You can get one round of inflation if industry can regain its pricing power. Competition has difficulty dislodging excess capacity. Some of you may have seen recent articles about Mitsubishi holding on in the automobile industry even though its prospects seem dim. Mergers and acquisitions, however, can accomplish the same goal. The takeover of AT&T may represent the first step in the diminution of competitive pressures in the telecom industry.
On Tue, Feb 01, 2005 at 06:58:08AM -0500, Paul wrote: > But doesn't this version of inflation emerge like this: > Some sector (economic or social) raises their price (or wage) shifting > income in their favor; the others resist by raising their price (wage) in > turn; and on and on. Ongoing inflation (rather than a one-shot) is a > distributional struggle. At some point in this game of "hot potato" it is > the turn of wage earners and eventually they are left with the burnt hands > (often creditors as well). But this game of "hot potato" can take several > rounds (if the wage earners are strong in defending their standard of > living). How many rounds the wage earners last is usually the principal > factor determining the duration and degree of inflation. > > Is there really much countervailing power in the socio-economic formation > of the US today? From which part of the economy or society? > > Paul > > Gene Coyle, citing Daniel Davies writes: > >As I read almost daily of giant corporations and Wall Street analysts > >deploring "the lack of pricing power" I believe that inflation would be > >(will be?) welcomed by big capital. > > >>Are we absolutely sure that the whole problem will not end up being solved > >>by an inflation rather than a recession? I know that this is the orthodox > >>view; that US rentier capital is big enough, important enough and > >>anti-inflation enough that anything will be tolerated other than inflation, > >>but it does strike me that it would sort a lot of things out, rather less > >>painfully than they might otherwise be sorted out. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
