Tuesday, May 22, 2012

Firms here to raise wages

Looks like the majority of workers can look forward to better pay this year. The happiness should be short lived because inflation will deduct their raise. Pity those who are living off their savings. Even if you have investment income, that is struggling to keep pace with inflation.

Pay rise is only meaningful when businesses do not have sufficient pricing power. Since we have locked in inflation expectation, businesses are not shy, even confident to raise prices. Of course businesses will join the herd to up pay. It will not cost them more. Workers must go out and spend their raise quickly or discover that prices have caught up.

We have no guts or ideas to restructure our economy. It could very well be that our timidity limits the ideas that we would entertain. I know we have no guts when we are afraid to eat our lunch to make a better one. I know we have no courage when leaders say the issues are complex. All these become even clearer when I read Issacson's biography of Steve Jobs.

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