“The bullshit piled up so high in Vietnam you needed wings to stay above it.” Apocalypse Now
I’m travelling, so at breakfast at the hotel I picked up a recent copy of Wall Street Journal.
The beauty of not reading WSJ regularly is that your bullshit radar, weaned off of daily exposure to it, regains its sensitivity. You open a ‘Markets’ section and bullshit jumps at you, offending all your senses.
I see a headline: “Another Danger of Rising Wages” by Justin Lahart. (The online version says “The Other Risk from Rising Wages.”)
If you don’t have access, no worries: I’ll be dissecting almost every sentence in the article.
The author’s major lament is that in current tight labor market the wages might rise, although he’s not sure whether or not this will lead to inflation. Today, he’s more worried about tight labor market leading to lower stock prices. Notice how right out of the gate, in a typical WSJ fashion, more concern is given to investors and markets than the wage schmucks. “A Danger” of rising wages. God forbid.
But there are ways to deal with this danger.
“One way wages could rise without inflation running hotter is if productivity picks up. This would be a good thing.” Good thing for who? He explains: “the more productive the economy is, the better off everybody can be.” Translation: If before you worked 10 hours a day for $11/hour, then if you now work 12 hours a day for the same $11/hour – you’re better off. See, it’s good for you to work more hours.
“And there is some hope that productivity growth, which has been woefully weak, kicks in as companies step up capital spending to combat rising labor costs.” Think about this for a moment: the productivity will grow, this guy argues, if companies spend money NOT on labor costs, but on COMBATING labor costs. Spend cash on devising remedies that make workers work harder for less and you won’t have to spend cash on wages!! Watch and learn, MBAs.
But there’s a problem with this approach though. You see, he then points out, “The problem is that investment in productivity won’t translate into productivity gains for a while.” Aawww! 😦 There’s a time-lapse between implementing those remedies and workers working harder.
“The other way wages can rise without inflation picking up is if companies eat their rising labor costs (wait, is there a remote possibility of redemption here? KG) – a scenario investors probably wouldn’t like.” (Oh, nevermind. Let’s not forget about the investors. KG). “Profit margins are near historic highs and are expected to go higher as a result of the tax cut, but more of that money than investors expect could be going to paychecks instead of earnings.” (OMG! The Horror! The Horror!)
“That wouldn’t be surprising. Inflation has been so low for so long, (btw, does this casual confession mean that WSJ will now rescind a decade of hysterical articles about the lurking inflation? KG) consumers have become conditioned to it, making it harder for companies to raise prices without losing customers.” Being a company is hard. Fucking workers demand a higher salary, fucking consumers are a bunch of flaky brats. Hey, maybe you should close up shop then? Oh, I forgot: Your fucking profit margins are near historic highs and are expected to go higher.
He concludes: “This might work out fine for everyone if low inflation kept the Fed from tightening aggressively. But with wages rising, the Fed will at least keep to its current path of rate increases. The result would be lower profit margins and higher rates – not exactly the stuff of investor dreams.” Yes, the investors dreams – that sacred ideal on which a civic society is built.
This mindset is so emblematic of our skewed priorities: We are asked to serve the market. We are the cogs and ‘the Market’ and ‘the Investor’ are supreme beings whose interests are more important that a working stiff’s to the point where companies are willing to spend money to PREVENT the working stiff from getting a decent wage.