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<h1><h1><h1>Historical aspects of Inflation # 10</h1></h1></h1></h1></h1>
He understood very well that wage rates could be too high in relation to the market, that is, too high to justify the decision of employers to increase their number of employees profitably, too high from the point of view of the entire employed population, since the wage rates Imposed by trade unions, exceeding the market level, prevented some of those who aspires to earn a salary to get a job.
Keynes said that mass unemployment, which continues year after year, is certainly an extremely unpleasant situation.
But instead of suggesting that wage rates can and should be adapted to market conditions, he stated that "if the currency depreciates and workers are not smart enough to put up with it, they will not resist the fall in real wages." , while nominal wage rates remain unchanged. "
In other words, Lord Keynes argued that if a person receives the same amount of pounds today as before the devaluation of the currency, he will not understand that in fact he now receives less or will prefer it, although the macroeconomic phenomenon is understood on a large scale.
To say things by name, Keynes suggested "keeping up appearances." Indeed, instead of declaring without wages that wage rates need to be adjusted according to market conditions, because otherwise part of the labor force will inevitably remain unused, he said, "full employment can only be achieved through the practice of inflation. Let's deceive the workers".
The most interesting is the fact that by the time his general theory (General Theory) was published, cheating had already become impossible because people had already realized the importance of indexing.
But the desire to make full use of labor remains the main political goal of all Governments.
The realization of the full use of labor comes from an unhindered, competitive labor market, hence a market not controlled by trade unions or the government.
In such a market, the wage rates for each type of work performed tend to the level at which everyone wants to get a job, and can get any employer who has all the employees he needs (perfect competition).
As the demand for labor increases, the wage rate will tend to increase, and when fewer workers are needed, the wage rate will tend to decrease. https://stayathome.co.in/
Keynes said that mass unemployment, which continues year after year, is certainly an extremely unpleasant situation.
But instead of suggesting that wage rates can and should be adapted to market conditions, he stated that "if the currency depreciates and workers are not smart enough to put up with it, they will not resist the fall in real wages." , while nominal wage rates remain unchanged. "
In other words, Lord Keynes argued that if a person receives the same amount of pounds today as before the devaluation of the currency, he will not understand that in fact he now receives less or will prefer it, although the macroeconomic phenomenon is understood on a large scale.
To say things by name, Keynes suggested "keeping up appearances." Indeed, instead of declaring without wages that wage rates need to be adjusted according to market conditions, because otherwise part of the labor force will inevitably remain unused, he said, "full employment can only be achieved through the practice of inflation. Let's deceive the workers".
The most interesting is the fact that by the time his general theory (General Theory) was published, cheating had already become impossible because people had already realized the importance of indexing.
But the desire to make full use of labor remains the main political goal of all Governments.
The realization of the full use of labor comes from an unhindered, competitive labor market, hence a market not controlled by trade unions or the government.
In such a market, the wage rates for each type of work performed tend to the level at which everyone wants to get a job, and can get any employer who has all the employees he needs (perfect competition).
As the demand for labor increases, the wage rate will tend to increase, and when fewer workers are needed, the wage rate will tend to decrease. https://stayathome.co.in/