Irving Fisher’s “The Money Illusion” is a life-changing economic treatise because it strongly advances the principle of thinking in terms of purchasing power rather than nominal dollars. We all have the intuitive sense to recognize this over long periods of time, as we know when we hear stories of grandpa making $1 per day or buying five-cent milk shares.
We are less cognizant of this over the intervals of our own life. If you have a $500,000 collection of investment assets, and inflation runs at 3.5% per year, you must have $517,500 in total at the end of a twelve-month period in order to maintain the status quo. How many people would correctly observe that their purchasing power had diminished if their account stated $515,000 at the end of the period? Not many.
In that spirit, I have paid attention to an unlikely source to gauge metrics of purchasing power–prisoners. … Read the rest of this article!
I’m very skeptical of writing of writing about “social contracts” in the American employment landscape because there is a good argument to make that they never existed in the first place. Namely, large employers do not hire people for the joy of “creating jobs”, but rather, because they actually need a living, breathing human being to do something in order to make a profit (unless you own a cemetery, in which case you will also need non-living, non-breathing human beings to make a profit).
Johnson & Johnson does not hire an engineer to make Listerine more effective at fighting cavities simply because they desire to pay someone $180,000 per year, but rather, because successful innovations will make Listerine a more indispensable item in the bathroom cupboards of Americans nationwide, and will drive up sales and ultimately make more profits. More profits mean bonuses for executives making the calls, and nice … Read the rest of this article!