Keynesians tell us that “sticky wages” are the big underlying economic problem. But why do they just repeat this story to justify inflation and stimulus? Why do they not advocate policies to undo minimum wages, labor laws, occupational licenses and other regulations that make wages stickier?I raised this very same point in The Fed Flunks: My Speech at the New York Federal Reserve Bank.
Monday, December 22, 2014
The Question Keynesians Need to Answer
John Cochrane, a professor of finance at the University of Chicago Booth School of Business and a senior fellow at Stanford University’s Hoover Institution, writes today at WSJ:
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Since wages and prices are so sticky....... why do "progressives" constantly moan about wages not keeping up with inflation and why do they fear deflation? Both are impossible, right?
ReplyDeleteFurther, if people would rather literally starve to death on the street rather than lower their wages or prices, why doesn't someone just explain economics to those poor lost souls? Where do such oblivious people obtain the wisdom to elect the proper Keynesian overseer to manage the underlying wage and price stickiness if such voters are so completely oblivious to alleged problem in the first place?