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To: neolib who wrote (276953)	9/18/2010 5:06:39 PM
From: yard_man	Read Replies (3) \| Respond to of 306849

>> Our economy is demand limited << If I understand this phrase, it is a common misconception promulgated by the media -- it runs like this: If only we could get consumers to loosen up their purse strings the economy would get humming again because this would stimulate more production and then more demand and hiring would pick up ... stimulating further demand and voila -- the recession would be over. Is this the gist of what you are saying?? Of course, if this were really true it REALLY COULD be fixed by simply printing money and giving it to poor people ...

To: neolib who wrote (276953)	9/19/2010 6:31:55 AM
From: grusum	Read Replies (2) \| Respond to of 306849

Our economy is demand limited, we can produce much more than we can afford. Thats why unemployment is currently high: we can lower prices to increase what we can afford. unemployment is higher because the value of labor is lower. the reason the value of labor is lower is because taxes are higher and/or government regulations have become more onerous. a smaller but still detrimental effect is the artificially high price that unions demand for their labor which reduces the value of their labor. wages and the value of labor have to be in equilibrium. when the value of labor rises, then in general more people are hired and wages rise. demand is limited by price. higher efficiency in labor from investing in increased skills or better equipment will decrease production prices and therefore increase demand. and higher efficiency in labor means that labor has increased in value. so, invest in increased skills or better equipment to increase efficiency, and reduce taxes and regulations to create a better business environment and therefore increase the value of labor, and unemployment will decrease and wages will increase.