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"the second-hand dealers in ideas"

Just say his name. Paul Krugman.

Sorry, why is this a "Hooverism"?

The belief that rising wages are necessary to generate the spending that is necessary to generate economic well-being is the core of how Hoover understood the problem of the Depression. It's why he did everything he could to convince/prevent firms from cutting wages in the early 30s, despite the fact that doing so is exactly what they should have been doing with a monetary deflation and the adjustments of the bust taking place. Many have argued that Hoover's wage policy, based on that severe misunderstanding of the relationship between wages and growth, was significantly responsible for the depth and, to some degree, the length of the GD.

Umm, but my model says that after a recession, the economy rebounds to trend growth. Shouldn't that mean that wages never have to fall? ;-)

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