Wednesday, March 11

1. Solutions for the Economy: Wages equal for your work.

Being so short on good free market ideas for the economy I will try and propose some here.

Allow workers and wages to realign. 

One of the most interesting comparisons between quick recovery (e.g. 1907 1921) from economic downturns and long recovery (1930s 1970s) is that in the quick recoveries wages and prices have been allowed to adjust--yes that means fall--even if it hurts so that reality can settle in and the economy can recover again. In the immediate months after the 1929 crash most wages stayed the same and many others even rose. But so did unemployment--very high. Many companies would have been happy (today too) to cut wages and higher more people.

So what can the government do to allow wages to fall to their proper market level? A few things:

1. Cut minimum wage laws.
By allowing the bottom wages to fall, this causes most wages to fall, since many wages are tied to the lowest amount.

2. Evaluate Government Wages
Instead of letting Congressional and other government wages to rise, the government could reevaluate what it is paying it own workers. Hey, would it be that bad if we could hire twice as many people for the same cost?

3. Monitor Unions
As we have seen from the $50+/hr wages that unions created in the car industry, government should give no added incentive or bartering power to unions to push wages above their natural level.

4. Don't Ever Run for Office.
At least with the popularity of these ideas. But hey, would you rather have no job or a job that pays a bit less because we are in a recession?