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| It happened prior to the 1930's depression.........its politically suicied to allow the price of labor to correct in a correction.......but ultimatly its what the market will force. H.Hoover tried to protect Labor in the late 20's...many attribute the Great Dep to those moves to keep labor prices high....mirrors present day. recessions are a natural and unavoidable part of the business cycle. Depressions are the bill you pay for trying to avoid recessions with even looser monetary policy and more government spending to stimulate consumption. What you need is a cleansing break--
The whole idea of Keynesian stimulus, was to cause inflation...which would reduce the real price of labor. In a modern democracy, politics prevents wages from falling. But in a correction, if wages don't fall people don't get jobs. Keynes' didn't mention it, but the only reason his stimulus works is because it pulls the wool over the eyes of the working classes - reducing their wages by inflation so employers can afford to hire them again. Ergo, no inflation...no recovery in the job market. No recovery in the job market...no recovery in the economy.
Toyota continues profitable production at 50% labor costs.........anyone long GM or Chyslr stock?........
Hoover's pro-labor stance helped cause Great Depression, UCLA economist says
University of California - Los Angeles ^ | Aug 28, 2009 |
Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation's gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.
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10%+ unemployment thru 2015?
