Explaining Econ 101 to Krugman

The Nobel prizewinner finds himself in over his head:

There is, if you think about it, an immediate logical problem here: Republicans are saying that job destruction leads to lower wages, which leads to job creation. But won’t this job creation lead to higher wages, which leads to job destruction, which leads to …? I need some aspirin. Beyond that, why would lower wages promote higher employment?

Seriously? Krugman is seriously asking why lower prices promote higher demand? Unbelievable. Apparently the devotees of the Keynesian Cross have forgotten how to draw a basic SD curve. Because lower prices promote higher demand, ergo lower wages promote higher employment.

As for Mellonism, it was never put into practice… which brought about Great Depression I.


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