3 ms·
No, neoclassical economics would have us believe that wages would go down until a clearing price was hit and everybody was employed. This is, indeed, exactly t
by crdoconnor 11y ago
No, neoclassical economics would have us believe that wages would go down until a clearing price was hit and everybody was employed.
This is, indeed, exactly the type of mind numbing idiocy that Varoufakis was talking about.
- yummyfajitas 11y agoThat's exactly what happens in your story. Wages go down from $P to $P2. Fewer people are willing to work at $P2 than at $P, so employment goes down. That's a standard market clearing story. The classical claim is that don't have involuntary unemployment - prevailing wage levels equal to $P (in some segment) and simultaneously people unable to find work at $P. Your story agrees with this.