Explain the economic impact of Biden’s anti-inflation proposal to cap prices on goods but raise wages (solution, how much)

[Loveshiscountry]

Originally Posted by MikMal

"The nine most terrifying words in the English language are: I'm from the Government, and I'm here to help". Pres. Ronald Regan

"I am Ronald Reagan and I am your president". Those were much more terrifying. Growing government does not work.

[Oklazona Bound]

Originally Posted by gwynedd1

Just look at the Nixon years. Expect work arounds like novel cuts of meat , or "new products which avoid classifications. Then there will be "shortages".

Shrinkflation is a thing now. Make the product size a smaller but the price the same. You cannot expect manufacturers who have increased expenses from fuel and raw materials and labor going up to not raise prices. You just push them out of business.

Only thing that really worked long term from 70's and 80's inflation was raising interest rates way up. Shock and awe. And if you look at history and what was going on back then I really believe this inflation now has the potential to get much much worse than anything back then.

[Volobjectitarian]

Originally Posted by Floorist

So a business would have to pay more in wages but can't make back the money? Makes perfect sense.

Exactly.

Consider that in the simplest terms, profit = revenue - taxes - cost

So to "fix" things, the Biden plan is to lower revenue (artificially lower prices) and raise costs (artificially raise wages) and do nothing with taxes. That does what to profit?

This is why every time there are price/wage controls done by hamfisted government, there is always increased unemployment, mass business closures, increased scarcity and a general decrease in the quality of life.

[WK91]

So if I’m a business and I am required to raise wages but then I can’t sell my product at a fair market value, that doesn’t leave me with a lot of options.

Let a bunch of employees go is one thing I can do. True, it will degrade my product, but hopefully, Americans are used to poor service and poor products by now.

Another thing I can do is try to sell my business to a new sucker, or just cease to operate.

Liberals are so stupid.

[MikeNigh]

You’ve either got capitalism or you’ve got shortages. What else is there?

[beach43ofus]

Price controls ALWAYS lead to product shortages.

[hawkeye2009]

Originally Posted by Freesponge

I am not fully understanding how this works effectively in achieving the outcomes we want

Of course we want to keep prices lower and raise wages,

But let’s see how this works:

A peanut grower small or largely owned , doesn’t matter sells crops to a wholesaler … the manufacturer’s overhead far more consists of supplies , land acquisitions , not a lot of wage but if those raw materials and utilities all come from America which they probably don’t, their costs are fixed and the price they charge to wholesale isn’t likely to have room to go down . Real estate price controls wouid be needed to fight inflation here but doing that would stifle home ownership as no seller would be able to make money in real estate . That wouid hurt American farmers reducing the number of crop growers and price controls would render wholesalers to not buy American …. With weakening dollar this won’t fight inflation at the source

Next , wholesaler needs to make money selling peanut and buy machines to make peanut butter and package peanuts

They sell to retail, small businesses, restaurants …

If that price isn’t lower and it won’t be , and then wages are not capped,

customers will not see a cap on price levels and if Biden mandates that then you lose retailers from the marketplace

How exactly does this plan work ?

Like most libs, Biden does not understand supply and demand. If he did, he would not have flooded the US with liquidity and cut oil supplies, which is a recipe for inflation.

[illtaketwoplease]

The Biden admin is clueless - and it shows. This statement by him is a perfect example.

[tommy64]

Old-time football coach Herman Edwards has a saying that sums it up best:

"A goal without a plan is a wish".

[Floorist]

The first result would be layoffs. Then the remaining employees would either produce more or be replaced. Marginal businesses would fold. More jobs would be commission only. Salaried employees would be working many more hours. More people would become salaried employees.