“Even in the gold standard, if cities pass all kinds of ordinances and labor laws, they would cause prices to rise and deprive the poor of the affected goods and services. Gold will fix many problems, but not all problems. Including the problem of mandatory useless ingredients.” Keith Weiner
Damn, but I like Keith’s writings. His “mandatory useless ingredients” refers to regulations, and the fact that the dollar is not buying less, it is just buying a lot of things that are not needed, wanted or, often, even known about, by the consumer. At every step of the production process these regulatory costs drive down profits and thus wages.
Keith nails it time and time again. He looks at areas of economics that have been looked at for centuries and describes what is happening with more clarity and nous than anyone ever has before.
A point that Keith didn’t delve into is that the division of labour (specialisation) fragments the production process, which results in greater market efficiencies (lower prices). However, its Achilles heel is that it greatly increases the number of steps, every one of which is exposed to myriad regulations. The more that the market specialises (cuts costs by making production more efficient), the more steps that there are for government regulations to add to costs and inefficiencies.
Read Keith’s article here.