Apparently The "Economist" forgot to do what even the most basic, simple-minded rookie economists; adjust for inflation.
Jesus
H
Christ.
How can a publication called "The (freaking) ECONOMIST" NOT ADJUST FOR INFLATION????
What a worthless publication that has become.
7 comments:
Cappy old boy, how does inflation come into play when the % adjustment is based on the base pay for a single year? I could see how PPP could give a better understanding of the results, but inflation? Perhaps an amatuer blunder by the economist of this proportion calls for you to give a lesson here.
There once was a town in Alaska which had 100 percent population growth in one month. The town consisted of one man and his pregnant wife who gave birth to twins.
When you start from a low base, you get huge percentage gains from small nominal changes.
Inflation is certainly one factor they didn't consider. Purchasing Power Parity which is usually used to compare across different exchange rates takes into account inflation and cost of living.
But they also ignore that the countries with the highest salary growth are command economies which:
1. Will run company deficits to pay those higher wages
2. Have inferior public goods
3. Have high and rising rates of abject poverty and unemployed whose wages aren't included.
4. Lie on their official statistics
For the US to have a 2 percent average pay raise in a declining economy with minimal inflation is damned generous! If anything, it shows wages are sticky which will prolong unemployment.
@ clinky
Here's why:
http://www.latinbusinesschronicle.com/app/article.aspx?id=3344
With 35 percent inflation, real wages in Venzuela will be falling.
Nominal Wage / Price Level = Real Wage
Clinky -
I am but an aspiring amateur economist. But it seems pretty clear to me. If the inflation in country x is 5% and salaries rise 5%, real income didn't rise. If inflation in country y is 50% and salary goes up 5%, there is a loss in real income. Thus inflation greatly matters when comparing salary increases.
Captain, correct me if I'm wrong.
No kidding, I know Igetting old because I remember it was a serious magazine where you'd learn things from that was perhaps, economically orthodox but at least somewhat rigourous.
Then I started noticing the "social commentary" articles, such a couple on gun control (there were other's, those stuck in my mind) which were highly one sided ( good, but not very rounded) and the econonomical content going soft, and in the last 5 years it just became another stupid magazine.
Sad really, there's very little to read on most magazine racks.
Admittedly, I still think it's about the best news magazine in the world, even though it has declined significantly in my opinion since around 2006 when Iraq started really going to shit... something clicked over at The Economist with their writers around then and they've been taking pretty left-wing stances on a lot of things since then.
Funny, because since 2006 Silvio Berlusconi of Italy has been calling it "The Ecommunist."
Interestingly, there seems to be a close correlation here, too, regarding the editors... in 2006 John Micklethwait, an author who has written extensively on American conservatism, took over from Bill Emmott, who ran it from 1993-2006.
So, we can either call it The Ecommunist from here on out, or we can sign off any post regarding The Economist with "Bring back Bill Emmott!"
Bring back Bill Emmott!
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