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A larger amount of money, especially if it comes from higher wages, leads to more intense consumer competition and hence to higher prices - or so they say.

How does that work? With the exception of essentials like housing, which seems to be a special case, can't consumers buy more stuff, and different kinds of stuff, rather than competing for the same stuff?

Rather, a much simpler explanation is that entrepreneurs "routinely" included raising costs (of higher wages) into the higher prices, trying to keep their profit share.

This seems rather more plausible.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Sep 2nd, 2009 at 09:18:51 AM EST
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