Starbucks’ implementation of artificial intelligence coffee makers¹ offers a simple and ideal case study that can illustrate the synergy between efficiency, wages, profits, and inflation. Even if we don’t know the actual cost figures, we can use some hypothetical numbers to demonstrate how higher efficiency enables higher wages, higher profits, and lower prices.

Although pressure to increase wages is generally linked to inflation,² this paradigm assumes the higher wages aren’t driven by higher productivity. When workers become more productive, their product or service becomes cheaper rather than more expensive, and this is deflationary.

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