Amity Shlaes: "Workers should not be paid much"

There's an argument going on between Paul Krugman and Amity Shlaes. In the Murdoch-owned WSJ, Shlaes pens "The Krugman Recipe for Depression".

Krugman responds.

Over at The Big Picture, an observation: "Krugman vs. Shlaes — Not A Fair Fight".

The Shlaes is mostly against big government spending, but also writes this:

High wages hurt corporate profits and therefore hiring. ...

... lawmakers are considering new labor legislation containing "card check," which would strengthen organized labor and so its wage demands. Because employees continue to pressure firms to spend on health care, without considering they may be making the company unable to hire an unemployed friend.

... raising wages may take away jobs in the private sector ...

Labor is an actor in the marketplace and there's no reason it, alone, should not bargain for the best deal it can get. For Shlaes, corporate profits are not to be touched no matter how high the get. Instead, labor is supposed to bear the brunt of whatever sacrifices that are needed to bring about an economic recovery.

UPDATE: George Will's Sunday column basically repeats Shlaes essay, with the bonus feature that Will deliberately ignores what Krugman told him on television about why 1937 was a bad year (FDR eased up on New Deal policies and went for balancing the budget).

AND ... Will touts Shlaes with this line: (emp add)

In "The Forgotten Man: A New History of the Great Depression," Amity Shlaes of the Council on Foreign Relations and Bloomberg News argues that government policies, beyond the Federal Reserve's tight money, deepened and prolonged the Depression.

Shlaes of Bloomberg News!


posted by Quiddity at 11/29/2008 04:45:00 PM