• UsernameHere@lemmy.world
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    2 months ago

    Economic models keep most numbers fixed to simplify their math. They call it ceteris paribus.

    So when economists claim that increasing wages will reduce the amount of jobs, they came to that conclusion by keeping corporate profits fixed while doing their math. So any business expense is paid for by reducing workers or wages.

    In the real world corporate profits are not fixed and have grown faster than wages for decades.

    Keep that in mind if an economist ever tries to claim increasing wages will reduce the quantity of jobs.

    • disguy_ovahea@lemmy.world
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      1 month ago

      Right. The problem is, CEOs maintain that as “responsibility to their shareholders” to ensure their Q4 earnings reports prove continuous growth. So prices will inevitably increase, or overhead will be reduced to maintain those margins.

      • Maggoty@lemmy.world
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        1 month ago

        Profits can go down slightly as long as it’s expected. The stock market is weird and the thing nobody likes is unexpected falling numbers. Stocks can maintain or even increase in value if the report matches the predictions and expectations. Even if that prediction is a slight lowering in profits.

      • Samvega@lemmy.blahaj.zone
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        1 month ago

        The price of progress is oppression, and the outcome of progress is that those who oppress get to enrich their own descendants so they can continue to oppress.

    • Maggoty@lemmy.world
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      1 month ago

      Economists are also very aware of what they choose to keep fixed and what they choose to allow as a variable. It’s a science that’s incredibly easy to corrupt the results in. Which is why people really need to pay attention to who it’s giving the results.