But aside from the European examples the important claim that needs to be examined is whether keeping wages low will stimulate employment. While it is true that if one employer cuts wages to sell its product cheaper and more competitively in the market, it will have rising demand with rising employment, it can not be true for the whole economy. If all the companies and all the states are slashing wages at the same time, such as would be the case during a recession, then the overall impact on the economy is depressive, because so much purchasing power is removed from the economy at the same time (Krugman 2009; Barone 2004, 112). In that case businesses, observing a drop in overall demand, have no incentive to invest their existing profits in expanded production and hiring, no matter how much they make in profits. This perhaps explains why Apple is so aggressively using its $145 billion cash pile to purchase its own shares rather than make new plant investments (Mead, Stillwell and Gangar 2013). Lower wages do not contribute to higher employment levels, but the opposite. If Sweden were to participate in the hunt for cheap wages, it would add fuel to the fire of lower living standards without an increase in employment. The social suffering a wage cut would induce in the country with the overall highest wage would also be so enormous that it might cause more social instability and unrest than what we currently see with the immigrant riots.
Neoliberalism in Sweden
But aside from the European examples the important claim that needs to be examined is whether keeping wages low will stimulate employment. While it is true that if one employer cuts wages to sell its product cheaper and more competitively in the market, it will have rising demand with rising employment, it can not be true for the whole economy. If all the companies and all the states are slashing wages at the same time, such as would be the case during a recession, then the overall impact on the economy is depressive, because so much purchasing power is removed from the economy at the same time (Krugman 2009; Barone 2004, 112). In that case businesses, observing a drop in overall demand, have no incentive to invest their existing profits in expanded production and hiring, no matter how much they make in profits. This perhaps explains why Apple is so aggressively using its $145 billion cash pile to purchase its own shares rather than make new plant investments (Mead, Stillwell and Gangar 2013). Lower wages do not contribute to higher employment levels, but the opposite. If Sweden were to participate in the hunt for cheap wages, it would add fuel to the fire of lower living standards without an increase in employment. The social suffering a wage cut would induce in the country with the overall highest wage would also be so enormous that it might cause more social instability and unrest than what we currently see with the immigrant riots.Neoliberalism ในสวีเดน
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