Ron -
[Don, will all due respect to the arguments made in that article, were the gold standard able to remain flexible enough to manage the global economy, we would still be on it. Once on a inflexible standard such as a fixed price for gold, should an economic anomaly impact the finanicial system (such as an oil embargo), gold provides little ability to permit govts to compensate for such a sudden increase in their economic "cost of business" as it essentially raises the cost of everything, and additionally creates a relative weakness in a nation's currency...]
I shouldn't be surprised that people still believe that the global economy can be 'managed'.
Your assumptions about a gold standard make no sense to me. If money were gold, there would be no 'price' for gold, just gold certificates representing ownership of a precise amount of gold likely stored in a particular place. A Ford Explorer might be purchased for 100 ounces of gold this month, but might require 120 or 80 ounces of gold next month. There is no inflexibility, beyond that of the loss of the ability of politicians to tax and steal silently by means of inflation. If gold seems to be scarce, an ounce will be exchangeable for more goods and services than when it does not.
[...And I believe you are incorrect about companies being unable to lower wage rates. I don't recall in my readings of history that unions became stronger as a result of the depression. Rather they were weakened by the need for jobs of any kind over higher wages that depressed corporate profitability...]
The unions wouldn't have to be weaker, just the existence of employment contracts would have prevented the lowering of wages. Unions are always a means of advantaging one group of workers over another and can never create either net jobs or wealth. I would be surprised if mandated minimum wages had not yet made an appearance, but it is just normal human nature to be extremely reluctant to take pay cuts, even if prices are falling, and the unhappiness would always be a threat to run to the politicians for relief.
Regards, Don |
