the argument :
in as much as increasing the RAU is contrived conciously by macronauts
to murder a "run away " boom
--as per say larry s
apropos all post WWII pre green span recessions
"they were fed policy induced ... murder one "
---
the murder is all about curbing the "unhealthy " advance of product prices
not wage rates
though looking at the change in unit labor costs is the key observation
its not about wage rate control per se
notice
wage rate gains can only be curbed by blocking the cost pass thru
ie the ability to effectively raise product prices
induced mass sacking say by cutting credit flow rates into production firms
which yes reduces effective demand directly
--by cutting firm spending on expansion od production or the capacity to produce --
but also pari passu reduces aggreagate wage sourced household income
and thus reducing in turn household spending on final products
and of course
this curbs price increases by firms as inventory backs up at certain stations
of the interlaced production system
even if formally accurate as far as it goes
this is not the whole story obviously
---nb comp stat models
obviously bypass the dynamic chain here
the egg hen bit is irrelevent if you just "show" the start and the finish ---
but what i like is spot lighting the product sellers / price setters
as both target and key players here
not the unorganized mass of employees that are just labor sellers
--recall more directly in a job rationed system its the employers bidding up wages to poach from each other etc
\that causes the wage spiral
and in organized settings
--the paradigm of choice in the 70's the unions are only empowered by firms added cost
pass thru capacity --
if
a wage increase can't be effectively past thru
because general market conditions are too weak
because lets say effective demand is crippled by credit policy
at all or at least enough important points and levels
to maintain operating margins
then
the wage gains won't be granted
----------------
review :
this presentation strikes me as exceedingly unsatisfactory
but the use of it by rads is clear
implicitly this story form
shifts the onus onto the capitalistic process itself
not the wage earners
a hunk of the wagery makes "the ultimate sacrifice "
by getting the sack
they join the small craft outfits in the general culling
by artificial discretionary credit drought
they inadvertantly serve the cause of DOM ( decent operating margin ) preservation
at least at the big corporations
the one's that cause the problem in the first instance because
they have market pricing power
both on the buy side labor and raw commodities as well as the sell side
the misery gets allocated to workers and petty proprietors and easily canabalized incer stinkers
its all just business nothing personal
purely incidental
the misery and loss a necessary instrumentality of dynamic discretionary mangement of the price level
the goal in a mudered boom is pricing restraint
at the corporate level
gentlemen restraining themselves by impersonal albeit compulsory means
a mark up market
would accomplish this mission without the mass sack
