimum wage laws are one of them.

The concept of minimum wage is flawed. Your economic textbooks even tell you this, but what is more ironic is that the laws actually hurt the poorest and least productive peoples in the workforce.

The cause of inflation is deficit spending and printing/creation of money out of thin air by central banks. Inflation by definition is an increase in the money supply. The value of money operates on the same supply and demand principle as the value of anything else. If the supply of money increases faster than the total available quantity of goods and services it is being used to purchase, its value goes down and prices increase.

Rising prices are not inflation, they are merely a symptom of inflation. The "cost" (i.e. value) of goods and services isn't going up, the value of the currency being traded for them is simply going down.

[bigearl]

Originally Posted by DGthe3

I don't think its legislation that drove the cost of living up in every developed country. And with increased cost of living comes demand for higher pay. Even if you removed minimum wage, there is no way that you could get people to work for $1.00/hr (and therefore be competitive with overseas workers). They'd have a hard time feeding themselves, let alone their family or afford things like a place to live.

One of the basic things driving up the cost of living in most of the world is a new definition of what the cost of living encompasses. I'll use Hong Kong vs China as an example. China is an agrarian country that has little high tech. The cost of living and standard of living is very low. China claims to have only around 3% living below the poverty line but their poverty line is another world compared to the US poverty line. When people talk about Chinese high tech growing so fast, they are really only talking about a few cities (like Hong Kong and Shanghai). They have travel controls just to keep the country people from all moving to the city, so yes, they have illegal immigration WITHIN their own country. Imagine if we talked about the entire US industrial might as being Silicon Valley and Seattle and everyone else was a miner or a farmer. China is growing their tech like crazy though and investing billions in it because they know they can't be number 1 off an agrarian mainland and resource harvest industries.

Originally Posted by a_Username

There is a correlation between minimum wage and inflation. Businesses that are effected by this type of regulation has to increase the amount of money their good is sold for in order to overcome the added expense of minimum wages. When the prices of goods are rising, so does the cost of living.

Originally Posted by DGthe3

But what causes people to need a higher minimum wage? Claiming it causes inflation seems backwards to me. Things become more expensive, so people need to be paid more in order to meet their needs. Sure, after that it becomes somewhat cyclical, for the reasons you said. But the first link in the chain isn't increased wages for the people at the bottom.

You need to combine the two. In America we use the term 'living wage'. America has decided the necessities of life are significantly improved over other parts of the world. I won't debate the morals of that- but we'll go to China. China considers their agrarian population to be above poverty when they have 4 or 5 families living in a communal farm. Maybe 1 truck per the entire farm- maybe yes maybe no on electricity and access to about 1/3 the caloric intake of a typical US person at the poverty line. There are a lot of sources for inflation, but it's accurate to say that "if labor costs arbitrarily rise, then the costs of products or services will rise to offset labor". These costs are on the bottom end goods, but that ends up putting pressure on wages all the way up the scale.

Originally Posted by a_Username

People do not "need" a higher minimum wage. They want higher wages for numerous reasons, and with an active minimum wage law they obviously attain these increases in pay. That is what starts the cycle, the wants and not the need.

http://www.lowpay.gov.uk/lowpay/repo...i-Min_Wage.pdf

The UK's introduction of a national minimum wage law has frankly had the inverse effects it intended. Employers did not hire as many employees, reduced their current employee's hours, increased prices of their goods, and have forced their current employees to be more productive.

This should be basically self-evident. If labor costs increase then you have to either have a smaller labor force or increase the cost of what you produce.

Originally Posted by DGthe3

When food, housing, utilities, and fuel prices go up people don't need to be paid more? They just want to be paid more?

Whether or not they need to be paid more goes back to the definition of 'standard of living'. Again I'm not arguing the goodness or badness, it's a simple fact that much of the world has people above their poverty line that don't use electricity and use a bicycle for transportation. The international poverty line used by the world bank and the UN is like $1.25 a day. It's more defined by access to medical care and food then creature comforts.

Originally Posted by a_Username

Don't take my word for it, there are multiple studies that put our colleges and universities at the top of the list.

This is true along with Europe. And this is why we have so many people from other countries coming to America (and Europe) for higher education. Then going home and engineering away.

Originally Posted by fielderLS3

The cause of inflation is deficit spending and printing/creation of money out of thin air by central banks. Inflation by definition is an increase in the money supply. The value of money operates on the same supply and demand principle as the value of anything else. If the supply of money increases faster than the total available quantity of goods and services it is being used to purchase, its value goes down and prices increase.

Rising prices are not inflation, they are merely a symptom of inflation. The "cost" (i.e. value) of goods and services isn't going up, the value of the currency being traded for them is simply going down.

My opinion is the monetary policy of the US has purposefully been keeping the money supply high in order to devalue the dollar so that we can have more success exporting and decrease importation without actually setting tariffs. The writing was on the wall in the late 60's, early 70s because the dollar's value was so high that imports were dirt cheap and we couldn't sell anything overseas and it was crushing us. So we decoupled the dollar from gold and started devaluing the dollar and that has continued ever since. 1 oz of gold = $35 from 1941 to 1970 by law. It's easier to explain inflation than high unemployment.

[syr74]

Originally Posted by DGthe3

Actually ... China's costs have gone up significantly in recent years and more and more companies are looking to other nations for cheap labour. Some say that Mexico and China are nearly equal on build cost now, but transportation speed and cost from Mexico to North or South America is significantly less than from China.

You're absolutely right DG. Even more, despite what some folks are claiming the notion that moving production anywhere else lessens costs is based on faulty logic to be kind. Many, many items are better served when manufactured right here.

Example? Graded fasteners come to mind immediately. Nucor fastener went into business in 1986 and they are hands down the overall leader in the manufacture of graded, threaded fasteners.....and keep in mind this is an industry that at one point was literally almost dead domestically. Nucor is very cost competitive and manages that while providing phenomenal compensation and providing a product no competitor can touch in terms of quality. Oh yeah, they are also extremely profitable.

How?

1: State of the art manufacturing. American manufacturing shines when we press our advantages, and this is one of them. Nucor uses bespoke, state of the art machinery (American designed and made machinery by the way) that absolutely antiquates the machinery of any rival company.

2: A well compensated work force. You still get what you pay for, and when you are willing to pay for it in a way which makes sense American productivity is still the best in the world IMO. Much of a Nucor employees pay is based upon meeting quality and productivity goals, which they virtually always do. No union needed here, just the common sense that says I'll give you a more than fair days wage for an especially honest days labor....who would have thunk it.

The effect this has had is surprising only in the measure of it's effect. These guys don't just love their job and put in a real days work everyday, they treat this place like they would treat their own mother. This place is so clean it would put your kitchen to shame. Even more mind blowing? I worked with these guys when they decided they simply didn't need such a large, dedicated quality control department anymore. That's right, almost all quality control is done by the folks who make the product because they are so good at it redundancy is pointless.

3: They manufacture something that logic dictates is better served if made here. If quality and attention to detail actually matter then U.S. manufacturing is difficult to beat.

Nucor is the best example of how you get it done in America and hammer the rest of the world in the process.

[a_Username]

Originally Posted by fielderLS3

The cause of inflation is deficit spending and printing/creation of money out of thin air by central banks. Inflation by definition is an increase in the money supply. The value of money operates on the same supply and demand principle as the value of anything else. If the supply of money increases faster than the total available quantity of goods and services it is being used to purchase, its value goes down and prices increase.

Rising prices are not inflation, they are merely a symptom of inflation. The "cost" (i.e. value) of goods and services isn't going up, the value of the currency being traded for them is simply going down.

I'm aware of this. I was explaining how minimum wage laws caused rising prices, which leads to inflation. However, the value I'm using is money, and not some subjective view of value that some may define it as.