The cost of government

Fleischer explains why he is not hiring. He must spend $74,000 to provide Sally with an $59,000 salary, of which after tax she gets $44,000 plus $12,000 in benefits. Plus he faces large uncertainty that these costs may be arbitrarily and unpredictably increased.

The recent substantial increases in the cost of employing people have not been reflected in substantial reductions in people’s wages, thus wages are substantially above market clearing levels.  The Fed could, I suppose, inflate their way out of this problem, using inflation to sneak the real value of wages down, thus causing employment to recover.  Government could then point out that the bloated capitalists are increasing their oppression of the victimized proletarians, and use that as justification to make employing people even more expensive.  Never let a good crisis go to waste.

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