The Fear Fairy
Some people think the solution to unemployment is more unemployment:
Prosperity through lower wages?, by Ezra Klein: Tim Fernholz and Jim Tankersley took the time to read a report that Speaker John Boehner’s office distributed as evidence that sharp deficit reduction can lead to rapid economic expansion. The plan, it seems, is to create a bunch of unemployed public workers who’ll create more competition for the few open jobs in the private sector and thus drive wages down for everybody:
The paper predicts that cutting the number of public employees would send highly skilled workers job hunting in the private sector, which in turn would lead to lower labor costs and increased employment. But “lowering labor costs” is economist-speak for lowering wages — does the GOP want to be in the position of advocating for lower wages for voters who work in the private sector? ...
So it's not the confidence fairy, but rather the fear fairy that is supposed to stimulate the economy? Yeah, that'll work because -- you know -- there's not enough people looking for jobs now. Yet another economic rationale invented by Republicans to support ideological preferences.
Posted by Mark Thoma on Friday, March 25, 2011 at 03:42 PM in Economics, Unemployment |
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