[LINK] Cost Of Living

[Bernard Robertson-Dunn]

On 11/02/2013 10:33 AM, Jim Birch wrote:
> The high cost of living is one of the "monkey" illusions of economics.  We
> are kitted out by evolution to think from an individual perspective or
> maybe at times as a small group not as part of a total system.  From the
> individual's point of view, a higher cost of living appears to indicate
> that we can buy less stuff.  But this viewpoint assumes that costs could be
> shifted up or down with no flow-on effects.  From a system welfare
> perspective, a high cost of living tends to mean exactly the opposite.  It
> means that everyone in the product supply chain is getting paid decent
> wages, has health care, aren't working long hours in unsafe conditions,
> etc.  And those people also spend and consume too.  Was it Henry Ford who
> said he wanted to pay his workers enough so that they could afford to buy a
> car?

That Henry Ford story is a myth, however, the lesson needs to be learned.

All those big American companies that outsourced their manufacturing, 
software development/support, help desks etc overseas suddenly found 
that the unemployment rate shot up and there were fewer consumers.

In the words of that great philosopher, Homer - D'oh.

It wasn't the only reason for the GFC, but it certainly didn't help.

-- 

Regards
brd

Bernard Robertson-Dunn
Sydney Australia
email: brd at iimetro.com.au
web:   www.drbrd.com
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