At 06:25 AM 06/04/2000 -0700, you wrote:
>I'm not sure how much weight to give any story about prices,
>though, in a world (this one) where competition doesn't necessarily mean
>price competition. Rising labor costs surely don't underlie the high price
>of Nike running shoes.
the Nike issue is about high prices rather than rising prices (inflation).
Nike is able to charge a high price (relative to costs) at this point of
history because it has monopoly power. That monopoly power doesn't give
them either the wish or the ability to continually raise prices in a way
that reverberates through the entire economy (i.e., cause inflation).
In order to have inflation, it's not only that businesses have the ability
to set prices, but there must be a reason for them to do so (like rising
labor costs due to a small reserve army of labor or rising demand for
products or rising raw material prices). Except for the role of
price-setting power (in general) in helping to cause inflation and
inflationary persistence, the identities of individual companies is rarely
relevant to a macroeconomic process such as inflation.
(I guess you'd say that because the oligopolistic steel and auto producers
were like spiders at the center of the economy's web, i.e., since those
industries could stimulate inflation in the rest of the economy, President
Kennedy's jaw-boning and President Nixon's price controls for the
commanding heights made sense. But that era is long over. US capitalists
are extremely competitive these days -- and struggling to re-attain secure
positions.)
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~JDevine
