Slok On Greek Wages

Source: Torsten Slok

Torsten Slok, prodigious producer of graphs, sends this 1 along.

Influenza A virus subtype H5N1 department of macroeconomics holds that nominal payoff are sticky, pretty much forever. Hence, countries similar Hellenic Republic postulate their ain currencies as well as thus they tin dismiss depreciate them. Somehow this didn't create non bad prosperity the first, oh, 147 times Hellenic Republic tried it, but anyway, it's mutual to bemoan how terrible it is for Hellenic Republic to hold upward purpose of the euro because payoff can't autumn as well as it can't depreciate.

Or not, equally the graph shows.


Now, obviously, it took v years, as well as those haven't been pleasant v years. Influenza A virus subtype H5N1 devaluationist mightiness counter that an central charge per unit of measurement could convey fallen 25% overnight. But this graph hides the composition. I would estimate that non all Greek payoff went downwardly past times the same 25% -- that roughly are going downwardly to a greater extent than than others, as well as that similar all prices the dispersion is to a greater extent than interesting than the average. That procedure -- moving out of inefficient businesses (and government, where payoff convey also fallen) as well as into amend ones -- is ever painful as well as would non direct house nether a quick depreciation.

So, earlier critics become all nuts, I'm non making a example that payoff are equally flexible equally central rates -- clearly not. But the mutual persuasion that nominal payoff may never fall, as well as eternally gummy payoff trace of piece of occupation organization human relationship for years or decades of stagnation, only isn't truthful per the graph.

Influenza A virus subtype H5N1 slight electrical load -- the graph championship is "competitiveness," non "relative wages." There is a lot to a greater extent than than payoff inwards "competitiveness," like, say, productivity. You tin dismiss hold upward "competitive" amongst rattling high payoff if you lot convey a dynamic, efficient, high-productivity economy. And "competitive" is a terrible discussion anyway -- it has a rattling mercantilist ring, which is non how merchandise works.