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Has this actually happened?

Chance would be a fine thing.

This is the usual brain rot excuse - what if wages outstrip productivity?

Well - what if they do? Profits and dividends can always be cut to keep prices level. It's not as if leaving profits and dividends to accumulate is actually going to drive investment.

But apparently this realisation is unpossible. Spending on wages must always be cut first, and must be cut more and more severely, until - er - only millionaires have anything left to spend.

At this point austerity can be applied, the state can be bought, and the cycle can repeat elsewhere.

It's specious nonsense. We know that wages and productivity have been disconnected since the 70s - which is, incidentally, when this idea first became something that "everyone knows" i.e. that paying people too much was the primary cause of the inflationary shocks that were actually caused by energy price increases and by Nixon's default on US obligations.

And for the proponents - in what sense is what's happening to Greece now significantly better economically than what happened to Weimar Germany?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Jun 18th, 2011 at 05:38:06 PM EST
[ Parent ]
in what sense is what's happening to Greece now significantly better economically than what happened to Weimar Germany?

It's not, of course.  

During the middle years of the Weimar Republic Germany experienced a burst of "prosperity" based on capital inflows (debt accumulation.)  This inflow was used for current account purposes instead of being deployed as long term capital to increase productive capacity  -- & is this beginning to sound familiar?  

:-)

It's the same old story: the inability to cognize the fundamental difference between "wealth" and "accumulating stuff."

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Jun 19th, 2011 at 12:02:19 PM EST
[ Parent ]

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