Re:We replaced rental brokers with software and filled 200 v...
by syshum on Friday July 09, 2021 @12:28PM
(#27785430)
You seem to be missing the fundmental problem here
Sure not all prices are infinitely elastic, but if Labor costs out strip the ability to prices to absorb them that do not mean the business simply magically makes them go away, no that business goes bankrupt and wages go to $0.
Owners / Investors demand a return on investment, if the market average is 8%, and business x is only returning 4% why would an investor continue to keep their capital there?
Worse still if inflation is 3% and the business is only returning 2% the investor is LOSING MONEY by keeping their capital in the business, better to cut their losses and move on
This mythical position where by businesses just "absorb the cost" because the prices are not elastic is pure fantasy
Sure not all prices are infinitely elastic, but if Labor costs out strip the ability to prices to absorb them that do not mean the business simply magically makes them go away, no that business goes bankrupt and wages go to $0.
Owners / Investors demand a return on investment, if the market average is 8%, and business x is only returning 4% why would an investor continue to keep their capital there?
Worse still if inflation is 3% and the business is only returning 2% the investor is LOSING MONEY by keeping their capital in the business, better to cut their losses and move on
This mythical position where by businesses just "absorb the cost" because the prices are not elastic is pure fantasy