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this is A Very Bad Idea, because the problem is not with competitiveness, it is with a lack of demand, which is not solved by wage cuts - quite the contrary, they make things worse
If wage cuts still result in a larger aggregate income for the workers than unemployment subsidies, then the wage cuts are a stop-gap measure.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 04:51:30 AM EST
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