Matt Yglesias: Creating Jobs by Cutting Wages

[miceelf]

Originally Posted by sugarkang

@Slate.



Well that's gotta sting.

How do we shoehorn this into the progressive narrative? Matt's freedom of expression at ThinkProgress was compromised by the corporate shackles of Slate?

I didn;t take him to be endorsing this as a solution, merely expanding the definition of the problem.

Wages are kind of a collective action/free rider problem. Most companies depend on some kind of middle class consumer base for their profitability. But each individual company also profits most by paying its workers lower than middle class wages. So a company will be most profitable when it pays its workers low wages and most other companies don't. It's a classic example of free riderism. Simply increasing the number of jobs that don't support the middle class isn't at all a solution to this problem.