/lit/ - Literature

>>18340383
>you could actually decrease real wages through inflation and people wouldn't be as perspective
bond yields have been driven to the ground, people are spending their money on anything and everything including bitcoin and stocks, people are legit taking their mortgage payments and putting it into the stock market instead of using it for their mortgage. another example was the inflation in the cost of gas in 2007; people bought smaller cars and just drove less. people adjust to inflation every time

>assume real wages are for whatever reason to high right now,
>employers can quickly decrease wages across the board and this won't in any way effect productivity.
you're putting the cart before the horse. We have seen through history an immense increase in productivity thanks to our capital goods. Case in point, america was 90% farmers. The reason why now only 5% of america needs to be farmers is because of capital goods increasing our productivity. in other words, a mexican who doesn't speak english (who 40 years ago couldn't sew 20 socks) can now press a button and produce 20,000 socks. Hence, as you stated in your assumption, the employer doesn't need to pay high wages for somebody to do that, and americans can move on to better jobs while the mexicans take the more menial one (we had full employment last year, so don't bitch about "they took our jerbs")
you're missing one of Henry Hazlitt's many points though, if his employees are indeed productive enough, then the employer won't cut their wages. it is in his self interest to maintain their wage, if indeed the employee is producing that much. why would he sabotage his production?